Phillip Drakard Trading Ltd v Commissioners of Customs and Excise
| Jurisdiction | UK Non-devolved |
| Judgment Date | 02 July 1990 |
| Date | 02 July 1990 |
| Court | Value Added Tax Tribunal |
VAT Tribunal
The following cases were referred to in the decision:
Bennett v Griffin Finance ELR[1967] 2 QB 46 (CA)
Flockton (Ian) Developments Ltd v C & E Commrs VAT(1987) 3 BVC 23
Lord Advocate v Largs Golf Club VAT(1985) 2 BVC 200,063
Wallman Foods Ltd VATUNK(1983) 2 BVC 208,012; (MAN/83/41) No. 1411
Input tax - Whether the appellant was liable for output tax on the disposal of two Volvo vehicles and on the sale of a Scania lorry - Whether input tax should be disallowed on goods and services supplied in the renovation of the appellant's property.
The issue was whether the appellant was liable to pay output tax on the disposal of two Volvo vehicles and on the sale of a Scania lorry, and whether input tax was deductible on goods and services supplied in improving the appellant's property.
The business of the appellant consisted of road transport and haulage, the buying and selling of commercial vehicles and buying and selling property. It had an annual turnover of £1.5 million until a setback occurred in March and April 1989, necessitating the sale of assets and the dismissal of two-thirds of its lorry drivers.
The appellant held two Volvo vehicles under hire-purchase agreements with the British Credit Trust Ltd (BCT), under which there was a down payment followed by 23 monthly instalments of £682.50 commencing on 5 February 1989. D, the managing director of the appellant, entered into a guarantee under its agreement with BCT, indemnifying BCT against any loss. With the appellant's business in recession, it could not keep up its hire-purchase payments. D tried the bank and all the finance companies with whom the appellant had dealings, and arranged to hand over the two Volvos to Mr Myhill ("M"), another road haulage operator, who said he would settle the hire-purchase. D said that M had paid BCT direct, as, if the the money had been paid to the appellant, it would have been taken by the bank and the appellant would still have been liable under the hire-purchase agreement. There was no written agreement.
Counsel for the appellant contended that, as the appellant could not keep up its payments under the hire-purchase agreement, M took over that contract and provided the finance to BCT. There was no contract between the appellant and M. M acted as agent of the appellant in taking over the agreement and paying the settlement figure on its behalf, but no consideration was paid by M to the appellant. Alternatively, M and BCT agreed between themselves that M would pay BCT. It was a matter between them. Again there was no contract between M and the appellant and no supply by the appellant to M. By implication, the agreement was terminated. Counsel submitted that para. 1 of Sch. 2 did not apply, because BCT owned the goods and no consideration was paid by M to the appellant.
The commissioners contended that in fact the appellant transferred possession of the goods to M and the consideration for it was M's promise to make payments under the hire-purchase agreement. Consequently the appellant made a taxable supply.
The Scania vehicle was delivered to M on 13 May 1989 and was paid for in October 1989. A Customs officer paid a control visit to the appellant on 5 October 1989. He removed certain records and later requested a schedule of vehicles to be accounted for. The appellant's tax advisers wrote, enclosing a schedule of vehicles, but with one not accounted for, which was found to be the Scania. D did not know why the Scania was stated to have been sold on "6/89".
In February 1986 the appellant took a conveyance of land in Hartest. It already owned other land to the south on which there was a garage. The new land had a bungalow, which the appellant granted D a licence to occupy, various buildings and a row of pig sties, which D converted into stables in order to make the area more attractive for sale to a developer. The cost was £576 together with VAT of £86.40 which the appellant claimed to deduct as input tax.
Held, largely...
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Phillip Drakard Trading Ltd v Commissioners of Customs and Excise
...Act 1983, Sch. 2, para.1(1). This was an appeal by the taxpayer company against a decision of the VAT tribunal ((LON/89/1473) No. 5030; (1990) 5 BVC 749) that VAT should have been accounted for in respect of two vehicles which were transferred to a third party by the taxpayer company on pay......
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Phillip Drakard Trading Ltd v Commissioners of Customs and Excise
...1Value Added Tax Act 1983, Sch. 2, para. 1(1). This was an appeal by the taxpayer company against a decision of the VAT tribunal ((1990) 5 BVC 749) that VAT should have been accounted for in respect of two vehicles which were transferred to a third party by the taxpayer company on payment b......