G McKenzie & Company Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 03 March 1994 |
| Date | 03 March 1994 |
| Court | Value Added Tax Tribunal |
VAT Tribunal
The following cases were referred to in the decision:
Christopher Gibbs Ltd VAT(LON/91/2419) No. 8981; [1993] BVC 623
Henry Moss of London Ltd & Anor; C & E Commrs v VAT(1980) 1 BVC 373
Inca Gemstones plc VAT(LON/89/1477) No. 5069; (1990) 5 BVC 775
Middlesex Textiles Ltd VAT(1979) 1 BVC 1112
Mr Wishmore Ltd v C & E Commrs VAT(1988) 3 BVC 311
Tribunal - Jurisdiction - Proof of export - Zero-rating - commissioners' refusal to grant concession - Decision dependent upon prior unappealable decision - Whether tribunal had jurisdiction to hear appeal - Value Added Tax Act 1983, s. 16(6) and 40(1) and (6); Value Added Tax (General) Regulations 1985 (SI 1985/886), reg. 51(1).
The issue was whether the tribunal had jurisdiction to review the commissioners' decision not to grant a concession in relation to the zero-rating of exports in circumstances where, without acting fraudulently, the appellant had deliberately misrepresented the nature of the goods.
The appellant operated a scheme whereby it exported silver to Bangladesh. Customers put their payments on deposit in Bangladesh. Persons working outside Bangladesh who wished to pay money to residents there paid money to the appellant which would then release the corresponding sum from the money deposited in Bangladesh. The appellant's profit on these transactions was obtained by making a charge of four per cent on the currency transaction.
One customer in Bangladesh imported silver and paid the costs of importation. Because of the problem of theft of bullion, the silver was described as lead and the customer obtained an import licence and supporting documentation to back up this fiction. The appellant maintained that all the silver was exported. There was no evidence of any other type of export by the appellant.
Acting on information supplied by a director of the company the commissioners made their own inquiries and refused to permit the appellant to zero-rate the supplies. They raised an assessment for underdeclared output tax and imposed a serious misdeclaration penalty.
On a preliminary point of law, the commissioners submitted that the tribunal had no jurisdiction to review their decision not to grant a concession in relation to the zero-rating of exports where, on the assumption that the goods had been exported, it was accepted that the strict conditions regarding export documentation had not been complied with. They contended that the export documentation did not amount to "proof of export which clearly identified the goods" as required by para. 7 of Notice 703 (March 1987 edition) which had the force of law. Insofar as the appellant sought a concession in the absence of the appropriate documentation the commissioners decided not to grant one. This was a decision which was not capable of being reviewed by the tribunal. Even if it could be, Customs' discretion had been reasonably exercised in the circumstances of the case.
The appellant contended that it had checked with the authorities and assumed, erroneously, from the advice given that goods supported by export certificates would be zero-rated on dispatch.
Held, finding for the company on the preliminary point of law:
Had the issue simply been whether the tribunal was entitled to review a decision by the commissioners not to grant a concession, the answer would have been in the negative. However, the issue was the exercise by Customs of its discretion as to whether or not the conditions for proof of export had been satisfied and the subsequent issue of an assessment. This was covered by s. 40(6) of the Value Added Tax Act 1983 whereby the tribunal had jurisdiction to allow an appeal where the disputed decision depended upon the making of a prior unappealable decision.
[The tribunal set out the facts summarised above and continued as follows.]
The commissioners contend that the silver purchased by the appellant was either exported or not...
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