Ford Motor Company Limited v Her Majesty's Revenue & Customs, V 19750
| Jurisdiction | UK Non-devolved |
| Judge | Rodney HUGGINS |
| Judgment Date | 31 August 2006 |
| Respondent | Her Majesty's Revenue & Customs |
| Appellant | Ford Motor Company Limited |
| Reference | V 19750 |
| Court | First-tier Tribunal (Tax Chamber) |
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FORD MOTOR COMPANY LIMITED
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Appellant
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and
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THE COMMISSIONERS OF HER MAJESTY’S REVENUE AND CUSTOMS |
Respondents |
Tribunal: Rodney P Huggins (Chairman)
Mrs J M Neill
Sitting in public in London on 19 and 20 June 2006
Jonathan Peacock QC, for the Appellant
Rupert Anderson QC instructed by the Acting Solicitor for Her Majesty’s Revenue and Customs for the Respondents.
CROWN COPYRIGHT 2006
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DECISION
The appeal
1. Ford Motor Company Limited (“the Appellant”) appeals against the partial refusal by the Commissioners for Her Majesty’s Revenue and Customs (“ Customs”) of three voluntary disclosures made by the Appellant on 30 September 1997, 23 November 2000 and 28 November 2000 claiming a total of £10,856,487 by way of overpaid output tax. The claims were initially rejected in their entirety. On 26 October 2001, they were allowed insofar as they concerned VAT paid in relation to supplies made to ‘ultimate consumers’ by Ford Credit, which is a member of the Appellant’s VAT group.
The balance remaining in dispute was some £5,013,911 and concerned supplies made by dealers outside the Appellant’s VAT group. The refusal of the first claim was contained in a letter of 14 October 1997 to the Appellant, from Richard Miller, an officer of the Basildon VAT office. Although the latter two claims were made after the initial refusal, and were not independently appealed, Customs acceded to the Appellant’s request that they be included in this appeal. The first two claims were made in relation to the provision of free insurance to motorcar purchasers. The claim made on 28 November 2000 however, concerned the provision of free RAC breakdown service on the sale of motorcars. There is also an appeal against a notice of assessment referred to in a Customs letter of 26 October 2001 relating to the overpaid tax.
The legislation
2. The relevant European provisions relating to this appeal are contained in three Articles of the Sixth Council Directive (77/388/EEC) (“the Sixth Directive”)
(1) Article 2 is in these terms (so far as is material):
“The following shall be subject to value added tax : 1. the supply of goods or services effected for consideration within the territory of the country by a taxable person acting as such …”
(2) Article 11A.1 provides that “the taxable amount shall be (a) in respect of goods or services … everything which constitutes the consideration which has been or is to be obtained by the supplier from the purchaser, the customer or the third party for such supplies …”
Article 11A.2 continues that the taxable amount shall include
“(a) taxes, duties, levies and charges, excluding the value added tax itself.” and
Article 11A.3 states that
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“the taxable amount shall not include (a) price reductions by way of discount for early payment; (b) price discounts and rebates allowed to the customer and accounted for at the time of supply; (c) the amount received by a taxable person from his purchaser or customer as repayment for expenses paid in the name and for the account of the latter and which are entered in his books in a suspense account. The taxable person … may not deduct any tax which may have been charged on those transactions”.
Article 11C.1 provides that
“in the case of cancellation, refusal or total or partial non-payment, or where the price is reduced after the supply takes place, the taxable amount shall be reduced accordingly under conditions which shall be determined by the Member States.”
(3) Article 13B(a) provides :
“Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of the exemptions and of preventing any possible evasion, avoidance or abuse:
(a) insurance and reinsurances transactions, including related services performed by insurance brokers and insurance agents”.
3. These provisions were implemented in the United Kingdom by item 4 of group 2 of Schedule 9 to the Value Added Tax Act 1994 (the 1994 Act).
4. The United Kingdom legislation gives effect to the Sixth Directive and is to be interpreted with that in mind.
(a) Section 1 of the 1994 Act provides (so far as is relevant)
“(1) Value added tax shall be charged, in accordance with the provisions of this Act – (a) on the supply of goods or services in the United Kingdom (including anything treated as such a supply), … and references in this Act to VAT are references to value added tax.
(2) VAT on any supply of goods or services is a liability of the person making the supply and (subject to provisions about accounting and payment) becomes due at the time of supply.”
(b) Section 4(1) of the 1994 Act provides that VAT shall be charged on any supply of goods or services made in the United Kingdom where it is a taxable supply made by a taxable person in the course or furtherance of any business carried on by him. In that context, a taxable person is a person who is, or is required to be, registered under the Act (see s 3(1); and a taxable |
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supply is a supply of goods or services made in the United Kingdom other than an exempt supply (see s 4(2) of the 1994 Act). Section 5 applies Schedule 4 for the purposes of determining what is, or is to be treated as, as a supply of goods or a supply of services. It is sufficient to note that, subject to any provision made by that Schedule and to Treasury orders made under s 5(3) to (6), ‘supply’ includes all forms of supply, but not anything done otherwise than for a consideration.
(c) Section 19 of the 1994 Act provides for the determination of the value of a supply of goods or services. The second sub-section is in the following term :
“(2) If the supply is for a consideration in money its value shall be taken to be such amount as, with the addition of the VAT chargeable, is equal to the consideration.”
(d) Section 31(1)... |
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