First-tier Tribunal (Tax)

[2010] UKFTT 32 (TC)

TC00346

VAT – zero-rating – vehicle purchased under the Personal Export Scheme – permitted time for export exceeded – exercise of Commissioners’ discretion to extend – appeal dismissed

FIRST-TIER TRIBUNAL

TAX

                                                       MARTIN BLACKHAM                                      Appellant

- and -

THE COMMISSIONERS FOR

                                      HER MAJESTY’S REVENUE AND CUSTOMS         Respondents

Tribunal:        Judith Mitting (Judge)

                        M Farooq (Member)

Sitting in public in Birmingham on 25 November 2009

The Appellant did not appear and was not represented

Richard Mansell, senior advocate of the Solicitor to Her Majesty’s Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2009

DECISION

1. The decision under appeal is that of the Commissioners to require payment of £2,966.25 being the VAT on the Appellant’s purchase of a motor vehicle under the Personal Export Scheme.

2. The Appellant did not appear and was not represented.  Notice of the hearing had been properly served and Mr. Blackham was clearly aware of the date as he referred to it in a letter of 9 November to the Commissioners.  The letter of 9 November requested a response from the Commissioners to his letter to them dated 29 September in which he offered to withdraw the appeal now that his vehicle had finally been exported.  It was the wish of the Commissioners that the case should proceed to hearing and although we did not specifically check this with Mr. Mansell, we proceeded on the assumption that the Commissioners had informed Mr. Blackham of their intention.  We therefore proceeded to hear the case under rule 33 of the Tribunal Procedure (First-Tier Tribunal) (Tax Chamber) Rules 2009.

The legislation

3. The relevant legislation is to be found in section 30(8) and section 30(10) VAT Act 1994 and regulation 133 of the VAT Regulations 1995.

Section 30(8) of the VAT Act 1994:

“Regulations may provide for the zero-rating of supplies of goods, or of such goods as may be specified in the regulations, in case where

(a) the Commissioners are satisfied that the goods have been or are to be exported to a place outside the member States or that the supply in question involves both

(i) the removal of goods from the United Kingdom; and

(ii) their acquisition in another member State by a person who is liable for VAT on the acquisition in accordance with provisions of the law of that member State corresponding in relation to that member States, to the provisions of section 10; and

(b) such other conditions, if any, as may be specified in the regulations or the Commissioners may impose are fulfilled.”

Section 30(10) of the VAT Act 1994:

“Where the supply of any goods has been zero-rated by virtue of subsection (6) above or in pursuance of regulations made under subsection (8), (8A) of (9) above and

(a) the goods are found in the United Kingdom after the date on which they were alleged to have been or were to be exported or shipped or otherwise removed from the United Kingdom; or

(b) any condition specified in the relevant regulations under subsection (6), (8), (8A) or (9) above or imposed by the Commissioners is not complied with,

and the presence of the goods in the United Kingdom after that date or the non-observance of the condition has not been authorised for the purposes of this subsection by the Commissioners the goods shall be liable to forfeiture under the Management Act and the VAT that would have been chargeable on the supply but for the zero-rating shall become payable forthwith by the person to whom the goods were supplied or by any person in whose possession the goods are found in the United Kingdom; but the Commissioners may, if they think fit, waive payment of the whole or part of that VAT.”

The VAT Regulations 1995:

“133. The Commissioners may, on application by any person who intends to depart from the member States within 9 months and remain outside the member States for a period of at least 6 months permit him within 6 months of his intended departure to purchase, from a registered person, a motor vehicle without payment of VAT, for subsequent export, and its supply, subject to such conditions as they may impose, shall be zero-rated.”

4. The Commissioners Notice 705 gives further instruction on the purchase of vehicles under the personal export scheme.  This Notice reiterates the Regulations that for an EEC resident, the vehicle must be exported within six months of the date of delivery and if it is not exported by the due date then the VAT will become payable and the vehicle becomes liable to forfeiture.  The Notice goes on to advise purchasers that if a vehicle cannot be exported by the due date, they should immediately contact the Commissioners’ Personal Transport Unit.

