United Kingdom VAT & Duties Tribunals Decisions

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Cite as: [2006] UKVAT V19850

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Vetplus Ltd v Revenue & Customs [2006] UKVAT V19850 (25 October 2006)

19850

Jurisdiction – correctness of the assessment conceded – alleged misdirection by the Respondents – whether Tribunal has jurisdiction to consider misdirection – no – should Tribunal act as arbitrators – no – appeal dismissed

MANCHESTER TRIBUNAL CENTRE

VETPLUS LIMITED Appellant

- and -

THE COMMISSIONERS FOR

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: Lady Mitting (Chairman)

Sitting in public in Manchester on 26 September 2006

Richard Barlow of counsel for the Appellant

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

DECISION

Vetplus Limited, which is a member of a group of companies called Tangerine Group, deals in the production and wholesale sale of animal feeding products to other wholesalers, distributors and veterinary surgeons. Following a visit and examination of the Appellant's records, the Commissioners formed the view that three of the products sold by the Appellant, namely Panzym, Coatex and Lypex, had been incorrectly treated as zero rated rather than standard rated and they accordingly raised an assessment in the sum of £125,952 covering periods 03/01 to 09/03 inclusive. The assessment insofar as it related to the supply of Lypex which is sold in capsule form was not disputed, leaving in dispute the sum of £114,950 relating to the sales of Panzym and Coatex which are both sold in powder form.

Before the Tribunal, Mr Barlow, on behalf of the Appellant, accepted that whilst being animal feeding stuffs, all three products were by reason of their packaging and marketing "pet foods" and thus fall to be standard rated under excepted item No.6 in Group 1 to Schedule 8 VAT Act 1994. That the assessment was therefore in law correctly raised was conceded. However, it was Mr Barlow's contention that the Appellant had been given misleading advice by officers of the Commissioners and had, in effect, been misled into zero rating the products. The Appellant's case would be that on an assurance visit some years previously, Mrs Haythornthwaite, the mother of the current managing director, was told that products supplied in powder form (Panzym and Coatex) could be zero rated as feeding stuffs. The belief that this advice was correct was strengthened by the Commissioners' apparent acceptance that products which the Appellant believed to be similar in nature, supplied by two other members of the group, could be zero rated.

The Commissioners denied there had been any misdirection and the issue before the Tribunal was whether we, the Tribunal, had jurisdiction to adjudicate upon or grant relief in relation to the alleged misdirection. I heard no oral evidence but was considerably helped by skeleton arguments from Mr Barlow and Mr Puzey.

Mr Barlow referred to the answer given by Mr Robert Sheldon MP to the House of Commons on 21 July 1978 ("The Sheldon Statement") which reads as follows:

"When it is established that an officer of Customs and Excise, with the full facts before him, has given a clear and unequivocal ruling on VAT in writing; or it is established that an officer knowing the full facts has misled a trader to his detriment, the Commissioners of Customs and Excise would only raise an assessment based on the correct ruling from the date the error was brought to the attention of the registered person concerned."

There had been no ruling in writing but Mr Barlow's case was that an officer of the Commissioners, who had had full knowledge of all relevant facts, advised the Appellant incorrectly and to its detriment, i.e. the second limb of the Sheldon Statement. Mr Barlow referred to the cases of Animal Virus Institute v Commissioners of Customs and Excise (1998) VATTR56 and Commissioners of Customs and Excise v Arnold [1996] STC 1271. In so referring, Mr Barlow acknowledged that the Tribunal did not have jurisdiction where the only live issue was one of misdirection, as here. He acknowledged that the Tribunal did not have the jurisdiction to direct the Commissioners to adhere to the Sheldon Statement or to rule that the Commissioners were estopped from making an assessment where there had been a misdirection. However, he urged the Tribunal to adopt the course of action which was followed by the Tribunal in the case of C & G Developments Ltd v Commissioners of Customs and Excise Decision No. 2384 ("C & G").

C & G concerned the Commissioners' refusal to allow C & G a repayment of input tax. That the Commissioners were correct in law was conceded but C & G maintained it had received certain advice from an officer of the Commissioners who, in the wording of the Sheldon Statement, knew the full facts and that that advice had misled the company into acting to its detriment. The Tribunal was concerned that it lacked jurisdiction to consider the issue but at the request of both parties it agreed to act in an "arbitral capacity". Having heard the evidence, the Tribunal made full findings of fact and concluded, "the company establishes before us the second alternative in Mr Sheldon's written answer….". I was invited by Mr Barlow to act in a similar capacity, a course strongly resisted by Mr Puzey.

For a number of reasons, I declined so to act. First, as Mr Puzey submitted, the jurisdiction of the Tribunal derives from statute and cannot be enlarged upon either at the volition of the Tribunal or by the consent of the parties. There is nothing in any legislation which gives the Tribunal jurisdiction to act as arbiters. Secondly, in C & G, it was a joint decision by the parties that the Tribunal should so act and indeed following the ruling of the Tribunal the Commissioners made a voluntary payment to C & G. In this case, there is no joint approach to the Tribunal so to act because it is a course which the Commissioners did not agree with. Thirdly, it is of little point for the Tribunal to assume a fact finding role where our findings would be of no avail and could not be enforced. Fourthly, and probably most importantly, C & G was decided in 1987. There is now a fully fledged official complaints procedure which there was not then and the appropriate avenue to the Appellant would be to take his case to the Adjudicator. This option was not open to C & G. Coupled with this is the fact that I understand that the Adjudicator's office carries out its own investigations. There would therefore be a risk that I and the Adjudicator could come to different views and make different findings of fact which clearly would be a most unsatisfactory state of affairs. I further understand that any finding of fact which the Tribunal made would not be binding upon the Adjudicator.

In summary therefore, the substance of the appeal having been conceded, I find that the Tribunal has no jurisdiction to consider the issue of misdirection and it would not be an appropriate course of action for the Tribunal to act as an unofficial arbitrator. The appeal is therefore dismissed. There was no application for costs and I make no order.

LADY MITTING

CHAIRMAN
Release Date: 25 October 2006

MAN/04/0312