England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		08/04/2009

Mr Justice Sales:

1. This is an application by the Claimant ("Corkteck") for judicial review to quash an amended notice of assessment for VAT of £315,504 (together with interest and a surcharge) dated 31 August 2007 issued by the Defendant ("HMRC").
2. Corkteck carries on a business as a wholesale supplier of beverages in the UK and the European Union. Corkteck is run by its director, Parul Malde ("Mr Malde"). It is Corkteck's case that Mr Malde was given an oral assurance (or ruling or advice) over the telephone on 17 March 2005 by an agent of HMRC's telephone National Advice Service ("NAS") as to the proper invoicing arrangements for VAT purposes in respect of shipments of Red Bull drinks to a trader in Poland called Konto Spolka ("Konto"). Mr Malde gave evidence of that telephone conversation. The other party to that conversation was Keith Baker ("Mr Baker"). He no longer works for HMRC and was not called to give evidence. The court had available to it short notes made by Mr Baker during or immediately after the conversation. It is also known from HMRC's telephone records that the conversation could not have lasted more than about 7 minutes, and was probably somewhat less than that.
3. Amanda Harris ("Ms Harris") gave evidence for HMRC. She has had extensive experience working for HMRC in relation to the NAS. She was not a party to the conversation in issue in this case, but gave evidence about the training of agents who work in the NAS, the usual operating procedures in the NAS and so forth.

The Facts

4. By 2005 Mr Malde had had a good deal of experience in exporting goods within the EU. He had a copy of the then current version of the guide to Value Added Tax ("VAT") in the single market, Notice 725, dated October 2002, issued by the Defendant (at that time HM Commissioners of Customs and Excise). He was familiar with its terms. The guide contained the following inside its cover:

"If you need general advice or more copies of Customs and Excise notices, please ring the National Advice Service on [number] …"

5. One of the suppliers to Corkteck was a company called Sintra SA ("Sintra"), which was based in Belize (i.e. outside the EU) and which had a European office in Poland. It was not a trader registered for VAT purposes in the EU.
6. Sintra approached Corkteck in early 2005 to ask if Corkteck could sell cans of Red Bull soft drinks to Sintra (invoicing Sintra for them), but deliver them to Sintra's own customer in Poland, Konto. Konto was a trader registered for VAT purposes in the EU. Corkteck, through Mr Malde, was happy to assist Sintra. However, he was aware that there was a problem in relation to the VAT position regarding the proposed transaction, which differed from the type of transaction which he was familiar with, involving sale of goods by Corkteck to VAT registered traders in other EU countries.
7. It was common ground at trial that the proper position in relation to VAT in these two situations is to be compared as follows. If a UK based supplier registered for VAT in the UK (company A) agrees to sell goods to a supplier based in another EU country which is registered for VAT in that country (company B), but at the request of company B agrees to deliver the goods to company B's own customer who is a supplier also based in an EU country and registered for VAT in that country (company C), the sale from company A to company B is zero rated for VAT purposes. There is also scope to use a simplified procedure in this type of situation, which avoids the need for company B to register for VAT in the Member State to which the goods are delivered. Where the simplified procedure is used, company A's supply is again a zero rated supply. This sort of situation is described as "triangulation" for the purposes of charging of VAT in respect of intra-EU trade, and is addressed in section 9 of Notice 725. If, on the other hand, a VAT registered supplier based in the UK (company A – equivalent to Corkteck) agrees to sell goods to a supplier which is not an EU registered company and is not registered for VAT purposes in the EU (company B – equivalent to Sintra), and that company requests delivery of the goods to its own customer which is a VAT registered supplier based in another EU country (company C – equivalent to Konto), the supply from company A to company B is not zero rated, and company A is required to charge company B for VAT on the supply and account for that VAT to HMRC.
8. Mr Malde's evidence was that he was aware that if he just invoiced Sintra as his customer he would have to charge it UK VAT, while Sintra would still have to pay Polish VAT on its onward sales of the drinks to Konto. He was concerned to avoid this situation, if he could, since this might make the pricing of the transaction unattractive to Sintra, with the result that Corkteck might lose the business. If Corkteck supplied direct to Konto, the supply would be zero rated. However, Mr Malde was not prepared to try to deal direct with Konto, since Corkteck had an ongoing business relationship with Sintra which he did not wish to jeopardise by cutting Sintra out of the transaction. Mr Malde was aware that in the transaction which was contemplated Sintra, not Konto, was to be Corkteck's customer.
9. Mr Malde called the NAS to see if there was a way around this problem. He spoke to Mr Baker. According to Mr Malde's witness statement, he said that he had a customer who was non-EU with no EU VAT number who was requesting him to supply it with goods to be delivered direct to its client within the EU. He asked if he could use the VAT number of the delivery address of the final client (i.e. Konto) to zero rate the export sale. According to Mr Malde, Mr Baker made a short check and told him that he could invoice his client, the non-EU company (i.e. Sintra), if he used on the delivery note the address and VAT number of where the goods were delivered (i.e. those of Konto); Mr Baker said that this was a normal transaction.
10. The Notes made on computer by Mr Baker during or immediately after the conversation read as follows:

