Stanley and Another
| Jurisdiction | UK Non-devolved |
| Judgment Date | 21 May 2012 |
| Neutral Citation | [2012] UKFTT 375 (TC) |
| Date | 21 May 2012 |
| Court | First Tier Tribunal (Tax Chamber) |
[2012] UKFTT 375 (TC)
Judge John Brooks, Dr Caroline Small
Dr Nigel Stanley and Dr David Tallent appeared in person
Edward Brown, counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs, appeared for the Respondents
VAT - Doctors providing medical examinations and reports on applicants seeking Australian immigration visas - Reports sent directly to the Department of Immigration and Multicultural Affairs in Australia - Whether doctors carried out "services of consultants" or "other similar services" - Whether applicant or Department of Immigration and Multicultural Affairs was the recipient of these services - Appeals dismissed
The First-tier Tribunal decided that the taxpayers' services of undertaking medical examinations, as UK panel doctors, to Australian visa applicants were supplied in the UK and were properly subject to VAT. The nature of their services were of a type principally and habitually provided by a doctor, not a consultant, and could not be regarded as "similar" to services provided by a "consultant" or the "provision of information" within the Value Added Tax Act 1994 ("VATA 1994"), Value Added Tax Act 1994 schedule 5 subsec-or-para 3Sch. 5, para. 3. The Tribunal also held that the visa applicants, not the Australian Government's Department of Immigration and Multicultural Affairs ("DIMA"), were the recipients of the taxpayers' services. The taxpayers provided medical examination services for the visa applicants who were responsible for the payment of fees set by the taxpayers. Lastly, the Tribunal decided that irrespective of whether or not it had jurisdiction to consider the issue of legitimate expectation that HMRC should be bound by their written advice and guidance, in the absence of detrimental reliance as a legitimate expectation, the taxpayers' claims against the assessments on the basis of such expectation could not succeed.
The taxpayer doctors ("Dr S" and "Dr T") jointly appealed against HMRC's assessments made under VATA 1994, Value Added Tax Act 1994 section 80 subsec-or-para 4A section 78As. 80(4A) and 78A. These were issued to recover the respective VAT, together with statutory interests that had been repaid to Dr S and Dr T. Said assessments were in respect of VAT accounting periods ended 31 August 2007-09 for Dr S, and VAT accounting periods ended 31 October 2007-31 January 2010 for Dr T.
The taxpayers individually registered for VAT with separate effect from 1 May 2007 (Dr S) and 1 August 2007 (Dr T). They charged VAT on fees for undertaking medical examinations, as UK panel doctors, to potential immigrants to Australia and New Zealand. The government of these countries appointed the taxpayers as panel members, not treating doctors, for the Australian and New Zealand visa applicants. In respect of the Australian visa applicants, the taxpayers forwarded thorough and complete reports of the findings of their medical examinations to DIMA. Their role and obligations were set out in the instructions for medical and radiological examination of Australian visa applicants ("the instructions") published by the Australian Government.
In 2007, the taxpayers received emails from the Australian High Commission to which an HMRC letter was attached, stating that their work was an exempt supply for UK VAT purposes. The taxpayers' solicitors made queries to HMRC who then confirmed that as they reported to the Australian and New Zealand immigration authorities, their services were outside the scope of UK VAT. HMRC said that, although the immigration authorities of such countries were the recipients of the medical information, the applicants were the customers and therefore the standard rate of VAT was applicable. The taxpayers submitted their respective voluntary disclosures to HMRC to reclaim VAT comprising of VAT charged to applicants for Australian and New Zealand visas.
HMRC repaid the taxpayers of their respective claims, with statutory interest, only in respect of the VAT paid for medical examinations by Australian visa applicants. They said that the medical examinations for New Zealand visa applicants were supplied to the individual applicants and therefore were standard-rated for VAT purposes. However, HMRC reconsidered their decision to repay the taxpayers, saying that the medical examinations for Australian visa applicants should have been treated as supplied to the applicants in UK and were subject to VAT as was the case with the New Zealand visa applicants. Thus, they issued assessments to recover the repayments which had been made to the taxpayers.
