United Kingdom VAT & Duties Tribunals Decisions

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URL: http://www.bailii.org/uk/cases/UKVAT/2003/V18255.html
Cite as: [2003] UKVAT V18255

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Ward& Ors (t/a Ashby Hall) v Customs & Excise [2003] UKVAT V18255 (08 August 2003)

ASSESSMENT — sale of buildings and contents – not a sale as a going concern – apportionment of sale price in contract between buildings and contents disputed by the Appellant - VAT collected but not accounted for to the Commissioners - no power in tribunal to rectify or set aside contract or to re-value contents. Assessment upheld. Appeal dismissed

MANCHESTER TRIBUNAL CENTRE

RONALD WARD

IRMA BLANCHE WARD

JOHN WARD

LORRAINE HAMMERTON

(T/A ASHBY HALL COUNTRY CLUB Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Mrs E Gilliland (Chairman)

Mrs G Pratt

Sitting in public at York on 14 July 2003

Mr John Ward, one of the Appellants, in person for the Appellants

Miss L Linklater of counsel instructed by the Solicitors Office of HM Customs and Excise for the Respondents

© CROWN COPYRIGHT 2003


 


DECISION

1. This is an appeal by Ronald Ward, Irma Blanche Ward, John Ward and Lorraine Hammerton a family partnership which had carried on the business of a restaurant and country club at Ashby Hall Country Club, Ashby de la Launde, Lincolnshire LN4 3JH trading as Ashby Hall Country Club (the Appellant). The appeal is against an assessment raised by the Commissioners on 23 July 2001 in the sum of £14,000 tax plus interest. A misdeclaration penalty in a mitigated figure of £420 has also been imposed but is not under appeal to the tribunal. One of the partners, Mr. John Ward, has presented the Appellant's case before us.
2. The assessment arises subsequent to the sale of the business premises and contents. This was not the sale of a going concern and thus whilst no VAT arose on the land element, VAT was chargeable on the contents. There was produced to the tribunal a draft contract as amended attached to a fax of 14 September 1999 and a copy of the Buyer's part of the exchanged contract dated 17 September 1999 which has the Solicitor's manuscript endorsement of details of exchange. The completion date is shown as 14 January 2000 and the purchase price as £250,000. One of the contractual terms written in by hand is: "4. The price shall be apportioned as follows. a. Property £170,000 inclusive of VAT. b. The fixtures and fittings, set out on the attached list, £ 80,000 plus VAT". John Ward was also to be granted a lease of the property and he has confirmed to us that this was duly taken up and that he ran the business for a further two years in the rented property.
3. In the Notice of Appeal submitted by him on 30 October 2002 Mr. Ward set out the grounds of appeal as follows: "After the initial contract of sale of my business property was signed by me, the Purchaser then split the price into Building plus Contents i.e. £170/80,000. This figure for the contents is grossly overstated - the true figure is not more than £5,000. This is an attempt by the Purchaser to avoid stamp duty. Full details of the above are available (extra sheet enclosed)". The accompanying statement attached to the Notice of Appeal repeated the substance of the grounds of appeal and has been followed by Mr. Ward in his correspondence with the Commissioners and at today's hearing in the presentation of his case and in his sworn testimony in response to cross-examination. He has said that he had signed the original contract of sale, the sale figure being £250,000. In a "subsequent contract" the figure was broken down at £170,000 building and £80,000 contents. He had never intended splitting the property from the contents in the original price and the contents were worth less than £10,000. He was however under immense financial pressure (of which the buyer was aware) as one of the chargees ( the Bank) proposed to take possession of the property. He had also been warned by his solicitor that he would be in breach of contract if he were to withdraw. He felt that he had no alternative but to proceed. His solicitor spent some time trying to negotiate with the three main creditors (the Bank, the Brewery and the Inland Revenue) what each would take from the proceeds of sale. An unsuccessful request was also made to the Buyer for the contract to be set aside. In the event completion duly took place after the contractual completion date and it is common ground that the total received under the contract was £264,000 ie the purchase price of £250,000 plus the sum of £14,000 being the VAT payable on the apportioned figure for the contents. The whole of the moneys received, including the said figure of £14,000, were paid out to the creditors and no part was paid over to the Commissioners. On 20 April 2000 Mr. Ward signed a document concerning the sale of the contents of Ashby Hall Country Club on behalf of the Appellant setting out the figures of £80.000 and £14.000 VAT and showing the total of £94.000. This was handed to the Buyer. The buyer declared the sum of £14,000 on his VAT return.