"Caller wanted to know about the supply of goods to an EC member state and the VAT liability of the supply. Advised caller as per public notice 725 that they would be able to zero rate the supply providing that the conditions in section 3 are met."

11. Section 3 of Notice 725 is headed, "Zero-rating of supplies of goods to VAT registered customers in another Member State". It provides that a supply to such a customer may be zero rated "provided all the following conditions are met", and then sets out three conditions in a box which is stated to have "the force of law". Condition 2 is that "The goods are sent or transported out of the UK to a destination in another Member State": Corkteck could satisfy that condition in relation to its proposed supply to Sintra for delivery to Konto in Poland. Condition 3 is that the supplier holds satisfactory commercial documentary evidence that the goods have been removed from the UK: Corkteck would also be able to satisfy that condition.
12. Condition 1 provided as follows:

"You obtain and show on your VAT sales invoice your customer's VAT registration number …".

On the face of it, Corkteck would not be able to satisfy this condition, since its customer (Sintra) was not registered for VAT. Mr Malde was aware that Corkteck's customer was Sintra. Therefore, if he had regard to section 3 in Notice 725, it would or should have been apparent to him that Corkteck did not satisfy this condition. Since the condition was stated to have the force of law, Mr Malde would or should then have been aware that a person answering the telephone on the NAS would not have authority to waive compliance with that condition.