The taxpayers contended that their services were those of "consultants" or "other similar services" or the "provision of information" which were within VATA 1994, Value Added Tax Act 1994 schedule 5 subsec-or-para 3Sch. 5, para. 3. Hence, it was necessary to ascertain the recipient of that supply in order to determine the liability to VAT. However, HMRC submitted that VATA 1994, Value Added Tax Act 1994 section 7s. 7 applied. As the taxpayers belonged in UK, their services were properly chargeable to VAT.
The taxpayers argued that as they undertook the medical examinations of applicants for, and sent the reports to, DIMA, the latter was the recipient of their services. The medical examination form signed by the applicants showed a declaration that the Commonwealth of Australia became the owner of the information on the form. The instructions prohibited them and other panel doctors from giving the original form, films, reports or specimens to the applicants as they became the property of the Commonwealth of Australia. The instructions also stated that the panel doctors provided a service on behalf of the Australian Government and that an applicant only attended a medical examination at DIMA's request.
The taxpayers also argued that DIMA was the recipient of the report, albeit under a tripartite agreement between the panel doctor, DIMA and the applicant. They likened the situation to that in R & C Commrs v Airtours Holidays Transport LtdVAT[2010] BVC 1587 ("Airtours"), where Airtours, under a tripartite agreement with its lenders and accountants, had been required to pay for the accountants' services to its lenders to provide them with an insight into its financial position. Here, the taxpayers said that the medical examination and report were paid for by the applicant but were in fact supplied to DIMA. Moreover, the applicants would not have attended medical examinations had they not applied to DIMA in the first place.
The taxpayers also referred to HMRC's guidance in notice 741Notice 741 (place of supply of services) and to HMRC's advice that the medical examination and reports fell within VATA 1994, Value Added Tax Act 1994 schedule 5 subsec-or-para 3Sch. 5, para. 3 and that they were provided to DIMA, not the applicants. They, thus, contended that they had a legitimate expectation that the guidance and advice would be applied by HMRC even if they were not strictly in accordance with the letter of the law.
(2) Whether the taxpayers' services of undertaking medical examinations, as UK panel doctors, to Australian visa applicants were supplied in the UK.
(3) Whether the Australian visa applicants or DIMA was the recipient of the taxpayers' supply.
(4) Whether the claims of the taxpayers against the assessments were proper on the ground that there was a legitimate expectation that HMRC should be bound by their written advice and guidance.
Held, dismissing the taxpayers' appeals:
The Tribunal held that the taxpayers' services of undertaking medical examinations, as UK panel doctors, to Australian visa applicants were supplied in the UK and were properly subject to VAT. It found as fact that the nature of the taxpayers' services in accordance with the instructions of the Australian Government were of a type principally and habitually provided by a doctor, not a consultant, and could not be regarded as "similar" to services provided by a "consultant or the provision of information". Hence, their services did not fall within VATA 1994, Value Added Tax Act 1994 schedule 5 subsec-or-para 3Sch. 5, para. 3.
The Tribunal noted the role and obligations of the taxpayers, as panel doctors, in the instructions. There, it was clear that the panel members were not employees of the Australian Government. They did not represent the Australian Government and no contractual arrangement existed between them. However, a contractual arrangement existed between the Australian visa applicants and the taxpayers. The taxpayers provided medical examination services for the Australian visa applicants who were responsible for the payment of fees set by the taxpayers, not by DIMA. This was clear from both the form (which, without the applicant's declaration, would not become the property of the Commonwealth of Australia) and the instructions which confirmed that the taxpayers, as panel doctors outside Australia, were not contracted to, or paid by, the Australian Government for providing immigration health examinations.
It was also noted that, under the instructions, the taxpayers provided services on behalf of, and not for, the Australian Government. Therefore, unlike the situation in Airtours, there was not a tripartite agreement which involved DIMA, but a bipartite agreement between the applicant and the taxpayers concerned under which an applicant selected a panel doctor to undertake the medical examination and complete the report. The applicant paid for this and although the report was sent to DIMA, it was done on the instructions of the applicant to facilitate his or her visa application. The Tribunal, thus, concluded that the economic reality of the situation was that the applicants, and not DIMA, were the recipients of the taxpayers' services.
The Tribunal had adopted contrasting approaches in considering whether it had jurisdiction to the issue of...
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