United Kingdom VAT & Duties Tribunals (Customs) Decisions

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URL: http://www.bailii.org/uk/cases/UKVAT/Customs/2007/C00249.html
Cite as: [2007] UKVAT(Customs) C249, [2007] UKVAT(Customs) C00249

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West v Revenue & Customs [2007] UKVAT(Customs) C00249 (21 December 2007)

C00249

CUSTOMS DUTIES – Ford Zephyr Mark 1 Convertible motor car manufactured in 1955 – whether within CN heading 87.03 or CN heading 97.05 as a collectors' piece – only point in issue on the application of the CNEN was whether the motor car was "of high value" or "may fetch a high price" – provisional decision released in 2006 – appeal relisted for further evidence as to the value of the motor car's constituent materials – Erika Daiber v Hauptzollamt Reutlingen (Case 200/84) considered –– held the correct comparison is between the motor car's customs value and the value of its constituent materials – findings made as to the value of the motor car's constituent materials – held the customs value of the motor car was out of all proportion with the value of its constituent materials – the motor car was therefore properly classified within CN heading 97.05 as a collectors' piece – appeal allowed

LONDON TRIBUNAL CENTRE

PAUL WEST Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY'S

REVENUE AND CUSTOMS Respondents

Tribunal: JOHN WALTERS QC (Chairman)

Sitting in public in London on 14 September 2007

The Appellant appeared in person

James Maxwell-Scott, of Counsel, instructed by the Solicitor for HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2007

 