13. Mr Malde's evidence in cross-examination was that he had the terms of Notice 725, including section 3, in his mind when he called the NAS. He said it was because of the terms of section 3 that he was confused and wanted guidance, because the goods were to be delivered to a trader in the EU. He did not tell Mr Baker that he perceived that there was a problem, which was why he wanted guidance. He was aware of the guidance in section 9 of Notice 725 and he did not consider that this was a triangulation situation, because triangulation only occurs when each of companies A, B and C are traders in the EU. At this time, Mr Malde had in mind that Corkteck could become involved in a significant number of transactions with Sintra (as it transpired, the VAT which HMRC found to be due in respect of such transactions was in the sum of £315,504, which gives an idea of the scale of the business in Corkteck's contemplation), but he did not explain this to Mr Baker. Mr Malde's explanation for this was that the proper application of the VAT rules does not change depending upon the size of the transaction or transactions at issue. He considered that he was telephoning the Defendant's designated advice line and should not be expected to provide such information, or give special notice that he was asking for considered advice, before being entitled to rely on what he was told by the NAS agent. Mr Malde said that he did not remember Mr Baker saying that he could treat the supply as zero rated provided the conditions in section 3 were met (although he acknowledged that in reference to a brief telephone call some four years ago it was possible that Mr Baker had referred to section 3); he recalled Mr Baker saying that he could treat the supply as zero rated as long as he used the VAT number for the delivery address in Poland, although Mr Baker also mentioned that there were other criteria to be satisfied for a zero rated export sale (which Mr Malde took to be a reference to conditions 2 and 3 in section 3 of Notice 725). In substance, Mr Malde understood Mr Baker to give him advice as to how to satisfy condition 1, to the effect that there would be sufficient compliance with condition 1 if the VAT registration details for the delivery address in the EU (i.e. Konto's VAT registration details) were included in the VAT invoice to be issued by Corkteck for its supply to Sintra. Mr Malde did not retain any notes of this conversation.
14. I will revert to the conversation of 17 March 2005 below, to make findings of fact in relation to it. Before doing so, it is relevant to complete the factual history. From late June 2005, Corkteck commenced substantial supplies of Red Bull drinks to Sintra, delivered to Konto in Poland, under cover of invoices issued by Corkteck to "Sintra SA, c/o [Konto]", giving Konto's address and, under the heading "Customer VAT Number", giving Konto's VAT number. Mr Malde says that this procedure was followed in reliance on the advice he was given by Mr Baker over the telephone. Corkteck submits that this is a weighty factor supporting Mr Malde's account of the telephone conversation. It is said with some force that the only reason he called the NAS was to ask about the VAT treatment in relation to the proposed transactions with Sintra and Konto and that he would not have caused Corkteck to proceed in this way without the assurance he had received from the NAS, since if (as it transpired was the case) Corkteck was not entitled to treat the supply as zero rated, and did not charge its customer VAT, Corkteck would be left with a substantial liability to VAT which it had not recovered from its customer, and so would be left seriously out of pocket. Mr Malde said that he had had previous experience of having erroneously failed to charge a customer VAT, where Corkteck had been left with a liability to account for VAT, which made him especially careful to check the VAT position in relation to his dealings with Sintra. On the other hand, I found this evidence about the importance of the discussion on 17 March 2005 somewhat difficult to reconcile with the failure of Mr Malde to retain careful notes of what he had been told.
15. Corkteck had regular inspections of its business by HMRC officers, in connection with other aspects of its business. Mr Malde did not seek to conceal from them the nature of the supplies being made to Poland.
16. In the course of a VAT inspection in September 2006, HMRC came to appreciate the nature of the supplies to Sintra which Corkteck had been undertaking, by means of deliveries to Konto, and indicated that they disagreed with Corkteck's VAT treatment of its supplies of Red Bull to Sintra. By letter dated 7 December 2006 HMRC served Corkteck with an intended Notice of Assessment in respect of those supplies. The assessment was made by notice dated 31 January 2007 calculated at £370,717 VAT due plus interest and a surcharge for late payment. This was later corrected in the notice of assessment of 31 August 2007 to £315,504 VAT due plus interest and a surcharge.
17. Corkteck instructed a specialist VAT consultant, Mr Mainprice, to respond to the letter of 7 December 2006 on its behalf. By letter to HMRC dated 15 December 2006, copied to Mr Malde, Mr Mainprice wrote that Corkteck was in some difficulty in responding, since all its relevant papers had been seized by HMRC. He also suggested that the assessment was misplaced, because the arrangement between Corkteck, Sintra and Konto was "a standard triangulation procedure which is approved by [HMRC]". This point was incorrect. Mr Malde said that this part of the letter was not based on his instructions, since he did not think that the arrangement was a standard triangulation arrangement. I accept this evidence. Mr Mainprice seems to have formed his own view about the position, and without having all the papers available to him put forward what he considered to be a potential argument for his client. Nonetheless, I think it is significant that at the first point when the issue about payment of VAT on the transactions was raised Mr Malde clearly did not brief Corkteck's VAT consultant and representative that no VAT should be payable because of assurances he had been given on 17 March 2005.
18. HMRC responded by letter dated 4 January 2007, undertaking to provide Mr Mainprice with copies of the relevant papers and pointing out that the transactions with Sintra could not benefit from the triangulation arrangements because Sintra was Corkteck's customer and was not registered for VAT.
19. Mr Mainprice replied by letter dated 17 January 2007. It is clear that he had taken detailed instructions from Mr Malde. Mr Mainprice continued to argue that the transactions were covered by the triangulation arrangements, on the basis of Konto's (not Sintra's) VAT registration. The letter continued:

"My client informs me that he spoke to the London Advice Centre who, he says, told him that it would be in order to zero rate the supplies of Red Bull if he could establish delivery to a VAT registered client in the EC and that if he invoiced the agent of that client it was immaterial, for zero rating purposes, whether the agent was also registered for VAT provided that the goods were delivered to a registered customer."

