United Kingdom VAT & Duties Tribunals Decisions

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URL: http://www.bailii.org/uk/cases/UKVAT/2004/V18766.html
Cite as: [2004] UKVAT V18766

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Wongs Chinese Takeway v Customs and Excise [2004] UKVAT V18766 (08 September 2004)

ASSESSMENT — Chinese Takeaway — £1 delivery charge paid to driver — separate supply — £1 charge identified on menu and when order placed by telephone — single supply — assessment to best judgment — case dismissed

MANCHESTER TRIBUNAL CENTRE

WONGS CHINESE TAKEAWAY Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Mr D S PORTER (Chairman)

Sitting in public in Birmingham on 30 April 2004

Mr C K Ow, Certified Accountant, appearing for the Appellant

Mr B Haley of the Solicitor's Office of HM Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2004


 


DECISION
1. By a Notice of Appeal, dated the 12^th March 2002 Mr Ow Accountant to Mr Yiu Kuen Alfred Lee and Mrs Kwai Tai Lee proprietors of the Appellant appealed against the assessment in the sum of £3,011 representing VAT for the years 02/99 to 05/01 inclusive, arising from the failure by the Appellant to account for the delivery charges paid to the Appellant's drivers when delivering the takeaways to individuals who had placed an order by telephone. The Appellants contended that the agreed delivery fee of £1 was paid to the drivers and that the Appellants had no involvement with that payment and that they were therefore a separate supply. The Respondents are of the opinion that the supply is a single supply and that the delivery charge has to be added to the invoices for the takeaway meals when they are delivered and therefore gave rise to the assessment.

The Parties

2. Mr B Haley of the Solicitors' Office appeared for the Respondents and produced a bundle of copy documents and called Mr B J Bartley, the assessing officer. Mr Ow appeared for the Appellant and brought Mrs Tai along as a witness.

The Facts

3. The Appellant carries on business as a Chinese Takeaway from premises at 1 Longe Knowle Lane, Wednesfield, Wolverhampton, WV11 1HZ and was registered for VAT from 12^th August 1998. The business was visited on a joint visit by the Inland Revenue and the Commissioners for Customs and Excise. The visit established that the Appellant used two delivery drivers to deliver takeaways to individuals who rang in orders. The Appellants employed the drivers who were paid under PAYE. They were required to attend at the takeaway in the evening for 5.50pm to 11.30pm. They remained outside the shop, but the orders were given to them to deliver as and when necessary.
4. The menu (a copy of which was produced to the Tribunal) indicated that there would be a charge of £1 for deliveries within 3 miles and over that distance the cost would be negotiable with the driver. If individuals telephoned to place an order, they were given the same information. The invoices for the food did not give any details as to the delivery charge. Often a driver would not ask for any payment if the people were friends or relatives.
5. Mr Bartley gave evidence identifying how he had raised the assessment. He confirmed that the delivery charge had been raised from the start of the business but he could only raise the assessment from 02/99 because of the three-year cap preventing him assessing from an earlier date.
6. Mr Bartley referred to the calculations in the bundle at pages 12 to 19. For the periods 30/04/00 to 04/08/01, he had counted the deliveries and calculated the amount of VAT due on the basis of the actual deliveries. For the periods 05/12/98 to 29/04/00 he had averaged the deliveries using the earlier figures. Mr Ow had not objected to the figures. Mr Bartley had therefore raised the assessment of £3011 and interest on 20^th September 2001.
7. We find as fact the matters set out in paragraphs 3 to 6 above.

Summing up

8. Mr Haley submitted that there was clearly only one single supply. The orders were placed with the Appellants, not with the drivers. Mrs Tai and her husband arranged for the drivers to attend. They told them at what time they were expected and they gave them the appropriate instructions for the delivery of the order. The drivers waited outside the shop and went when and where they were told. If there were problems, the order was returned to the shop. The driver did not have to do anything but deliver the food and collect the money including his delivery charge. Unlike a tip in a restaurant, which is a mater of discretion for the customers, the delivery charge was on the face of it compulsory. On that basis the delivery charge formed part of the invoice price and was therefore subject to VAT. The assessment raised by Mr Bartley had been calculated on a reasonable basis and the Appellants had not raised any objections. He also referred the Tribunal to the case of Prontobikes Ltd LON/94/1198A, which related to motorbike couriers but was similar to the present appeal.
9. Mr Ow submitted that the Appellant had no control over whether the drivers received payment for the delivery or not. The drivers decided whether they should be paid or not and the amount to be paid over 3 miles. There was no map in the shop, therefore it was not possible for the Appellants to know how far the drivers had to travel. The Appellants had no responsibility for the expenses of the drivers either for public liability or whether the turned up for work or not. In the circumstances, the delivery charge was a separate supply and the assessment was not to best judgement.

The decision

10. I have considered the facts in this appeal and confirm that the assessments have been made to best judgement. There is no question but that the supply is a composite supply provided by the Appellant. Mr Ow confirmed that the drivers were paid under PAYE and whilst it might appear that they could come and go, as they chose the fact of the matter is that they came at 5.30 pm and worked to 11.30 pm. It was even conceded that their work schedules might overlap, which was clearly to the advantage of the Appellant. It is also clear that the customers were told both in the shop, though the menu, and by Mrs Tai and her sister by telephone that there would be a delivery charge. It is not possible to separate that charge for the invoices for the food, I find that the delivery charge is a single supply with the supply of the food and cannot reasonable be separated form it. The method used to calculate the VAT on the deliveries is eminently reasonable and has not been objected to as a calculation by Mr Ow and I find that the assessment is to best judgement. I therefore dismiss the appeal.
11. The Commissioners made no application for costs and I award none.

MR D S PORTER

CHAIRMAN

Release Date

MAN/02/0209