United Kingdom VAT & Duties Tribunals (Customs) Decisions

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Cite as: [2005] UKVAT(Customs) C198, [2005] UKVAT(Customs) C00198

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Barnfinds Ltd v Revenue & Customs [2005] UKVAT(Customs) C00198 (13 July 2005)

Barnfinds Ltd v Revenue & Customs [2005] UKVAT(Customs) C00198 (13 July 2005)

C00198

CUSTOMS DUTY –Jaguar XK120, 140 and 150 cars (1954, 1956 and 1960) – whether collectors' pieces within heading 97.05 as being of a high value and, in relation to the XK140 and 150, as illustrating a significant step in evolution – no – appeal dismissed

LONDON TRIBUNAL CENTRE

BARNFINDS LIMITED Appellant

- and -

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: DR JOHN F AVERY JONES CBE (Chairman)

ALEX McLOUGHLIN

Sitting in public in London on 5 July 2005

Christopher Keen, director, for the Appellant

James Maxwell-Scott, counsel, instructed by the Acting Solicitor for HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2005

DECISION

Barnfinds Limited appeals against a decision of review dated 20 January 2005 that the customs duty classification of three cars was under heading 87.03. (Customs' Statement of Case gives the Appellant as "Mr Christopher Keen (Barnfinds) Limited" but we presume that the company Barnfinds Limited is the proper Appellant.) Mr Christopher Keen appeared for the Appellant; Mr James Maxwell-Scott appeared for Customs.

Mr Keen gave evidence. We find the following facts:

(1) The Appellant's business is that of importing (in this case from the United States) and restoring vintage sports cars for resale.

(2) The Appellant submitted three applications for Binding Tariff Informations seeking classification under heading 97.05 ("collections and collectors' pieces of…historical…interest"). The first application was made on 9 October 2004 for a 1956 Jaguar XK140 open two-seater model (cost converted into sterling £10,857); the second on 25 October 2004 for a 1954 XK 120 open-top sports car (cost converted into sterling £11,042); and the third on 25 October 2004 for a 1960 XK150 drop-head coupe (cost converted into sterling £15,969).

(3) The XK140 was sold in the same condition for £19,500 on 21 January 2005.

(4) Mr Keen obtained an estimate (which we accept) from the registrar of a club devoted to collecting old Jaguars that there were between 1,000 and 2,000 examples of the three models taken together still in existence worldwide.

(5) The XK120 was described in a book by Paul Skilleter "Jaguar Sports Cars" as a "revolutionary sports car" because it "achieved for the first time ever saloon car standards of ride and comfort in a sports car which had a performance exceeding that of virtually any other production car." We accept these descriptions. The XK140 and 150 are derivatives of the XK120 containing some new features. Each type was available in several engine sizes and shapes making a total of 12 variants.

(6) The three cars are in their original state without substantial changes to the chassis, steering or braking system, engine, etc., are at least 30 years old and of a model or type which is no longer in production. The cars were not in running order.

(7) Customs issued three BTIs on 15 November 2004 classifying the cars under heading 87.03 as motor cars principally designed for the transport of persons. The covering letter stated that heading 97.05 did not apply because the cars were of low value and there were too many surviving examples. That decision was upheld on review on 20 January 2005 and again on 29 March 2005 as it had been discovered that the earlier review did not take into account a missing page in the request for a review. The Appellant appeals against such reviews.

Mr Maxwell-Scott, for Customs, contended that none of the three cars met the value criteria for being collectors' pieces; and that the XK140 and 150 did not meet the historical interest criteria as they were derivatives of the XK120.

Mr Keen contended that the value of the cars should be taken to be their open market value rather than the cost. The value of these cars was higher than more recent Jaguars; he gave us an internet search showing the prices of 1980s Jaguar XJS cars between £395 and £1,995, showing that the premium price of the cars in this appeal was their value as a collector's item. While the XK140 and 150 were derivative from the XK120 they had more sophisticated electrical items and better braking and they illustrated a period of the evolution of cars.

