Healthspan Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 18 December 2017 |
| Neutral Citation | [2017] UKFTT 876 (TC) |
| Date | 18 December 2017 |
| Court | First-tier Tribunal (Tax Chamber) |
[2017] UKFTT 876 (TC)
Judge Barbara Mosedale
Ms N Shaw, QC, appeared for the appellant
Mr S Singh, counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs, appeared for the respondents
Procedure – Whether to order reference on basic agreed facts before hearing takes place when remaining factual matters in dispute will be resolved – Not in this case – Application for disclosure of HMRC policy documents – Refused on basis not satisfied of relevance and – Separately – Application too late.
[1] I make no findings of fact. Without making any such findings, I set out what I understand the outline position to be. And that is that the appellant is a Guernsey registered company whose business is to sell vitamins and health food supplements to customers residing in the UK. Since 1 April 2012, it has arranged for its goods to be stored in the Netherlands at a warehouse operated by PostDirect, an independent company. Any goods purchased online are despatched to its customers from that warehouse by PostDirect.
[2] The parties are agreed that the legal dispute between them in the substantive hearing is the meaning of:
the removal of the goods … by or under the directions of the person who supplies them
in s 7(4)(a) Value Added Tax Act 1994 (“VATA”). The significance of that phrase was that if the goods in issue were delivered to the UK customer “by or under the directions of” the appellant, then the place of supply of the goods was the UK and the appellant should have been registered for VAT in the UK since 1 April 2012 and would be liable to the assessment of approximately £27 million against which it appealed. But if the goods were not so delivered, then the place of supply would be the Netherlands and not the UK, and the appellant would have no liability to be registered for VAT in the UK nor to pay the assessment.
[3] But the parties were not agreed to the extent that the meaning of “by or under the directions of the person who supplies them” would be influenced by the meaning of the EU law which s 7(4)(a) purported to implement. The relevant EU law was contained in article 33 of the Principle VAT Directive 2006 (“PVD”) and used the phrase:
… goods dispatched or transported by or on behalf of the supplier …
[4] HMRC applied for the Tribunal to make a reference to the Court of Justice of the European Union (“CJEU”) and to postpone the hearing of the appeal until the CJEU's answer to the reference had been received. The sought-for reference would be on the meaning of that phrase in art 33.
[5] The parties were agreed on what was the legal test for a reference to be made; they did not agree on whether the case met those criteria nor on how the Tribunal should exercise its discretion in the matter.
[6] Art 267 of the Treaty on Functioning of the European Union provides that tribunals may make references to the CJEU
if it considers that a decision on the question is necessary to enable it to give judgment
[7] It was clear that while it was unusual for a question to be referred to the CJEU before the substantive hearing in the appeal, it was not unheard of, and was (in the right circumstances) a proper way of proceeding.
[8] In Dr Reddy's Laboratories Ltd v Warner-Lambert Co LLC [2012] EWHC 1971 Roth J said
[6(4)] A reference may be made at any stage of the proceedings: [citing the CPR]. Although it is often desirable for the court first to find the facts if they are not agreed, this is not necessarily the case: a reference may be made on assumed facts eg C-453/99 Courage v Crehan …
[9] The CJEU's Recommendations to national courts and tribunals, in relation to the initiation of preliminary ruling proceedings 2016/C 439/01 state:
[12] A national court or tribunal may submit a request for a preliminary ruling to the court as soon as it finds that a ruling on the interpretation or validity of EU law is necessary to enable it to give judgment. It is that court or tribunal which is in fact in the best position to decide at what stage of the proceedings such a request should be made.
[13] Since, however, that request will serve as the basis of the proceedings before the Court and the Court must therefore have available to it all the information that will enable it both to assess whether it has jurisdiction to give a reply to the questions raised and, if so, to give a useful reply to those questions, it is necessary that a decision to make a reference for a preliminary ruling be taken when the national proceedings have reached a stage at which the referring court or tribunal is able to define, in sufficient detail, the legal and factual context of the case in the main proceedings, and the legal issues which it raises. In the interests of the proper administration of justice, it may also be desirable for the reference to be made only after both sides have been heard.
All were agreed that even if the a ruling by the CJEU on a point of law would be “necessary” that did not mean a reference would have to be made. There is a discretion not to make a reference.
[10] I have to decide now whether I can say for certain that it will be necessary for the CJEU to rule on the meaning of that phrase in art 33 in order for this Tribunal to determine the appeal. It is agreed that the CJEU has not yet made a ruling on Art 33, and it is agreed that the Tribunal will have to determine the meaning of s 7(4)(a), so whether it will be “necessary” for the CJEU to rule on art 33 depends on:
- Whether it is unrealistic to expect the Tribunal hearing the substantive hearing to decide that the relevant phrase in s 7(4)(a) could be interpreted without reference to the meaning of the relevant phrase in art 33;
- Whether the findings of fact could be such that it is clear that the meaning of art 33 is not relevant to the determination of the appeal.
[11] Further, even if a CJEU ruling is “necessary, I have to consider whether I should in my discretion decide to make a reference now. In this instance, would it be better to leave the decision until after the substantive hearing has taken place? In favour of doing so, all findings of fact will be made on the disputed as well as agreed evidence and the substantive hearing may serve to define the legal issue between the parties. Against doing so, a ruling now may serve to make a substantive hearing unnecessary, or at least shorter, thus saving costs.”
[12] The appellant's case is that the meaning of delivery “by or under the directions of the person who supplies” the goods should be the literal meaning of the words and that that literal meaning would exclude the possibility of PostDirect being seen to make the delivery under the directions of the appellant, when its contract was with the customer. HMRC, as the tax collector, could not rely on the PVD: the appellant as taxpayer could elect to rely on either the PVD or VATA.
[13] However, while I recognise the theoretical possibility that the Tribunal hearing the appeal might...
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Healthspan Ltd
...a tribunal which considers that a ruling is “necessary” also has a discretion not to refer. [12] Judge Mosedale's decision was issued as [2018] TC 06271. She considered that it would be “necessary” to obtain a ruling from the CJEU on the meaning of article 33, but decided not to exercise he......