First-tier Tribunal (Tax)

 

[2010] UKFTT 260 (TC)

 

 

 

 

 

 

TC00554

 

Appeal number: TC/2009/16560

 

 

VAT – Sale of Registration Marks – Whether transaction zero rated as international supply – No – Place of supply in UK – Standard rated – Appeal dismissed

 

FIRST-TIER TRIBUNAL

TAX CHAMBER

 

 

 

 

                                                  MR T HOVAN                                 Appellant

 

 

                                                                      - and -

 

 

                                 THE COMMISSIONERS FOR HER MAJESTY’S

                                                   REVENUE AND CUSTOMS               Respondents

 

 

 

                                    TRIBUNAL:  DR K KHAN (Judge)

                                                                                                                                   

 

 

Sitting in public in London on 16 April 2010

 

Mr Hovan  represented himself.

 

Mr R Basi, Officer, for the Respondents.

 

 

© CROWN COPYRIGHT 2010

DECISION

 

Introduction

 

1.           This case concerned whether a supply of registration marks (personalised number plates) constituted a standard rated supply for VAT purposes, where the supply  is made in the UK or by a UK based supplier.  The supplier  was a supply of intermediary services being supplied by auctioneers, SMA (Leeds) Limited (thereafter “SMA”).

 

Background and Chronology

 

2.           On 17 February 2009, SMA wrote to the Commissioners stating they have a contract with the DVLA to sell vehicle registration numbers at auction.  They had sold one to a customer who belongs outside the European Union (hereafter “EU”) and have charged VAT on the sale and the buyer’s premium.  The customer, the Appellant, was disputing the VAT charge on the basis that SMA were exporting the number plate and the Appellant therefore believes the supply is outside the scope of VAT.

 

3.      On 8 March 2009 the Commissioners wrote to SMA confirming that the supply of services would fall under the normal place of supply rules ie where the supplier belongs, in this case the UK.

 

4.      On 8 April 2009, the Appellant emailed the Commissioners detailing the reasons for the Appellant’s belief that the supply is an exception to the basic rule.

 

5.      On 26 May 2009, the Commissioners confirmed that on the basis of the information provided, the supply is not a transfer or assignment of a right within Paragraph 1 of Schedule 5.  Since none of the exceptions to the basic rule apply, the place of supply is where the supplier belongs and is therefore within the scope of UK VAT.  This confirmation was sent to both SMA and the Appellant’s representative.

 

6.      On 26 May 2009 the Commissioners  confirmed to the Appellant that VAT was due on the sale  of the registration mark.  On 1 June 2009 the Appellant emailed the Commissioners asking if the supply of the registration mark could be deemed to be zero rated under item 2 Group 7 Schedule 9 on the basis that the supply being arranged is made outside the EU.

 

7.      On 8 October 2009 the Commissioners confirmed the supply is within the scope of  UK VAT and cannot be zero-rated.  The Appellant requested an internal review.

 

8.      On 10 November 2009 the Commissioners confirmed that following an internal review the decision was upheld.

 

9.      On 25 November 2009 the Appellant submitted an appeal.

 

Relevant Legal Provisions

 

10.    Value Added Tax Act 1994(“VATA 1994”), Section 7(10) states:

 

         Place of supply

 

         (1)          This section shall apply (subject to sections 14 and 18) for determining, for the purposes of this Act, whether goods or services are supplied in the United Kingdom

 

         (10)        A supply of services shall be treated as made –

                        (a)       in the United Kingdom if the supplier belongs in the United Kingdom; and     

                        (b)       in another country (and not in the United Kingdom) if the supplier belongs in that other country

 

11.    Paragraph 1 of Schdule 5, VATA 1994 states:

 

         SCHEDULE 5 SERVICES SUPPLIED WHERE RECEIVED

 

         1             Transfers and assignments of copyright, patents, licences, trademarks and similar rights

 

12.    Group 7 of Schedule 5, VATA 1994 states:

 

         INTERNATIONAL SERVICES

 

         Item No

 

         1        The supply of services of work carried out on goods which, for that purpose, have been obtained or acquired in, or imported into, any of the member States and which are intended to be, and in fact are, subsequently exported to a place outside the member States –

         (a)     by or on behalf of the supplier; or

         (b)     where the recipient of the services belongs in a place outside the member States, by or on behalf of the recipient.

