Mallon (t/a Phoenix Agency Services) v Customs and Excise [2003] UKVAT V18222 (03 July 2003)

Output Tax – Supply in the Republic of Ireland to dealer – Cars removed by dealer to UK (Northern Ireland) – Acquisition taxable in the UK – Whether supply in respect of which no VAT chargeable – Whether sale by dealer within margin scheme – VAT (Cars) Order SI 1992/3122 art 8(2)

BELFAST TRIBUNAL CENTRE

	GERALDINE ENDA MALLON T/A PHOENIX AGENCY SERVICES 	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	MR JOHN MCKEE QC  (Chairman)
						MR M MCLOY

Sitting in public in Belfast on 21 March 2003 

Mr T M Nesbitt, Licenced Credit Broker, appeared for the Appellant

Ms Sara Williams of Counsel appeared for the Respondents

© CROWN COPYRIGHT 2003

DECISION

1.	Mr Nesbitt opened his client’s appeal explaining that the Appellant’s business involved the resale of cars imported into the Republic of Ireland.  She conducted her prospective client to the docks in Dublin where the client was invited to make a selection of a vehicle which had just been imported from Japan.  If the vehicle was valued at less than £10,000.00 then the Appellant’s commission was fixed at £300.00.  If, however, the vehicle selected was valued at a figure in excess of £10,000.00, then the Appellant’s commission was measured at £500.00.  Mr Nesbitt explained that the sale of the vehicle selected was completed in Northern Ireland.

	In the course of his opening Mr Nesbitt suggested that the Appellant had taken steps with the VAT authorities to confirm the basis on which VAT would be levied and had been assured that the Margin Scheme would operate as described in the Value Added Tax (Cars) Order 1992.  On the basis of this advice he asserted that the Appellant had conducted her business for some years and had made returns which had been accepted as valid.  This Tribunal did not investigate this assertion nor did the Respondents make any submissions thereon.  The point therefore remains open for resolution if necessary at a future hearing.  Eventually the Appellant’s business was investigated by Ms Groves on behalf of the Respondents and an assessment was raised on the basis that the returns of Value Added Tax had been submitted on the wrong basis and that the Margin Scheme did not apply to afford relief from tax.

2..	This Tribunal pointed out that the issue to be decided turned, in the first instance, on the question of law namely whether the Margin Scheme applied in the circumstances outlined by Mr Nesbitt, which were not challenged by the Respondents.  Ms Williams submitted that the Margin Scheme could not apply and referred the Tribunal to De Voil’s summary of the law on “Output Tax” at V3.534 “the Seventh directive margin scheme – used cars” under the heading “Permitted Circumstances”.  De Voil sets out these circumstances as follows:-
“A supply of a used motor car is eligible to be made under the margin scheme if the taxable person took possession of the car pursuant to –

	(…and here De Voil set out four conditions).

“However, it has been held that the supply of a car from another member state followed by its taxable acquisition in the UK cannot be dealt with under the margin scheme”

The Tribunal rose to allow Mr Nesbitt to consider this authority and to advise his client.  At the resumed hearing Mr Nesbitt conceded that, in the circumstances of this case, in law the margin scheme could not apply.

3.	Accordingly the Tribunal held that the supply of a car from another member state, in this case the Republic of Ireland, followed by its taxable acquisition in the UK could not in law be dealt with under the margin scheme identified in the Value Added Tax (Cars) Order 1992.

4.	This Tribunal declined to address the question as to whether, on foot of this ruling on law, there is any debt or liability on the part of the Appellant due to the Respondents.  The reason is that there has been no claim made by or on behalf of the Appellant for in-put tax.

5.	Accordingly this Tribunal orders that this case be adjourned to enable this question to be investigated.

JOHN MCKEE QC
CHAIRMAN

RELEASED:

LON/2001/1054