United Kingdom VAT & Duties Tribunals Decisions

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Cite as: [2005] UKVAT V19245

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P & C Morris Catering Group Ltd v Revenue and Customs [2005] UKVAT V19245 (12 September 2005)

19245

ASSESSMENT — £7,927 incorrectly claimed input tax — three commercial vehicles under one tonne — assessment on the basis that the appellant failed to discharge burden of proof as to vehicles unladen weight — evidence in support of burden of proof — vehicles modified as Euromega Isuzu TFS 69 4 x 4 — evidence of vehicle unladen weight provided by manufacturer — on registration documentation — confirmed by single vehicle approval certificate — appellant discharged burden of proof — vehicles weighed one tonne — assessment not to best judgment — appeal allowed

MANCHESTER TRIBUNAL CENTRE

P & C MORRIS CATERING GROUP LIMITED Appellant

- and -

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: David S Porter (Chairman)

Carole A Roberts

Sitting in public in Birmingham on 11 July 2005

Graham Foulkes, commercial vehicle dealer, for the Appellant

James Puzey, of counsel, instructed by the Acting Solicitor for HM Revenue and Customs for the Respondents

DECISION

P & C Morris Catering Group Limited (The Appellant) appeals against an assessment of £7927 and interest for the periods 06/02 arising from a disallowance of input tax on three Euromega Izusu TFS 69 4 x 4 commercial vehicles because they have a pay load of less than 1 Tonne.

The issue

The issue for determination in the appeal is whether the Appellant has discharged the burden of proof upon it of establishing that the un-laden weight of the vehicles is 1 tonne or more. Customs say that it has not as the vehicles are "grey vehicles" for import purposes and that there is inconclusive evidence as to their mass to enable the un-laden weight to be calculated. The Appellant says that they have provided the necessary information from the suppliers and manufacturers sufficient to identify the payload as being 1 tonne or more.

The evidence

A bundle was supplied by both parties and oral evidence was given on behalf of the Appellant by Graham Foulkes; and by Margaret Semple and Paul Gilbey on behalf of Customs. James Puzey of counsel appeared on behalf of HM Revenue and Customs and Graham Foulkes was instructed to act on behalf of the Appellant.

The facts

From the evidence before us we find the following facts. Mr Foulkes, who appeared for the Appellant, has been in the trade selling commercial vehicles for 32 years and he has run his present business Humphreys & Foulkes for 25 years. He has appeared as an expert witness for Customs from time to time. He explained that the commercial motor trade changes its models in July/August of each year. Factories are closed down whilst they are re-tooled to accommodate the new models. Those models are than designated with the next year's date. Hence a 1999 Isuzu TFS 69 crew cab, the subject of this appeal, is in fact a 2000 year vehicle. An assessment on five vehicles had been raised but two of the assessment were outside the three year cap and were withdrawn. The three vehicles involved JAATFS69 H27102128; H27102129 and H27102133 were supplied by A Loutsios & Sons Ltd in Cyprus. The vehicles are "grey imports" as they are not available for sale in the United Kingdom. They had been modified as the 2000 year model because the earlier models did not meet the European emission requirements. They have a 3059cc litre engine; up-rated brakes and suspension and a larger load rating for the tyres. They are sold as a "Euromega" Isuzu.

The Appellant produced the following evidence as to the vehicles mass being over 1 tonne:-

• A letter dated 31 August 1999 from Isuzu Motors Limited in Japan signed by Enshieke Mechizuki, the Manager of the International department, confirming that the gross vehicle weight (GVW) of the Isuzu TFS69 crew cab is 2780 kg and the vehicle mass (VM) is 1735 kg. Therefore the difference of GVM minus VM is at 1045.( The un-laden weight).