20. This was a reference to the telephone conversation of 17 March 2005. It is striking that the account set out here differs from the careful terms in which his witness statement was put (see para. [9] above). In this account, the impression is given that Konto is Corkteck's "client" or "customer", and that Sintra is the agent of Konto which Corkteck invoices. This account does not reflect the true underlying relationship between Corkteck, Sintra and Konto, in which Sintra (not Konto) was Corkteck's client or customer.
21. HMRC responded by letter dated 4 April 2007, again pointing out that the triangulation rules did not apply. Mr Mainprice replied by letter of 15 May 2007 to argue once again that the triangulation rules did apply. This was on the basis (it was said) that Corkteck supplied the goods to Konto, albeit they were paid for by Sintra, and that Konto was "a customer" [sc. of Corkteck] registered for VAT in Poland. Mr Mainprice said, "… the supply is from Corkteck to [Konto] …". Again, this did not reflect the true underlying relationship between Corkteck, Sintra and Konto. Mr Mainprice continued that Mr Malde had been informed that "provided the goods were shipped to a customer with a VAT registration in the EC the transaction could be zero rated and that Corkteck could recover the VAT which it had been charged on its purchase of Red Bull from the UK supplier". This version of what Mr Malde had been told on 17 March 2005 is again strikingly different from the account given in his witness statement. Sintra, not Konto, was Corkteck's customer, as Mr Malde was aware. On this basis, the account of the advice set out in this letter would not have justified Mr Malde in concluding that the proposed transactions could be treated as zero rated by Corkteck. The account in this letter reflects condition 1 in section 3 in Notice 725, and is more consistent with the note made by Mr Baker of the conversation (para. [10] above) than with Mr Malde's account of it in his witness statement.
22. Ms Harris did not know Mr Baker and had not been a party to the critical conversation on 17 March 2005. Ms Harris's witness statement and evidence in cross-examination were to the effect that agents in the NAS receive 9 weeks full time training in answering calls; they are trained not to give advice in the form of expressing their own views about the VAT treatment of a particular transaction but rather to give it in the form of directing callers to the terms of the relevant parts of public guidance notices issued by the Defendant (this accords with the reference to "general advice" in Notice 725: see para. [4] above); they are subject to random call monitoring by their supervisors, and their notes of conversations entered on the Defendant's computer system are subject to supervisory review; and very few complaints are made about the quality of advice given by the NAS (about two complaints a week, compared with many thousands of calls a day), and those that are made are usually complaints about being referred to the incorrect guidance notice (which accords with the form of advice which agents are trained to give). I accept this evidence. In my view, agents are given a thorough training designed to ensure that they do not give their own advice or rulings on proper VAT treatment of transactions of the kind which Mr Malde says he was given.
23. I turn, then, to make findings as to what was said in the conversation on 17 March 2005 between Mr Malde and Mr Baker. Despite some factors which tend to support Mr Malde's account as set out in his witness statement, I do not accept that account. In my view, it is not consistent with the position adopted for Corkteck (with the knowledge of Mr Malde) in the correspondence in 2006 and 2007 to which I have referred. Moreover, it is likely that Mr Baker was given the training referred to in para. [22] above, and it is likely that he would have sought to follow it. In the light of such training, and the consciousness that an agent such as Mr Baker would have that his performance at work would be monitored in light of it, I think that Mr Baker's note of the conversation with Mr Malde is properly to be interpreted as indicating that he specifically called Mr Malde's attention to the requirements of section 3 in Notice 725 in providing guidance for Mr Malde. Since the conversation took place several years ago, I regard that contemporaneous note as the best evidence of what was actually said in the conversation. It is corroborated to some degree by the letter sent on behalf of Corkteck referred to at para. [21] above. In my view, Mr Baker did not say to Mr Malde that so long as he put the VAT details of the ultimate delivery address (i.e. Konto's address) on Corkteck's invoice or delivery note, when those were not the address or VAT details of Corkteck's customer (i.e. Sintra, the person to whom Corkteck was supplying the goods for VAT purposes), then Corkteck's supply would be zero rated. Offering such a view would have been contrary to Mr Baker's training, and contrary to the express terms of condition 1 of section 3 in Notice 725 which it appears Mr Baker had directly in his mind. Mr Baker would also have been well aware that, since condition 1 had the force of law, there was no scope for him to give advice or a view which departed from it. I think it likely that the fact that Mr Malde proceeded to arrange for Corkteck to make supplies to Sintra, by delivery to Konto, which Corkteck treated as zero rated reflected a degree of wishful thinking on his part in interpreting what had been said to him on the telephone, rather than any detailed and rigorous explanation by him and discussion by Mr Baker of the proposed transactions.

