Maritsan Developments Limited v The Commissioners for Her Majesty's Revenue & Customs, TC 01971
| Jurisdiction | UK Non-devolved |
| Judge | J Gordon REID QC,Peter SHEPPARD |
| Judgment Date | 23 April 2012 |
| Neutral Citation | [2012] UKFTT 283 (TC) |
| Respondent | The Commissioners for Her Majesty's Revenue & Customs |
| Appellant | Maritsan Developments Limited |
| Reference | TC 01971 |
| Court | First-tier Tribunal (Tax Chamber) |
[2012] UKFTT 283 (TC)
TC01971
Appeal number: TC/2010/05389
VAT; joint venture; written agreement; whether written agreement truly
reflected arrangements between individuals and companies they controlled;
acquisition and sale of development land; supply of services; identification
of supplier; nature of services; whether activities of joint venturers
constituted supply of services; contribution to capital of joint venture;
consideration; nature of consideration; whether distribution of one half
share of net profits amounted to consideration for supply of services; no;
appeal allowed.
FIRST-TIER TRIBUNAL
TAX CHAMBER
MARITSAN DEVELOPMENTS LIMITED Appellant
- and -
THE COMMISSIONERS FOR HER MAJESTY’S Respondents
REVENUE & CUSTOMS
TRIBUNAL:JUDGE J. GORDON REID Q.C., F.C.I.Arb.
PETER SHEPPARD F.C.I.S., F.C.I.B., ATII
Sitting in public at George House, Edinburgh on 5, 6 and 7 March 2012
Phillip Simpson, advocate, on the instructions of Johnston Carmichael,
Chartered Accountants, Edinburgh, for the Appellant
Iain Artis, advocate, instructed by the Office of the Advocate General, for the
Respondents
© CROWN COPYRIGHT 2012
DECISION
Introduction
1. The issue in this appeal is whether payments made by the Appellant (Maritsan) to 5 another company, MacIntyre House Ltd (“MHL”) were consideration for the supply
of services by MHL to Maritsan in relation to the sale of development land at
Whiteshaws Farm, Mauldslie Road, Carluke (the “Whiteshaws Site”). If so, then
Maritsan is bound to pay at least some VAT on these payments. MHL have raised
VAT invoices against Maritsan and sued them for the VAT in the Court of Session. 10 Maritsan originally said that VAT is not exigible as the payments constituted a share
of profits under a written agreement with MHL. Maritsan’s interest to make this
appeal to the Tribunal arose because, under the written agreement, VAT liability is
treated as a cost which affects the amount of net profits available for division between
Maritsan and MHL (cf. VATA s83(1)(b)). 15
2. However, the evidence in the appeal has not been as the representatives of either
party expected it to be. This has led us to find that a somewhat different factual
background existed. This has a material bearing on the rights and obligations of the
parties involved in this appeal.
3. The appeal was heard at Edinburgh on 5, 6 and 7 March 2012. Phillip Simpson, 20 advocate, appeared on behalf of Maritsan, on the instructions of Johnston Carmichael,
Chartered Accountants, Edinburgh. He led the evidence of Michael Munro, the
principal director of Maritsan. A written statement of his evidence in chief was
produced in advance of the Hearing. Mr Simpson also led the evidence of Daniel
Meikle, the principal director of MHL. No written witness statement was produced 25 for Mr Meikle. Ian Artis, advocate, appeared on behalf of the Respondents
(“HMRC”) on the instructions of Ian Mowat of the Office of the Advocate General.
He led no evidence. A Joint Bundle of Productions, skeleton arguments and a
Statement of Agreed Facts were also produced.
Facts 30
4. We incorporate into our findings of fact the relevant parts of the Statement of
Agreed Facts.
General Background
5. Mr Munro is a chartered quantity surveyor. He is self-employed and has no staff.
Mr Meikle is a councillor for South Lanarkshire Council. He was a councillor 35 between about 1996 and 1999, and then from 2003 to date. For part or all of that
period he was chairman of the Council’s planning committee. Although he has no
formal qualifications or trade, he has a background in building and roads construction.
His son operates a building company. Mr Munro provided quantity surveying
services to Mr Meikle’s son from time to time. That is how he came to know 40 Mr Meikle.
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