4. Mr. Ward has acknowledged that VAT is payable to the Commissioners and that he will pay it when the correct sum is ascertained. He has submitted that the contents' valuation has never been accurate, was fraudulent, and was agreed to by him only under duress. However we have heard no evidence from the buyer as to his version of what occurred nor indeed any evidence from the Appellants' solicitor. There is with the bundle of papers before the tribunal an Inventory as at 14 September 1999. This is detailed though we have noted that a number of the items included would be termed fixtures and thus part of the fabric. No valuation figure is attached. Mr. Ward has also produced a page of a copy Balance Sheet for the Appellant for the year ended 31 October 1993 with a firm of Accountants' name endorsed showing a valuation for fixed assets other than the freehold property for 1992 as £14297 and for 1993 as £9195. The schedule of the same referred to has not been attached. Mr. Ward has also produced a copy Invoice on the sale of fixtures and fittings on a later sale. This is dated 30 April 2002 and refers to an inventory and valuations, which are not produced though Mr Ward has stated that the items referred to are from his personal knowledge unchanged from those at the time of his sale. The figure for the items is £4,280.00 and the VAT charged is £749. In addition Mr. Ward raised the matter with the Birmingham Stamp Office and his view that the contents figure in the contract was not the true value. Although there has been correspondence from the Stamp Duty Office we are not aware of any current action on their part
5. The position so far as the contract is concerned is that the Appellant on 17 September 1999 entered into a binding contract for sale of the land, buildings, and contents. The purchase price and the apportionment of the same and the fact that VAT is to be paid on the contents figure is clearly shown. We would mention that even on the faxed copy produced to us there is a manuscript amendment for an apportionment although no figures have been inserted. It may be the case that the issue as to the figures to be inserted arose only at a late stage in the negotiations and we do not dispute that Mr. Ward may have had misgivings which he expressed, but it is clear that a valid contract was entered into and the Buyer complied with its terms by paying over as part of the completion moneys the VAT payable. Mr. Ward also taken up the lease provided for. The document subsequently given on behalf of the Appellant, while not a VAT invoice meeting all the statutory requirements, cannot be viewed as other than a statement of the VAT monies passing under the contract. The VAT thus collected by the Appellant was properly payable to the Commissioners and has still not been accounted for to them. The Commissioners have not sought to go behind the terms of the contract or to suggest that it was not a binding contract.
6. Mr. Ward has accepted that the contents were liable to VAT and he has invited the tribunal to produce an alternative (and lower) figure for the amount payable than that which the Appellant has already received from its Buyer. Mr. Ward has suggested several possible sums for the value of the contents but nowhere has any professional valuation of the contents been produced and indeed no schedule of items associated with any alternative figures. The statement which Mr. Ward is said to have signed at his Solicitors expressing his discontent at the contract has not been shown to us though the letter from the Appellant's Solicitors post - contract disputing the apportionment is in the bundle. Mr. Ward did not contact the Stamp Office expressing his concerns until after the assessment had been received. The Appellant's dispute can only be with the Buyer and any rectification could only be of the contract. The tribunal cannot substitute its own figure for that in a binding contract under which all moneys have been duly paid including an agreed figure for VAT. In truth the Appellant's role became that of a collector of the VAT agreed to be paid. There is no basis on which the tribunal has power to re-write the terms of a contract nor can we re-value the contents nor indeed suggest what other sum might be considered appropriate. Even if the Tribunal had power to set aside the contract or to substitute a revised figure for the agreed value of the contents and thus the amount of the VAT thereon, there is not any satisfactory evidence before us as to what the substituted figure should be. Having entered into a binding contract with the Buyer, the Appellant is bound by its terms and its legal liability in respect of the VAT received on completion of the contract is concluded by the terms of the contract.
7. The appeal is dismissed.
8. The Commissioners have not sought costs and we make no direction as to costs.

Mrs E Gilliland

Chairman

Release date:

MAN/02/0781