Legal analysis

24. My finding of fact at para. [23] above is fatal to Corkteck's case. But for the alleged assurance or advice which Mr Malde says he was given by Mr Baker (on which I have upheld the submission for HMRC), there is no dispute that Corkteck is liable to account to HMRC for the VAT which it should have charged on the supply it made to Sintra.
25. However, I should shortly deal with other points which were argued before me. First, HMRC submitted that the relevant legal test whether a good claim for remission of the tax had been made out against them depended on whether they had acted irrationally in refusing to apply an extra-statutory concession, sometimes called the Sheldon Statement, promulgated by HMRC in these terms (HC Written Answer Vol. 161 col. 426):

"If a [HMRC] officer, with the full facts before him, has given a clear and unequivocal ruling on VAT in writing, or knowing the full facts has misled a registered person to his detriment, any assessment of VAT due will be based on the correct ruling from the date the error was brought to the registered person's attention."

According to this argument, in light of the uncertainty about what had been said in the telephone conversation on 17 March 2005, it could not be said that HMRC had acted irrationally in rejecting the claim by Corkteck.

26. I do not accept this submission. The nature of Corkteck's claim was that it had been given a clear and unequivocal assurance by HMRC as to the proper VAT treatment applicable to the proposed transactions, which it had relied upon to its detriment in making supplies to Sintra which Corkteck treated as zero rated, rather than charging VAT on them. (I assume that the honouring of any such assurance would not have involved HMRC in taking ultra vires action: they did not submit that it would have done). Corkteck contended that that assurance founded a substantive legitimate expectation in its favour that VAT would not thereafter be claimed from it in relation to those transactions where it had proceeded in reliance on such assurance. In my judgment, a substantive legitimate expectation claim depends (as Corkteck submitted) on the true underlying facts as found by the court, and does not proceed by reference to a test whether the person said to have given the assurance has acted irrationally in refusing to acknowledge it. The leading authorities on claims based on substantive legitimate expectations all state the relevant law to be applied on the assumption that this is the case: see, in particular, In re Preston [1985] AC 835, esp. at 866G-867C per Lord Templeman, R v Inland Revenue Commissioners, ex p. MFK Underwriting Agencies Ltd [1990] 1 WLR 1545 at 1569A-1579B and R v North and East Devon Health Authority, ex p. Coughlan [2001] QB 213 at [55]-[60], in relation to the third category of case identified in [57] ("Where the court considers that a lawful promise or practice has induced a legitimate expectation of a benefit which is substantive, not simply procedural, authority now establishes that … the court will in a proper case decide whether to frustrate the expectation is so unfair that to take a new and different course will amount to an abuse of power. Here, once the legitimacy of the expectation is established, the court will have the task of weighing the requirements of fairness against any overriding interest relied upon for the change of policy"). There is no authority of which I am aware which supports the submission of HMRC. The issues whether conduct of a public authority involves an abuse of power or is to be regarded as unfair have always been matters for decision by the court itself, applying legal standards, and not for decision by the authority, subject only to review by the court on public law grounds such as irrationality.
27. However, even if I had accepted Mr Malde's evidence of what was said in the telephone conversation on 17 March 2005 as set out in his witness statement, I would still have dismissed Corkteck's claim for additional reasons. In view of the vulnerability of HMRC to a person making a claim based on an alleged legitimate expectation founded on what might have been said in a telephone conversation with a NAS agent some years ago (where, even if the agent is still employed by HMRC, the prospects of him being able to recall a brief telephone call occurring a long time in the past, out of thousands of calls he may have been involved in, are likely to be very slim), it is right that I set out my reasoning on these points as well.
28. The main legal argument at trial proceeded by reference to the following passage in the judgment of Bingham LJ in R v Inland Revenue Commissioners, ex p. MFK Underwriting Agencies Ltd [1990] 1 WLR 1545 at 1569A-1570B, which the parties agreed stated the relevant principles to be applied and which accordingly merits being set out in full:

