United Kingdom VAT & Duties Tribunals Decisions

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You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> Calibre Tas Ltd v Revenue & Customs [2007] UKVAT V20508 (14 December 2007)
URL: http://www.bailii.org/uk/cases/UKVAT/2007/V20508.html
Cite as: [2007] UKVAT V20508

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Calibre Tas Ltd v Revenue & Customs [2007] UKVAT V20508 (14 December 2007)

20508

VAT – Flat Rate Scheme – Whether Expert Witness and Employment Consultant Management Consultant? No – Appeal allowed

LONDON TRIBUNAL CENTRE

CALIBRE TAS LTD Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY'S

REVENUE AND CUSTOMS Respondents

Tribunal: ADRIAN SHIPWRIGHT (Chairman)

CAROLINE DE ALBUQUERQUE

Sitting in public in London on 27 September 2007

Mr John Rollings, Director, for the Appellant

Mrs Gloria Orimoloye for HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2007


 


DECISION

Introduction

1. This is an appeal against a decision on review by the Respondents ("HMRC") to charge the Appellant's business category for the purposes of the Flat Rate Scheme from "Business Services not listed elsewhere to Management Consultancy. The rate is then 12.5% rather than 11%.

The Issue

2. The issue in this case is whether the Appellant's supplies are supplies of Management Consultancy services for the purpose of the Flat Rate Scheme.

The Law

3. The law is found in Regulation 55A to 55V of the VAT Regulations 1995.
4. The Categories are set out in Regulation 55K(4). This provides:

"Table

	Percentage
Post offices Retailing food, confectionery, tobacco, newspapers or children's clothing	2
Membership organisation Pubs Wholesaling food	5.5
Farming or agriculture that is not listed elsewhere Retailing that is not listed elsewhere Wholesaling agricultural products	6
Retailing pharmaceuticals, medical goods, cosmetics or toiletries Retailing vehicles or fuel Sport or recreation Wholesaling that is not listed elsewhere	7
Agricultural services Library, archive, museum or other cultural activity Manufacturing food Printing Repairing vehicles	7.5
General building or construction services* Hiring or renting goods Manufacturing that is not listed elsewhere. Manufacturing yarn, textiles or clothing Packaging Repairing personal or household goods Social work	8.5
Forestry or fishing. Mining or quarrying Transport of storage, including couriers, freight, removals and taxis Travel agency	9
Advertising Dealing in waste or scrap Hotel or accommodation Photography. Publishing. Veterinary medicine	9.5
Any other activity not listed elsewhere Investigation or security Manufacturing fabricated metal products	10
Boarding or care of animals Film, radio, television or video production	10.5
Business services that are not listed elsewhere Computer repair services. Entertainment or journalism Estate agency or property management services. Laundry or dry-cleaning services. Secretarial services	11
Financial services	11.5
Catering services, including restaurants and takeaways Hairdressing or other beauty treatment services Real estate activity not listed elsewhere	12
Architect, civil and structural engineer or surveyor Management consultancy	12.5
Accountancy or book keeping Computer and IT consultancy or data processing Lawyer or legal services	13
Labour-only building or construction services*	13.5

* "Labour-only building or construction services" means building or construction services where the value of materials supplied is less than 10 per cent of relevant turnover from such services; any other building or construction services are "general building or construction services".

5. We were referred to no useful authorities.

Evidence

6. Both sides produced bundles of documents. No objection was taken to any of the documents and they were all admitted in evidence.
7. We heard oral evidence from:

(a) David Kelly; and

(b) Andrew Coulson

No witness statements were provided

Findings of Fact

8. From the evidence we make the following findings of fact:

(a) The Appellant is a limited company. It carries on business providing the services of a Forensic Employment Consultant and Expert Witness.

(b) The Appellant was accepted into the Flat Rate Scheme by HMRC as from 1 April 2004. This was confirmed by letter dated 11 May 2004. This was on the basis that the services were "Business Services not listed elsewhere."

(c) HMRC contacted the Appellant in November 2006 by telephone. The officer concluded that the proper category was legal services at 13%

(d) The Appellant wrote to HMRC and this was treated as in effect a request for a review.