5. Mr. Blackham made an application dated 25 September 2007 to purchase a vehicle under the Personal Export Scheme.  His anticipated date of departure from the EU was 19 March 2008 and the country of destination was Israel.  The Commissioners gave approval to the application on 4 October 2007.  Nothing more was heard by the Commissioners from Mr. Blackham so by letter dated 8 October 2008, the Commissioners wrote to Mr. Blackham requesting evidence of export.  Mr. Blackham’s VAT consultant replied on 28 October advising the Commissioners that the intention had been to export the vehicle to Israel where it was to be used in connection with TV work relating to film production.  As there had been a delay in completion of the set for the TV production company, filming had not commenced and the vehicle was still in the UK.  The consultant envisaged that the production set would be available within the next four to six months and concluded “the time limit for export has expired.  Can you please extend this limit for a further six months in order that the vehicle may still be exported tax-free?”

6. The Commissioners refused an extension, having given full consideration to the details provided.  They went on to advise Mr. Blackham that full payment of the VAT was now due.

7. Mr. Blackham then wrote to the Commissioners on 4 November 2008 again asking for an extension for time to export because time had been needed to make certain adaptations to the vehicle to comply with local Israeli regulations.  The Commissioners again refused an extension on the grounds that no request for an extension had been made until 28 October.

8. By letter dated 3 December 2008, Mr. Blackham requested a review.  In this letter he explained the delay in export was because he and his wife had “unforeseen trouble in securing a property in Israel”.  He also went on to expand upon the adaptations which Israeli law required before the vehicle could be used in Israel.  This letter was treated as an application for a review and a full review was carried out by Mr. Adrian Woodley.  He gave his decision by letter dated 14 January 2009 in which he set out the full facts, the legislation and the contents of the Public Notice.  He upheld the original decision to demand payment of the tax, again on the grounds that Mr. Blackham had not notified the Commissioners as soon as he was aware that the vehicle could not be exported by 19 March 2008.  He had therefore not complied with the conditions of the Personal Export Scheme and the conditions of the relief, not having been met, the VAT suspended on the purchase had now to be brought to account.

9. Mr. Blackham’s grounds of appeal asked for fair and reasonable consideration to be given to the application for extension for export.  He explained that he had had considerable difficulty exporting the vehicle within the time frame allowed due to unforeseen trouble in securing a property in Israel and also again set out the technical adaptations which needed to be carried out.  He anticipated that everything should be resolved “fairly shortly” to enable the export to be completed in the near future.  The notice of appeal was dated 22 January 2009 and we understand that the vehicle was eventually exported on 11 September 2009.

10. The legislation does not expressly give the Commissioners any power to extend the statutory time limit although section 30(10) allows the Commissioners, if they think fit, to waive payment of the whole or part of the VAT.  This would imply that the Commissioners did at least have a discretion to extend the time limit for payment and indeed Mr. Mansell accepted that this was so.  There is nothing which gives the tribunal the power, of its own volition, to waive payment and we therefore proceeded on the basis that we had a supervisory jurisdiction to review the reasonableness of the Commissioners’ exercise of their discretion.

11. The vehicle was due to be exported by 19 March 2008.  The application made by Mr. Blackham refers to the Commissioners Notice 705 and indeed the declaration which he completed reads, inter alia, that he had read that Notice.  The Notice makes it abundantly clear that the vehicle had to be exported within six months of the date of delivery and that if for some reason that date could not be met then the purchaser must notify the Commissioners immediately.  In this case, Mr. Blackham not only failed to meet the date for export but took no steps to notify the Commissioners whatsoever until the Commissioners themselves, chasing up proof of export, wrote to him some six months later.  It was on this ground that both the original officer and the review officer refused an extension.  This was a perfectly valid factor to take into account and the Commissioners cannot be faulted for refusing an extension given these circumstances.  We therefore find that the Commissioners acted reasonably in refusing an extension and in demanding immediate payment of the tax due.  The appeal is therefore dismissed.

12. Mr. Mansell made no application for costs and no order is made.

MAN/2009/0262

LADY MITTING

JUDGE
Release Date: 14 January 2010