"… in assessing the meaning, weight and effect reasonably to be given to statements of the revenue the factual context, including the position of the revenue itself, is all-important. Every ordinarily sophisticated taxpayer knows that the revenue is a tax-collecting agency, not a tax-imposing authority. The taxpayer's only legitimate expectation is, prima facie, that he will be taxed according to statute, not concession or a wrong view of the law: Reg. v. Attorney-General, Ex parte Imperial Chemical Industries Plc. (1986) 60 T.C.1, 64g, per Lord Oliver of Aylmerton. Such taxpayers would appreciate, if they could not so pithily express, the truth of the aphorism of "One should be taxed by law, and not be untaxed by concession:" Vestey v. Inland Revenue Commissioners [1979] EWHC Ch 177, 197 per Walton J. No doubt a statement formally published by the Inland Revenue to the world might safely be regarded as binding, subject to its terms, in any case falling clearly within them. But where the approach to the revenue is of a less formal nature a more detailed inquiry is in my view necessary. If it is to be successfully said that as a result of such an approach the revenue has agreed to forgo, or has represented that it will forgo, tax which might arguably be payable on a proper construction of the relevant legislation it would in my judgment be ordinarily necessary for the taxpayer to show that certain conditions had been fulfilled. I say "ordinarily" to allow for the exceptional case where different rules might be appropriate, but the necessity in my view exists here. First, it is necessary that the taxpayer should have put all his cards face upwards on the table. This means that he must give full details of the specific transaction on which he seeks the revenue's ruling, unless it is the same as an earlier transaction on which a ruling has already been given. It means that he must indicate to the revenue the ruling sought. It is one thing to ask an official of the revenue whether he shares the taxpayer's view of a legislative provision, quite another to ask whether the revenue will forgo any claim to tax on any other basis. It means that the taxpayer must make plain that a fully considered ruling is sought. It means, I think, that the taxpayer should indicate the use he intends to make of any ruling given. This is not because the revenue would wish to favour one class of taxpayers at the expense of another but because knowledge that a ruling is to be publicised in a large and important market could affect the person by whom and the level at which a problem is considered and, indeed, whether it is appropriate to give a ruling at all. Secondly, it is necessary that the ruling or statement relied upon should be clear, unambiguous and devoid of relevant qualification.

In so stating these requirements I do not, I hope, diminish or emasculate the valuable, developing doctrine of legitimate expectation. If a public authority so conducts itself as to create a legitimate expectation that a certain course will be followed it would often be unfair if the authority were permitted to follow a different course to the detriment of one who entertained the expectation, particularly if he acted on it. If in private law a body would be in breach of contract in so acting or estopped from so acting a public authority should generally be in no better position. The doctrine of legitimate expectation is rooted in fairness. But fairness is not a one-way street. It imports the notion of equitableness, of fair and open dealing, to which the authority is as much entitled as the citizen. The revenue's discretion, while it exists, is limited. Fairness requires that its exercise should be on a basis of full disclosure. Mr. Sumption accepted that it would not be reasonable for a representee to rely on an unclear or equivocal representation. Nor, I think, on facts such as the present, would it be fair to hold the revenue bound by anything less than a clear, unambiguous and unqualified representation."