We do not accept the evidence deduced by the Respondents by the fax from Isuzu Brussels to the effect that the vehicles unloaded weight (mass) must be no more than 1745 and at best 1720. The evidence refers to vehicles dated 1993-1996,1997-1998 and 1999. We are satisfied that the vehicles in question were year 2000 models. The models had 3 litre engines and their specifications had been increased. The comment at the end of the fax that " Isuzu now wished to disavow the contents of the statement (presumably contained in the letter of 31 August 1999) regarding the weights and confirm that the weights should be detailed as above" is unsubstantiated and is at best hearsay. Further the fax indicates that the statement does not correspond with the EC documents. Given that the vehicles are "grey vehicles" we are not surprised. Nor do we think it strange that there should be reference to the difference being 1045kg, which effectively means that the model has an un-laden weight of one tonne as 45 kg has to be deducted to allow for the hard top. We are told that the new law relating to the exemption for vehicles over 1 tonne did not come into effect until December 2000. The vehicles were being sold as 2000 year models and the industry were aware that the law was going to be changed in circumstances where the unladen weight would become critical.

• The log books show that all three vehicles were registered on 10 June 2002

• The plate produced to the tribunal and fixed to one of the vehicles by an Isuzu distributor in Cyprus states that the GVW is 2780 kg. The figure confirmed in the letter from Isuzu.

• The gross weight of 2780 kg was also contained in the Single Vehicle Approval Certificates issued in Cyprus confirming that the vehicles complied with the terms of the Road Traffic Act 1988. It is silent as to the unladen weight but we were told by Mr Foulkes that this would be known to the inspector and would be 1735 kg.

• The declaration of registration for each vehicle reveals that the GVW is 2780 kg and the unladen weight is 1700 kg. These facts were confirmed in a letter 16 March 2005 from the suppliers A Loutsios & Sons Ltd addressed to Humphreys and Foulkes.

• A Cypriot Motor Vehicle Certificate of Registration produced for the purposes of this tribunal by the suppliers A Loutsios & SonsLtd for a similar model shows the un-laden weight of that model to be 1680

• The Respondents confirmed the GVW and un-laden weights for the earlier models as under

Model Year 93-96 GVW 2650kg Un-laden 1720 kg

Model Year 97-98 GVW 2650kg Un-laden 1745 kg

Model Year 99 GVW 2700kg Un-laden 1745kg

• The vehicles are fitted with a hard top and it is agreed by both parties that the weight of a hard top of 45 kg has to be deducted from the un-laden weight.

The legislation

Article 2 of The Value Added tax (Cars) order 1992 provides:-

"motor car" means any vehicle of a kind normally used on public roads which has three or more wheels and either:

(a) Is constructed or adapted solely or mainly for the carriage of passengers: or

(b) Has to the rear of the drivers seat roofed accommodation which is fitted with side windows or which is constructed or adapted for the fitting of side windows;

But does not include:-

iv Vehicles constructed to carry payload of one tonne or more

By the operation of Regulation 29 of the Value Added Tax Regulations 1995 a taxable person must provide such evidence of the charge to input tax as the Commissioners may direct. The Commissioners may, in their discretion, consider such other material as may be relevant in determining entitlement to credit for input tax.

The submissions

Mr Puzey submitted that the burden of proving that the vehicles weighed 1 tonne or more lies with the Appellants. In arriving at that figure a deduction of 45kg has to be made to allow for the weight of the hard top. The letter from Isuzu of 31 August 1999 must be suspect. The law allowing vehicles to be exempt, if they weighed 1 tonne or more, did not come into effect until December 2000 so there would be no need to confirm in a letter dated 31August 1999 what the vehicle mass should be. Further the Isuzu representative in Brussels had indicated that Isuzu did not now endorse the details contained in that letter. It is also unclear why, after the vehicle had been manufactured, the Cypriot motor dealer would affix a plate to the vehicle identifying various specifications. The fact that the vehicle had been fitted with bigger tyres does not necessarily mean that a vehicle could carry a larger pay load. The gross vehicle weight is known to be 2780 kg but various figures have been produced as to the vehicle's mass. There appears to be no specific information as to vehicle mass other than the letter from Isuzu of 31 August 1999, which the Commissioners do not accept as reliable, as it does not refer specifically to the vehicles that are the subject of this appeal.

