Revenue and Customs Commissioners v Tanjoukian
| Jurisdiction | UK Non-devolved |
| Judgment Date | 19 October 2012 |
| Neutral Citation | [2012] UKUT 361 (TCC) |
| Date | 19 October 2012 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
[2012] UKUT 361 (TCC).
Upper Tribunal (Tax and Chancery Chamber).
Henderson J.
Thomas Chacko (instructed by Gregory Rowcliffe Milners) for the appellant.
Eleni Mitrophanous (instructed by the Solicitor to HM Revenue and Customs) for the respondents.
The following cases were referred to in the judgment:
Hutchison 3G UK Ltd v C & E CommrsECASVAT (Case C-369/04) [2010] BVC 55; [2007] ECR I-5247
Ladd v MarshallWLR [1954] 1 WLR 1489
Lowe v W Machell Joinery LtdUNKUNK [2011] EWCA Civ 794; [2012] 1 All ER (Comm) 153
NoorTAX [2011] UKFTT 349 (TC); [2011] TC 01209
R v International Stock Exchange of the United Kingdom and the Republic of Ireland Ltd, ex parte Else LtdELR [1993] QB 534
Value added tax - Sale of vehicle registration marks - Services supplied where received - Whether transaction zero-rated as international supply - Whether supply to person outside EU - Whether transaction involving transfer or assignment of rights - Whether DVLA taxable person - Whether sale of registration marks by DVLA economic activity - Taxpayer's appeal dismissed - Value Added Tax Act 1994, Value Added Tax Act 1994 schedule 5 subsec-or-para 1Sch. 5, para. 1 - Value Added Tax (Place of Supply of Services) Order 1992 (SI 1992/3121), art. 16.
This was an appeal by the taxpayer from a decision of the First-tier Tribunal ([2010] UKFTT 260 (TC); [2010] TC 00554) that VAT was properly chargeable at the standard rate on the sale to the taxpayer of a personalised vehicle registration mark.
The vehicle registration mark had been sold by auction on behalf of the Driver and Vehicle Licensing Agency (DVLA). The taxpayer was resident in Saudi Arabia. He said that the place of supply should be treated as outside the EU. He also contended that the DVLA was a regulatory government body and that the sale of registration marks did not constitute an economic activity. Further he had relied on advice given to him by HMRC which created a legitimate expectation that the supply would not be subject to VAT.
The FTT held that the supply of a vehicle registration mark did not involve a transfer or assignment of rights within the Value Added Tax Act 1994, Sch. 5, para. 1 and that the place of supply was the UK and the supply was standard-rated.
The taxpayer appealed arguing, first, that the supply was a transfer or assignment of rights within Sch. 5, para. 1, and art. 16 of the Value Added Tax (Place of Supply of Services) Order 1992 (SI 1992/3121) provided that a supply of services of a description specified in para. 1 of Sch. 5 should be treated as made where the recipient belonged, if that was in a country which was not a member state of the EU, so that the supply was to be treated as made outside the EU. Secondly, the DVLA was not acting as a taxable person for the purposes of art. 9 of the Principal VAT Directive 2006/112, because the sale of registration marks was an essentially regulatory activity by reference to Hutchison 3G UK Ltd v C & E Commrs (Case C-369/04) [2010] BVC 55. The taxpayer also obtained permission to appeal on the ground that he had a legitimate expectation that the transaction was not subject to VAT, but that ground was stood over to be argued after the Upper Tribunal had given its ruling in another appeal raising that issue (Noor [2011] UKFTT 349 (TC); [2011] TC 01209).
Held, dismissing the appeal:
1.The primary focus of Sch. 5, para. 1 was on recognised forms of intellectual property. The UK system of vehicle registration did not involve the creation of intellectual property rights in any recognisable shape or form, or even anything analogous thereto. Although registration marks were used to distinguish one vehicle from another, they formed part of a legislative scheme the primary purpose of which was to licence and regulate the use of road vehicles in the UK. The marks were not themselves the product of any intellectual or inventive process to which the law afforded protection. Nor did the grant of a registration mark confer any private right on its owner to prevent anybody else from using it. That being the essential nature of a vehicle registration mark, its characterisation for VAT purposes could not be transmuted into something akin to a form of intellectual property merely because there were certain marks which people were prepared to pay good money to acquire, and because such marks could become articles of commerce. The FTT had come to the correct conclusion when it held that the supply did not fall within Sch. 5, para. 1.
2.The sale of registration marks pursuant s. 27 of the Vehicle Excise and Registration Act 1994 and the Sale of Registration Marks Regulations 1995 was a separate economic activity which fell outside the core regulatory functions of the Secretary of State. The primary purpose of that activity was not to provide registration marks for the vehicles to which they would be attached, if they were not simply retained as investments by the purchasers, but rather to enable the Secretary of State to participate in the market for distinctive registration marks and to generate revenue for the public purse by so doing. The sale of registration marks bore no significant similarity to the regulatory activity considered by the ECJ in Hutchison 3G, and therefore nothing stood in the way of the straightforward analysis that in selling the registration marks the Secretary of State, through the DVLA, was carrying on an economic activity within the meaning of art. 9 of the Principal VAT Directive. (Hutchison 3G UK Ltd v C & E Commrs (Case C-369/04) [2010] BVC 55 distinguished.)