 

         2        The supply of services consisting of the making of arrangements for –

         (a)     the export of any goods to a place outside the member States

         (b)     a supply of services of the description specified in item 1 of this Group; or

         (c)     any supply of services which is made outside the member States.

         Note: This Group does not include any services of a description specified in Group 2 or Group 5 of Schedule 9.

 

 

 

The Appellant’s Submissions

 

13.    The Appellant’s grounds of appeal are set out in a lengthy email to the Tribunals Service dated 25 November 2009; it would appear no formal Notice of Appeal was served by the Appellant nor requested by the Tribunal.

 

14.    The Appellant argues that the supply in question should be zero rated as SMA was the intermediary in the supply of services.  The Appellant argues the place of supply of the service is outside the EU and therefore the supply can be zero rated as it is an “international service where the supply is out of the scope of UK VAT” (point 7, page 1 of Appellant’s email).

 

15.    The Appellant argues that zero rating should apply to the supply by SMA Leeds Limited under Group 7 of Schedule 8 , VATA 1994 as it is an international service where the place of supply is the UK.  The Appellant argues he resides in the Middle East and  SMA are an intermediary based in the UK.  They  stand between the DVLA and the customer in selling the registration mark.  The Appellant did not make any direct payment to the DVLA.  The Appellant is an “international” customer who did not have face to face dealing with SMA in the UK.  Therefore, the Appellant argues that the intermediary service is in the UK but the actual supply is outside the EU and the intermediary services therefore qualify for zero rating under Group 7 of Schedule 8 VATA 1994  They argue that once SMA  received payment for their intermediary services, they contacted the DVLA to issue the relevant documents to the international customer.

 

16.    In the alternative, the Appellant argues that the place of supply is outside the EU as it is an intermediary service involving the “transfer of an assignment of rights”.  This service is provided to a customer outside the EU which  means that the place of supply is outside the EU, therefore the supply is outside the scope of UK VAT.

 

17.    The Appellant argues that the supply should either be zero rated or outside the scope of UK VAT.

 

18.    Although not set out explicitly in the emails to the Tribunal by the Appellant, the Appellant also appears to contend that the ‘relied on’ advice given to him by the Commissioners and that this created a legitimate expectation of the basis of telephone calls between the Appellant and the Commissioners.

 

The Commissioners’ Submissions

 

19.    The supply is standard rated, SMA has a contract with the DVLA to sell vehicles registration marks.  The substantive details of the contract between the parties is unknown to the Commissioners but in any event this does not affect the VAT treatment.  The Appellant has previously put forward arguments that SMA is the principal in the supply of services to the Appellant and also argued that it could be an intermediary in the supply of the service by the DVLA to the Customer.  The Commissioners argue that the supply by SMA is standard rated, irrespective of whether SMA is acting as principal or intermediary.

 

Conclusion

 

20.    If SMA is a principal in the supply of a registration mark then the supply of services shall be treated as made in the UK.  The supplier is based in the UK .  The supply of the registration mark is therefore standard rated.

 

21.    The supply does not fall in paragraph 1 of Schedule 5, VATA 1994 because the supply of registration marks is not a transfer or an assignment of rights.  The place of supply is where the supplier belongs, which is in the UK. 

 

22.    If SMA are acting as an intermediary,  Section 7(11),VATA 1994 provides that the rule where supply of goods and services are made can be varied by the Treasury by order under the Place of Supply of Services Order 1992.  Under Article 13 of that Order, intermediary services carried out by SMA would be carried out in the UK.  The supply would therefore be standard rated.  The underlying supply is not outside the EU member states and therefore will not be zero rated as submitted by the Appellant.

 

23.    The Appellant has made a submission regarding the issue of misdirection and/or legitimate expectation.  This Tribunal does not have power to look at such a matter.

 

24.    In the circumstances the Appellant’s appeal should therefore be dismissed.

 

25.    It should be stated at the end that the Appellant has had very poor and conflicting advice from HMRC and has legitimate grounds for a complaint.  HMRC should make available the appropriate literature and website reference to allow such a complaint to be made, if it has not already been made.

 

26.    No issues of costs arose.

 

 

 

DR K KHAN

TRIBUNAL JUDGE

RELEASE DATE: 10 June 2010