(e) By letter dated 12 January HMRC advised the Appellant that it should apply the rate of 12.5% under the Flat Rate Scheme as being within the Management Consultancy Sector.

(f) Further correspondence took place and the decision appealed against is in a letter from HMRC dated 9 March 2007.

(g) Mr Rollings is a director of the Appellant. He gave evidence of the work he does for the Appellant which is essentially all its business.

(h) He produced a sample report. This was an "Employment Report". He also described his work as an Expert Witness and his understanding of his obligations under the CPR. Mr Rollings was an associate of Trevor Gilbert and Associates and acted as Expert Witness for them.

(i) The Sample Report was a very helpful indication of what Mr Rollings did. Essentially this analysed an injured person's pre-injury earning potential and post injury earning potential to make an objective estimate of loss of earnings. This was essentially an analysis of a financial nature based on knowledge of the employment market and other significant knowledge and judgment. It was an important matter in Personal Injury cases.

(j) There was no evidence that any advice as to how a business should be run or restructured was given in the way that someone falling within the well known term of Management Consultant would do. We find this as a fact. He did travel extensively to meet people and so there might be said to be consultations. However, it was not Management Consultancy.

(k) Mr Rollings produced an email from the Chartered Institute of Management.

"John

Many thanks for your enquiry regarding definitions of management consultants and consultancies.

Please find below the definition of a management consultant from the Institute of Management Consultancy

http://www.imc.co.uk/our_standards/self_regulation.php

The sector-wide definition should be "Management consultancy is the provision to management of objective advice and assistance relating to the strategy, structure, management and operations of an organisation in pursuit of its long-tem purposes and objectives. Such assistance may include the identification of options with recommendations; the provision of an additional resource and/or the implementation of solutions."

The definition of a management consultant should be "Management consultants are those organisations and/or individuals that participate in the process of management consultancy within a framework of appropriate and relevant professional disciplines and ethics designed of the activity of management consultancy."

The Management Consultancies Association:

The MCA defines management consultancy as "The creation of value for organisations, through the application of knowledge, techniques and assets to improve performance. This is achieved through the rendering of objective advice and/or the implementation of business solutions."

Hope that this helps. Please do not hesitate to contact us again if we can be of assistance on this or any other matter.

Regards

Robert Orton

Information Researcher, Chartered Management Institute."

(l) We consider that no ordinary person would consider Mr Rollings acted as a Management Consultant. We find this as a fact.

Submissions of the Parties

Submissions of the Appellant in outline

9. Mr Rollings submitted on behalf of the Appellant that:

(a) The activities in question were acting as a Forensic Employment Consultant and Expert Witness.

(b) This did not fall easily within any of the specific categories in the Flat Rate Scheme and so properly fell within the category of "Business Services not listed elsewhere".

(c) It was not Management Consultancy in the usual understanding of that phase. The referral was to the email form the Chartered Institute of Management.

Submissions of the Respondents in outline

10. The Appellant acts as a consultant and so falls within the Management Consultancy sector as:

(a) The Appellant identified what it did as Employment Consultancy.

(b) The Appellant does more than just injury claims services.

(c) The Appellant's business does not fall within HMRC's list of trades falling within "Business services not listed elsewhere".

(d) It matches "Management Consultancy" listed businesses.

(e) Accordingly, the appeal should be dismissed.

Discussion

11. We consider the Respondent's argument to be wholly misconceived. We need to consider the words in the Statutory Instrument.
12. We accept the Chartered Institute of Management's email as an adequate description of Management Consultancy.
13. We have found as a fact:

(a) the Appellant's activities do not fall within that description; and

(b) no ordinary person would describe these activities as Management Consultancy.

14. We do not understand how factually the recharacterisation as falling in categories with higher rates could be properly made on the basis of telephone calls and no detailed consideration with the Appellant of its business.
15. We consider that the Appellant's business properly falls within the category of "Business Services no listed elsewhere". We find this as a fact. It has acted correctly throughout.
16. Accordingly, we allow the appeal with costs.

ADRIAN SHIPWRIGHT

CHAIRMAN

RELEASE DATE: 14 December 2007

LON/2007/0594