29. It was also common ground that, to found a case based on legitimate expectation, any reliance by Corkteck upon an assurance given by the Defendant would have to be reasonable in all the circumstances of the case. This and the cited passage from ex p. MFK Underwriting Agencies Ltd give rise to two related points which in my judgment are also fatal to Corkteck's claim.
30. First, I do not consider that there was full disclosure by Corkteck, through Mr Malde, to the Defendant (through Mr Baker), as required according to the principle stated in ex p. MFK Underwriting Agents Ltd. Taking Mr Malde's evidence at its highest, as set out in his witness statement, he did not "put all his cards face upwards on the table": (a) he did not give Mr Baker "the full details of the specific transaction" on which he sought the Defendant's ruling (that would have required him to explain precisely who his customer was, i.e. Sintra, who its customer was, i.e. Konto, the nature and quantity of the goods proposed to be supplied and the precise detail of the way in which the transaction would be carried out, including proposed methods of invoicing for the goods); (b) he did not indicate to Mr Baker that he was calling precisely because on his own view of Notice 725 there was a problem in the application of the VAT rules in relation to the transaction which Corkteck wished to enter into, so as to bring that problem directly to Mr Baker's attention in order to explain the nature of the assurance or ruling he was seeking; (c) he did not indicate to Mr Baker the ruling which he sought, nor did he make it plain that such a ruling was sought on "a fully considered" basis (that would have required him to explain the full details of the particular transaction in contemplation, the nature of the VAT problem with it as appeared from Notice 725 and that Corkteck specifically sought a ruling or assurance that, in light of the particular circumstances of the case and despite what appeared to be a problem with Corkteck treating the transaction as zero rated, Corkteck wished to have a considered ruling that no VAT should be charged in relation to that transaction); and (d) he did not indicate to Mr Baker the use to which he proposed to put the information which he was asking for, so as to allow the Defendant to have a fair opportunity to consider at what level (and whether) any ruling should be given (so far as Mr Baker knew, the "ruling" being sought could have covered transactions of any value, small or very large, and might have had considerable implications for the future, proper application of VAT: see also In re Preston at 867F-G). In my view, this aspect of the test in ex p. MFK Underwriting Agencies Ltd will be especially difficult to satisfy where the taxpayer claims that an enforceable legitimate expectation has arisen on the basis of a purely oral exchange with a tax official. In particular, where there is no written request for a tax ruling, then in anything other than very exceptional circumstances a tax official will not have been put on proper notice of the desire of the taxpayer to have a fully considered ruling on the point at issue and will not have been put on proper notice of the importance and significance of the ruling which he is being asked to provide.
31. Secondly, even if I accepted Mr Malde's account of his conversation with Mr Baker, I do not consider that it was reasonable for Mr Malde and Corkteck to rely upon what Mr Baker said in that conversation as the foundation for their treatment of the supplies to Sintra as zero rated. The NAS was only held out as a source of "general advice" (para. [4] above), rather than as a source of binding rulings on the proper tax treatment of specific transactions. Moreover, Mr Malde's approach to the Defendant was not in writing, involved only a telephone conversation of about six or seven minutes duration (with no prior notice to Mr Baker even of the broad nature of problem on which his view was to be sought) and did not involve full disclosure of the transaction and the perceived problem which Mr Malde wished to have addressed. In all these circumstances, Mr Malde could not reasonably have thought that Mr Baker had given Corkteck a fully considered and binding ruling in its favour as to the validity of it treating its supply to Sintra as zero rated. This conclusion is reinforced by the facts that the terms of section 3 of Notice 725 were known to Mr Malde (and, indeed, actually in his mind at the time of the conversation); Mr Malde knew that Sintra, not Konto, was Corkteck's customer; and he knew or should have appreciated from the text of section 3 that condition 1 was not on the face of it capable of being complied with by Corkteck and also that that condition had the force of law. He could not reasonably have thought that what Mr Baker said (according to Mr Malde's witness statement), in a short telephone conversation, was capable of overriding the specific guidance as to the proper approach to VAT given in the Notice.

Conclusion

32. For all these reasons, I dismiss Corkteck's claim.