H.K. Sneller
| Jurisdiction | UK Non-devolved |
| Judgment Date | 25 November 1987 |
| Date | 25 November 1987 |
| Court | Value Added Tax Tribunal |
VAT Tribunal
The following cases were referred to in the decision:
Betterware Products Ltd. VAT(1985) 2 BVC 205,355; (LON/83/384) No. 1684 and 1951
Din & Anor. VAT(1984) 2 BVC 205,131; (1984) VATTR 228
S.J. Grange Ltd. v. C. & E. Commrs. VAT(1978) 1 BVC 210
Parekh & Anor. (1983) VATTR 1; VAT(1984) 2 BVC 200,025
Potter & Anor. (1983) VATTR 108
Potter & Anor. v. C. & E. Commrs. VAT(1984) 2 BVC 200,049
Assessment - Whether agent or principal - If principal, whether assessment made for correct period - Value Added Tax Act 1983 schedule 7 subsec-or-para 4Value Added Tax Act 1983, Sch. 7, para. 4(2); Finance Act 1985 schedule 7 subsec-or-para 1Finance Act 1985, Sch. 7, para. 1(1).
The appellant retailer sold wool, but also through her shop sold pictures on behalf of local artists, on a sale or return basis, and arranged for picture framing. Initially, the appellant accounted for VAT on the whole of the sum she received for the picture framing from the customer. The picture framer was not registered for VAT so no input tax arose. However, subsequently, she was advised that she was acting as the framer's agent and so in the quarter ending 31 August 1985, accounted for tax on her commission, the difference between the sum paid by the customer and that paid over to the framer. In the same return the appellant also made a claim for the return of sums paid in previous quarters on the basis that she had incorrectly overdeclared the tax on the full picture framing price. A repayment was made by the Commissioners' computer, but following a visit made by the officers, the Commissioners raised an assessment on the basis that the appellant was acting as a principal, not agent. The assessment of £1,372.86 was made for the period 27 October 1983 to 31 May 1985, and was expressed as being £416.08 underpaid for the return quarter ending 31 August 1985 and £956.78 for tax wrongly repaid by the computer. The appellant lodged an appeal to the Tribunal on the grounds that she was an agent not a principal.
Held, allowing the taxpayer's appeal:
1. The relevant factors for the Tribunal to consider in the present case to determine whether there was an implied agency, in the absence of an express agreement, was whether the appellant had complete freedom to decide ultimate consideration; whether the identity of customers had to be revealed and whether the appellant was required to notify the framer of amounts received.
2. On the evidence before the Tribunal the appellant had complete freedom to decide on the ultimate consideration without reference or notification to the framer, so the appellant had failed to discharge the onus upon her that she was an agent.
3. However, the first part of the assessment was for the period 1 June to 31 August 1985 but the assessment was only expressed to cover the period up to 31 May 1985. Accordingly, it did not cover the correct prescribed accounting period and there was no provision within the legislation that enabled the Commissioners to amend such a mistake in an assessment.
4. While the remaining sum contained within the assessment was for tax in the period 27 October 1983 to 31 May 1985, the Commissioners had repaid such sum to the appellant in the period commencing 1 September 1985. Accordingly, while there were provisions which enabled the Commissioners to assess for tax repaid as being tax due in the period it was repaid in, the assessment did not extend to that period as it concluded on 31 May 1985, and therefore, in relation to both amounts the assessment had been made for the wrong prescribed accounting periods and the appeal would be dismissed.
[The Tribunal set out the...
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