Mr Puzey referred us to the case of Grunwick Processing Laboratories Ltd v Commissioners of Customs and Excise 1987 STC 357. That case decided that the appellants had failed to establish on a balance of probabilities that invoices from a dishonest third party should in part be ignored because the scientific evidence showed that less silver extract could have been obtained. Evidence could have been given as to the facts by the dishonest third party, but he had not been called. As a result the appellants could not on a balance of probabilities establish that his evidence was defective. Similarly in this case the Appellant cannot deduce evidence as to the unladen weight of the vehicle and has produced no reliable evidence to establish that it must be 1735 kg or less.

Mr Foulkes submitted that the plate attached to vehicles in Cyprus, after their manufacture, was affixed by the Isuzu distributor in Cyprus. There is no doubt that the letter from Isuzu dated 31 August 1999 is genuine. Why would they have produced the letter on 31 August 1999 if it was intended to mislead? Surely they would have released the letter after the new law came into effect in December. Further the letter identifies that the un-laden weight was 1045kg. All parties accept that the reduction for the hard top did not come into effect until July 2000. Isuzu changed the models, along with the rest of the motor trade, in August of each year. The Commissioners have throughout referred to earlier models. If as the supplier Mr Foulkes had thought that VAT input tax would not have been allowed he would have altered the vehicles by removing the rear seats and seat belt points and converted them so that they complied with the legislation for exemption purposes. He did not do that as he was satisfied with the information provided by the manufacturers and his supplier in Cyprus. The Appellant has proved on the balance of probabilities that the vehicles un-laden weight was 1 tonne.

The decision

We are satisfied that the Appellant has produced sufficient evidence to prove that the un-laden weight of the vehicles even after the reduction for the hard top is at least one Tonne. The gross vehicle weight is 2780kg. That fact cannot be contested as there is sufficient evidence in all of the documentation of that fact. The problem lies with the vehicle mass. For the vehicles to be one Tonne or more the vehicle mass cannot exceed 1735 kg. ( ie 2780 – 45 (the hard top) –1000 = 1735).

We are told by Isuzu Motors Limited in their letter of 31 August 1999 that the vehicle mass of generic Isuzus TFS69 crew cabs is 1735. We have no reason to doubt the validity of that letter. The date ties in with the change of the manufacture of the vehicles as identified by Mr Foulkes. The declaration of registration for each vehicle reveals the un-laden weight to be 1700kg. The un-laden weight of a similar vehicle as identified in the Motor Vehicle Certificate of Registration as identified by Loutsios & Sons Ltd reveals the un-laden weight of the generic vehicle to be 1680 kg.

We are told that the inspector providing the Single Vehicle Approval Certificate would have known that vehicles mass would have been 1735 kg. The declaration of registration states that the vehicle mass is 1700. The only evidence deduced by Customs identifying the vehicle mass at over 1735 is the evidence of the two earlier models 1997-98 and 1999 with an un-laden weight of 1745kg. We are satisfied that the model range changed to a 3 litre vehicle in August 1999 and those two examples are not relevant to these vehicles.

What more can the Appellants do? From the evidence that they have produced the un-laden weight could be as little as 1680 kg but cannot be greater than 1735 kg. The only evidence showing that the un-laden weight could be 1745 kg relates to vehicle prior to the change of model. We therefore find that on the balance of probabilities the vehicles un-laden weight is 1 tonne. As a result the exemption applies and the input tax is reclaimable

We award costs to the Appellant such costs to be agreed between the parties and failing agreement to be brought back to the Tribunal for assessment.

DAVID PORTER

CHAIRMAN
Release Date: 12 September 2005

MAN/04/0545