3.It was not necessary to refer either the first two issues to the ECJ, since the court felt no real doubt about either conclusion. The taxpayer had been unable to demonstrate any error of law in the conclusion of the FTT and his appeal on those grounds was dismissed. The ultimate outcome of the appeal would depend on the adjourned ground of appeal relating to legitimate expectation.
Henderson J: Introduction
1.This is an appeal from a decision of a single judge (Dr K Khan) of the First-tier Tribunal ("FTT") released on 10 June 2010 ("the Decision"; [2010] UKFTT 260 (TC); [2010] TC 00554), following a hearing at the London Tribunal Centre on 16 April 2010. The basic issue for determination by the FTT was whether value added tax ("VAT") was properly chargeable at the standard rate on the sale by auction on 30 January 2009 of a personalised vehicle registration mark "1O" (i.e. the number one and the letter "O") to Mr Adoum Tanjoukian ("Mr Tanjoukian") for a hammer price of £170,000 and buyer's premium of £12,750, to each of which VAT at the then standard rate of 15% was added by the auctioneer SMA (Leeds) Ltd ("SMA"). The auction was conducted by SMA on behalf of the Driver and Vehicle Licensing Agency ("the DVLA"), which was and is an executive agency of the Department for Transport, pursuant to the terms of an exclusive auction contract between SMA and the DVLA.
2.The basic facts which I have just summarised are fortunately not in dispute between the parties, but they are not the subject of any findings by the FTT in the Decision. A further crucial fact, which appears to have been common ground before the FTT (or at any rate not the subject of any effective challenge by HMRC), is that Mr Tanjoukian was at the material time resident in Saudi Arabia and not resident in the United Kingdom or anywhere else in the European Union ("the EU"). Again, no finding to this effect can be found anywhere in the Decision. I have, however, been shown photocopies of what appear to be Mr Tanjoukian's passport and driving licence, which indicate that he is an Austrian national with an Austrian passport and a driving licence issued by the Kingdom of Saudi Arabia, although on each document his name is given as "Adoum Tounjekian" which I take to be a variant spelling of his surname.
3.It appears from a witness statement dated 3 April 2012 by Mr Tanjoukian's son, Mr Hovan Tanjoukian, who has an address in the UK and who conducted the appeal to the FTT on his father's behalf, that both these documents were before the FTT, at least in the sense that he brought them to the hearing because he considered them to be potentially relevant. It is not clear, however, whether they were actually shown to or considered by the FTT, or whether Mr Tanjoukian's residence status was conceded by HMRC (who were represented at the hearing by an officer, Mr R Basi, who has subsequently left HMRC's employment), or whether the documents were (whether formally or informally) put in evidence by Mr Hovan Tanjoukian. All this is most regrettable, and the position is made still worse by the fact that no formal notice of appeal to the FTT was ever served by or on behalf of Mr Tanjoukian, or (seemingly) ever required by the FTT, with the result that his grounds of appeal had to be deduced from two lengthy emails sent to the Tribunal Service by Mr Hovan Tanjoukian on 14 and 20 November 2009, together with a shorter confirmatory email of 25 November ("the November 2009 emails").
4.It is not easy to discern the central thrust of Mr Tanjoukian's appeal from the November 2009 emails, because (understandably, in documents prepared by a layman) they contain a mixture of substantive arguments, apparently predicated on the proposition that Mr Tanjoukian was an "international" customer of SMA resident outside the EU, and procedural complaints, based on a history of allegedly unclear and contradictory advice given to Mr Hovan Tanjoukian by HMRC, either directly or via SMA.
5.HMRC commendably did their best to make sense of the November 2009 emails, and to analyse the issues, in a document headed "Respondents" Statement of Case' which was prepared in the office of the General Counsel and Solicitor to HMRC on 26 March 2010. In summary, the contents of this document were as follows:
(2) The introduction recorded HMRC's understanding that the...
To continue reading
Request your trial
-
The Commissioners for Her Majesty's Revenue and Customs v Astral Construction Limited
...involving no new evidence.” 33. The point was also considered by the Upper Tribunal (Tax and Chancery) in Tanjoukian v HMRC [2012] UKUT 361 (TCC), [2013] STC 825. In that case, the appellant sought to raise a new point of law on appeal that had not been argued in the FTT. Henderson J summar......
-
The Commissioners for HM Revenue and Customs v Astral Construction Limited
...involving no new evidence.” 33. The point was also considered by the Upper Tribunal (Tax and Chancery) in Tanjoukian v HMRC [2012] UKUT 361 (TCC), [2013] STC 825. In that case, the appellant sought to raise a new point of law on appeal that had not been argued in the FTT. Henderson J summar......
-
Eynsham Cricket Club v The Commissioners for HM Revenue and Customs
...way of contrast in this chamber of the Upper Tribunal, the approach laid down by the courts has been followed. 46. In Tanjoukian v HMRC [2013] STC 825 Henderson J at [24] quoted with approval the statement of Rix LJ in Lowe v W Machell Joinery Ltd quoted above. In that case, he declined to ......