Heading 97.05 (then 99.05) was considered by the European Court of Justice in Erika Daiber (Case C 200/84) where the court considered separately the criteria of collectors' pieces and historical interest. As to collectors' pieces the Court summarised the requirements in paragraph 25:

"…articles which possess the requisite characteristics for inclusion in a collection, that is to say, articles which are relatively rare, are not normally used for their original purpose, are the subject of special transactions outside the normal trade in similar articles and are of high value."

The Advocate General at p.3371 had described the value condition:

"Normally second-hand cars fetch a lower price than new cars; the price for a 30-year old second-hand car ought to be considerably lower that than of a new car. If, however, such an article is bought at several times the price of a new car, that is an indication that the value thereof is not based on its original intended use but on other criteria."

The meaning of historical interest was summarised by the Court as follows:

"Collectors' pieces which evidence a significant step in the evolution of human achievements or illustrate a period of that evolution are to be regarded as being of historical or ethnographic interest…".

The Explanatory Notes to the Combined Nomenclature to Chapter 97 deal with cars and refer to this case:

"This heading includes motor vehicles as collectors' pieces of historical interest if they meet the criteria set out n the judgment of the Court of Justice of the European Communities in Case No. C 200/84, and therefore:

possess a certain scarcity value,

are not normally used for their original purpose,

are the subject of special transactions outside the normal trade in similar utility articles,

are of high value, and

illustrate a significant step in the evolution of human achievements or a period of that evolution.

In view of the fact that a motor vehicle is basically a utility article with a relatively short life, and subject to constant technical development, then the foregoing preconditions underlying the above judgments, in so far as they are not obviously contradicted by the facts, can be taken to apply in respect of:

vehicles in their original state, without substantial changes to the chassis, steering or braking system, engine, etc., at least 30 years old and of a model or type which is no longer in production,

all vehicles manufactured before 1950, even if not in running order."

In Uwe Clees (Case C-259/97) the European Court explained that the Explanatory Notes made a presumption of historical interest for cars satisfying the last two criteria but the first four conditions laid down in Daiber to qualify as collectors' pieces must also be satisfied.

We were referred to a Tribunal decision Saunders v HMRC (released 24 May 2005, not yet issued) concerning a DeLorean car manufactured in 1981 in which the Chairman records Mr Maxwell-Scott, who also appeared for Customs in that case, as saying that a car need not meet all the requirements set out in Daiber, which Mr Keen interpreted as meaning that they were alternative. Mr Maxwell-Scott told us that his submission in that case was that they were cumulative. It is clear from the quotation above from the Judgment in Daiber that they are cumulative.

The "high value" condition for being collectors' pieces is in issue for all three cars. We take the value of a new ordinary car at the time of import at say £7,000 to £8,000. The cost of these cars, and we assume import values, with the addition of VAT which Mr Maxwell-Scott agrees should be added, are £12,757, £12,974 and £18,763 respectively. We consider that the relevant value should be the value for customs duty rather than the price at which the Appellant might expect to sell (and in one case did sell) the car, on the basis that we are dealing with customs duty and the value for customs purposes is used in determining the duty. On this basis, while the cars are of greater value than an ordinary new car, and are of greater value than more recent similar cars, we find that they do not meet the requirements laid down by the European Court.

The "historic interest" condition is in issue for the XK140 and 150 cars, but the XK120 is accepted as being a significant step in the evolution of car production. We agree with Mr Maxwell-Scott that this criterion is satisfied for the first type to make that step but not derivatives from it with only minor changes, such as more sophisticated electrical equipment and braking. We consider that if they are to "illustrate…a period of that evolution" they should represent a significant step in that evolution, and in this case we find that the technical changes do not meet the requirements laid down by the European Court.

Accordingly we hold that the classification of the three cars does not fall within heading 97.05 and was correctly made under heading 87.03, and we dismiss the appeal.

JOHN F AVERY JONES

CHAIRMAN

RELEASE DATE: 13 July 2005

LON/05/7005