18757
ECONOMIC ACTIVITY – whether purchase and charter of boat an economic activity within Article 4 of Sixth Directive – Berwick distinguished – Appeal allowed
LONDON TRIBUNAL CENTRE
TREVOR BRIAN VAUX STOCKDALE Appellant
T/A COMPASS CHARTERS
- and –
THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents
Tribunal: MISS J C GORT (Chairman)
MR SUNIL K DAS
Sitting in public in London on 1 July 2004
The Appellant appeared in person
Mr James Maxwell-Scott of counsel, for the Respondents
© CROWN COPYRIGHT 2004
DECISION
Background
The law
- "Taxable person" shall mean any person who independently carries out in any place any economic activity specified in paragraph 2, whatever the purpose or results of that activity.
- The economic activities referred to in paragraph 1 shall comprise all activities of producers, traders and persons supplying services including mining and agricultural activities and activities of the professions. The exploitation of tangible or intangible property for the purpose of obtaining income therefrom on a continuing basis shall be considered an economic activity.
- Member States may also treat as a taxable person anyone who carries out, on an occasional basis, a transaction relating to the activities referred to in paragraph 2 and in particular one of the following:
(a) the supply before first occupation of buildings or parts of buildings and the land on which they stand; Member States may determine the conditions for application of this criterion to transformations of buildings and the land on which they stand.
…..
Mark Berwick and Christine Berwick (VAT Tribunal Decision No.17686)
Van Tiem v Staatssecretaris van Financien [1993] STC 91
Enkler v Finanzamt Homburg [1996] STC 1316
The facts
OWNER'S OBLIGATIONS
…
- Agree that WW shall act as managers of this vessel and shall charter it out at the rates included in the brochure or as determined by WW (discounts sometimes offered for marketing purposes/or structure from pricelist) to Yachtsmen/women who guarantee their experience (all reasonable care to be taken by WW to ascertain that statements made relating to experience are correct).
- Agree to pay WW the management fee of 40% of the gross charter income earned by the vessel with WW. Shall be entitled to deduct as a first charge of such income.
- Pay for all maintenance, repair and replacement of worn and broken equipment where not covered by insurance, and where not the result of the charter negligence (except as stated under WW Obligations para 2.).
- Pay berthing and harbour dues incurred at the berthing location.
- Agree that WW shall use the vessel when necessary for testing.
- Notify WW at the earliest opportunity the periods that are not available for charter, when the vessel will be required for Owner's use, and agrees to honour charter bookings already confirmed prior to any such notification.
- Equip the vessel to Yacht Charter Association minimum standards and WW Specifications.
- In the event of a decision to cease charter, only withdraw the vessel at the end of the season (31st November) after two months notice, unless otherwise agreed by WW.
…
- Insure the vessel using standard charter cover.
- Leave the vessel in a clean and tidy order ready for the next charter.
NB: Westways are not responsible for cleaning the vessels after owner/private use, (a standard cleaning charge of £30 plus VAT applicable if vessel not suitable for charter presentation).
WESTWAYS OF PLYMOUTH LTD OBLIGATIONS
- Render the vessel into good seaworthy condition and equip her as necessary to the Yacht Charter Association minimum standards at least at the owner's expense.
- Carry out such repairs and maintenance as are necessary which shall be at the owner's expense where not covered by insurance and where not the result of the Charterer's negligence. (Should any single outlay necessary for the repair of the vessel exceed £1,000 WW will obtain the owner's consent in carrying out or arranging any such work).
- Clean, fuel, and water the vessel and inspect all gear at each change of charterer.
- Pay for printing of that part of the brochure which pertains to the vessel.
- Pay for additional advertising of the vessel in Yachting periodicals.
- Arrange all advertising, booking, food orders, administration relating to the chartering, maintenance, purchasing of equipment and mooring of vessel.
…
GENERAL CLAUSES
- All bills for repairs and maintenance, where not arising from charterers' negligence shall be paid within 21 days of presentation. In default WW shall be entitled to retain the whole of the charter income due, or becoming due, without prejudice to their claim for any balance outstanding, provided that, where there is an insurance claim, up to a period of three months from such a claim, payment by the owner to WW may be deferred until 14 days after the owner has received payment from the insurers. …
- If due to any misconduct or dispute that WW deem as detrimental to the Westways charter fleet occurs with the owner, then WW will give notice of one week for the vessel to be removed from Westways marina berth, and no further business will continue between the said two parties and this contract will be cancelled with immediate effect. …
ACCOUNTING PROCEDURE
WW will account to the owner at the completion of each charter. Payments are only issued on presentation of an invoice from the charter owner. Accounts for the fitting out of the vessel or for repairs, spares or services other than the charter of the vessel will be presented separately as required throughout the year.
"You do not carry out any of the charter duties in any way yourself. THIS IS ALL THE RESPONSIBILITY OF WESTWAYS.
Westways are responsible for all advertising. YOU ARE NOT REQUIRED TO DO ANY.
Westways carry out all administration with regards to chartering out your yacht, reservations etc. To cut a long story short Trevor, you are not involved in any way with the entire charter process, this is ALL Westways responsibility."
- Nine weeks' charter at £1,655 per week at 60% £8,937
- Six week-ends at £925 at 60% £3,330
Total income £12,267
Less moorings £ 3,400
£ 8,867
Cost of yacht £88,185.54
Additional equip for coding for charter £ 4,346.39
£92,531.00
Equals approximately 9.5% return
The Respondents' case
The Appellants' case
Reasons for decision
MISS J C GORT
CHAIRMAN
Release Date: 2 September 2004
LON/03/864