DECISION

1. This was the adjourned hearing of the appeal which was originally heard by myself (as Chairman) and Mr. Tym Marsh on 16 June 2006. Mr. Marsh was not available to sit at the adjourned hearing and Mr. Maxwell-Scott, on instructions, informed me that the Commissioners were content that I should sit alone at the adjourned hearing and that they would not take any jurisdictional point relative to the constitution of the tribunal as a ground for appealing my final decision. Mr. West, the Appellant, informed me that he was similarly content for me to sit alone at the adjourned hearing of the appeal.
2. Mr. Marsh and I had issued a preliminary decision for publication (release date: 12 September 2006) in which we noted (at [24]) that the question of law arising in this appeal, as we saw it, was whether there is to be found in Erika Daiber v Hauptzollamt Reutlingen (Case 200/84) justification for the following two propositions advanced by Mr. Maxwell-Scott. First, that in order for a motor car to qualify for classification as a collectors' piece, it must be more than a "classic car" which people who have enthusiasm for classic cars might choose to collect, and it must have an extra interest commanding an additional value over and above its undoubted value as a rare and highly desirable classic car. Secondly, that a motor car which qualifies for classification as a collectors' piece must have been "bought at several times the price of a new car" (cf the Opinion of the Advocate-General (Lenz) in Daiber).
3. Mr. Marsh and I had concluded that Daiber did not support these propositions and that the requirement that a motor car must be "of high value" (see the dispositif in Daiber) would be satisfied if the motor car in question was of high (great) value, out of all proportion to the value of its constituent materials (see: [29] of our preliminary decision). We cited paragraph 19 of the Judgment of the Court of Justice in Daiber.
4. Consequent upon this conclusion, we directed (at [35]) that the appeal be relisted so that we could hear further evidence on the value of the constituent materials of the motor car in question (the "Motor Car") and argument as to how we should approach the question of proportion.
5. It was in these circumstances that the adjourned hearing of the appeal came about.
6. I received a witness statement from Mr. Barry David Wheeler, a motor vehicle consultant, provided on the instructions of the Commissioners. Mr. Wheeler gave oral evidence and was cross-examined by Mr. West.
7. On the basis of Mr. Wheeler's evidence I find that the approximate value of the Motor Car as scrap metal was £75 – the value agreed by Mr. Wheeler in cross-examination when it was put to him by Mr. West.
8. I find that the approximate value of the Motor Car as a source of spare parts (whether as being impossible to repair as a motor car at all, or where the cost of repair as a motor car is more than the market value of the car when repaired) is £2,500 – again, the value put to Mr. Wheeler by Mr. West in cross-examination.
9. I accept Mr. Wheeler's evidence that the modern vehicle which can be taken as the nearest equivalent to the Motor Car is the new Ford Focus 2.0 CC3 cabriolet, and that the list price of that vehicle as new is £18,607 including VAT.
10. I find that the value of a Ford Focus 2.0 CC3 cabriolet as scrap metal is £25.
11. I find that a Ford Focus 2.0 CC3 cabriolet, if in a condition which makes it a "write off", that is, either it is damaged and repairable, but the cost of repair would be more than the market value when repaired, or it is damaged and repairable, and the cost of repair would be economically viable but repair is for some other reason not viable, is £6,000 – being effectively the value of the Ford Focus 2.0 CC3 cabriolet as a source of spare parts.
12. The value of the Motor Car was £10,575 (see: [9] of the preliminary decision).
13. Thus to carry out the test set in [29] of the preliminary decision, I compare the value of the Motor Car, £10,575, with its scrap metal value, £75, and its value as a source of spare parts, £2,500. I find that value of the Motor Car was out of all proportion to the value of its constituent materials, whether taken as scrap metal or as a source of spare parts. It follows that I hold that the Motor Car was of high value for the purposes of the application to this case of the dispositif in Daiber. I also find (though, on the approach I adopt, this is irrelevant) that the value of the Motor Car was out of all proportion to the value of a modern Ford Focus 2.0 CC3 cabriolet in a condition which makes it a "write off".
14. Mr. Maxwell-Scott anticipated this result on the basis of the evidence likely to be accepted by the tribunal, and produced concise written skeleton submissions inviting the tribunal to reconsider the preliminary decision. His main point was that "the reality is that, although not all cars are in fact "of high value", if the [Motor Car] is deemed to satisfy the test for "high value" set out in paragraphs 33 and 34 of [the preliminary decision], it is likely that virtually all other cars will do so as well. That test does not therefore truly identify those cars which are of sufficiently high value that (provided that they also satisfy the other criteria) they constitute collectors' pieces".
15. His argument was not, as I understood it, a criticism of the reasoning deployed in the preliminary decision. Instead it was a type of "floodgates" argument, suggesting that the reasoning deployed in the preliminary decision had not given any practical effect to the "high value" test as a stand-alone criterion for the qualification of an article as a collectors' piece.
16. I readily accept that it is likely that, on the reasoning deployed in the preliminary decision, virtually all cars which are "relatively rare [and] are not normally used for their original purpose [and] are the subject of special transactions outside the normal trade in similar utility articles" will also be "of high value" (cf. the dispositif in Daiber).
17. However I do not consider that this renders the criterion that collectors' pieces must be "of high value" without meaning or effect. If an article is relatively rare and not normally used for its original purpose, it is easily conceivable that it could have a value equivalent to or only slightly more than its scrap value. If this were the case, that fact would point to the article not being "suitable in itself for inclusion in a collection" (cf. paragraph 16 of the Judgment of the Court of Justice in Daiber).
18. The additional criterion that an article which is a collectors' piece must also be the subject of special transactions outside the normal trade in similar utility articles does, I accept, suggest that it will usually change hands at a price higher than its scrap value. But this condition is not looking at the value of the article, but at whether or not it is dealt with in the normal trade in similar utility articles, which is an aspect of the matter particularly directed to ensuring that the exemption from duty will not be distortive of the normal trade in similar utility articles.
19. The requirement that an article must be "of high value" to qualify as a collectors' piece is, as the Advocate-General observed in Daiber, an indication that its value is not based on the article's original intended use, but on other criteria, which "must normally be the interests of collectors". It sets the test that the value of the article must be out of all proportion to the value of its constituent materials. This is a quantitative test which will not be satisfied in all cases and, where it is satisfied, will provide further confirmation that the article is, in truth, a collectors' piece. Thus, this requirement identifies those rare objects which are not normally used for their original purpose which are, in reality, objectively suitable for inclusion in a collection, and distinguishes them from those which are not. It has a separate function as a stand-alone condition for the qualification of an article as a collector's piece, on the interpretation and application which I favour.
20. Although the four conditions identified in Daiber for qualification as a collector's piece must each be met, and are each, thus, stand-alone conditions, it is not necessary, as a matter of interpretation, that the "high value" condition must impose a requirement which would not normally be met if the other conditions were, in any particular case, satisfied. Thus, if it is the case that an article which is the subject of special transactions outside the normal trade in similar utility articles usually changes hands at a price out of all proportion to its scrap value, that does not, in my view, invalidate the interpretation and application of the "high value" condition, which I favour.
21. It must be recalled that all four conditions are criteria laid down by the Court of Justice specifically to determine whether an article "is suitable in itself for inclusion in a collection". They therefore are, as it were, four different indications of how the same destination is to be reached. It would not be surprising if it were the case that virtually all items which satisfied three of the conditions satisfied the fourth as well.
22. For the reasons expressed in the preliminary decision and in this decision, I hold that the Motor Car ought properly to be classified under heading 97.05 in the Combined Nomenclature ("Collections and collectors' pieces of ... historical ... interest"). The appeal succeeds.
23. I note that Mr. Maxwell-Scott indicated that the Commissioners would not be inviting the tribunal to make a reference to the Court of Justice. Mr. West made no such invitation either. I in any case concluded that no such reference was necessary to enable me to decide the appeal.
24. There will be liberty to apply in relation to costs.

JOHN WALTERS QC

CHAIRMAN

RELEASE DATE: 21 December 2007

LON/2005/7071