The Commissioners for HM Revenue and Customs v General Motors (UK) Limited
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Henderson,Judge Sinfield |
| Neutral Citation | [2015] UKUT 0605 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Subject Matter | Tax,17 November 2015 |
| Date | 17 November 2015 |
| Published date | 01 December 2016 |
1
[2015] UKUT 0605 (TCC)
Appeal number FTC/18/2014
VAT - supply of cars – value of supply – whether entitled to use
purchase price of identical imported cars – computation of cost price
– reliance on schedules of calculations produced during hearing
UPPER TRIBUNAL (TAX AND CHANCERY CHAMBER)
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMS
Appellants
- and -
GENERAL MOTORS (UK) LIMITED
Respondent
TRIBUNAL: MR JUSTICE HENDERSON
and
JUDGE SINFIELD
Sitting in public at the Rolls Building, London EC4A 1NL on 16, 17 and 18 June
2015
Mr James Puzey and Mr Jospeh Millington, instructed by the General Counsel
and Solicitor for HMRC, for the Appellants
Mr Roderick Cordara QC, instructed by KPMG LLP, for the Respondent
© CROWN COPYRIGHT 2015
2
Introduction
1. This is an appeal to the Upper Tribunal by the Commissioners for Her
Majesty’s Revenue & Customs (“HMRC”) from the decision (“the Decision”)
of the First-tier Tribunal (Tax Chamber) (Judge Charles Hellier and Michael
James) (“the FTT”) released on 14 August 2013 after a hearing in London
spread over 10 days in June, July and October 2012: see [2013] UK FTT 443
(TC). The appeal is brought with permission granted by Judge Hellier on 16
January 2014.
2. We heard the appeal over three days on 16 to 18 June 2015. The parties were
represented by the same legal teams as they had been before the FTT, with Mr
James Puzey and Mr Joseph Millington appearing for HMRC and Mr
Roderick Cordara QC, instructed by KPMG LLP, appearing for the respondent
General Motors (UK) Ltd (“GMUK”).
3. An appeal to the Upper Tribunal from a decision of the FTT lies only on
questions of law: see section 11 of the Tribunals, Courts and Enforcement Act
2007. We emphasise this point at the outset, because Mr Cordara submits that,
apart from a self-contained question of law which forms the first of the five
grounds of appeal, the remaining grounds represent an impermissible attempt
by HMRC to find an error of law in the approach of the FTT to, and its
evaluation of, a very complex question of fact involving much narrative and
technical evidence. HMRC maintain, for their part, that the grounds of appeal
are focused on narrow and discrete issues, and are not an invitation to reopen
all of the many complex factual issues covered by the evidence and
submissions at the hearing and in the Decision.
Background
4. During the years relevant to this case (1987 to 1996), a car manufacturer in the
UK which took a car which it had manufactured into use in its own business
was treated for VAT purposes as making a “self supply” of the vehicle. The
central issue in the case is for what consideration that deemed supply should
be treated as having been made.
5. GMUK is part of the General Motors Group, which has its headquarters in the
USA. GMUK manufactures cars in the UK, including many well-known
models such as Vauxhall. It has sister companies in Germany, France, Spain
and other European countries. During the relevant period, as the FTT record in
the first paragraph of the Decision:
“[GMUK] sold and manufactured cars and car parts in the UK,
and imported them from, and exported them to, sister
companies in Europe. In the UK it sold its cars to individual
3
retail purchasers and to corporate entities through a network of
dealers. It also used some of the cars it produced or imported to
provide cars for its own staff and business.”
6. The cars which GMUK took into its own use in its business were used as
demonstrator cars, press cars, pool cars and cars for GMUK’s staff. After they
had been so used for a relatively short period (sometimes less than 6 months,
and usually for not much longer than a year) they were sold as second-hand
cars. The number of cars that GMUK took into its own use varied between
13,000 and 20,000 in each year. These cars were of a higher than average
specification, because many of them were supplied to senior GMUK
employees, whose preference was for higher specification vehicles. The FTT
found that, for different reasons, cars used as demonstration and pool vehicles
may well also have been of a higher specification.
7. The cars which GMUK imported from its sister companies included models
which it manufactured itself in the UK. Although there is no express finding to
this effect, it is implicit in the Decision, and we do not understand it to be
disputed, that the imported models were in all material respects identical to
their UK-manufactured counterparts. The only difference between them lay in
their place of manufacture.
8. By virtue of Article 4 of the Value Added Tax (Cars) Order 1980 (SI 1980 No.
482) and its successor, Article 7(1) of the Value Added Tax (Input Tax) Order
1992 (SI 1992 No. 3222), cars were subject to a “blocking order” which
prevented the recovery of any input tax by a business purchaser of the vehicle
on its supply in the UK or its importation into the UK. There were certain
exceptions to this treatment, none of which is material. The underlying reason
for the block, which was authorised by EU law, was the practical difficulty of
ensuring that cars purchased for business use were in fact exclusively so used:
see Chalke v Revenue and Customs Commissioners [2009] EWHC 952 (Ch),
[2009] STC 2027, at [12] to [16].
9. If nothing further were done, this treatment would have discriminated in
favour of car manufacturers which took their own cars into business use,
because in such circumstances there would have been nothing to prevent
recovery by the manufacturer of the input tax referable to the production of the
car. In order to maintain the principle of fiscal neutrality, Article 5 of the
1980 Order, and its successor Article 5 of the Value Added Tax (Cars) Order
1992 (SI 1992 No. 3122), provided for a deemed self-supply when a car
manufacturer took a car it had manufactured into use in its business. The car
was then to be treated “as both supplied to him for the purposes of that
business and supplied by him in the course or furtherance of that business”.
The result of the self-supply was thus to generate input tax on the deemed
acquisition of the car by the manufacturer, which (by reason of the blocking
order) the manufacturer could not then set against the VAT due on the deemed
supply of the car by him in the course of his business. In this way the tax
treatment of the transaction was made equivalent to that of any trader
purchasing a car for use in his business.
To continue reading
Request your trial