DECISION
Introduction
1. This
is an appeal by Mr Edward George Harrison (“the Appellant”) against the
decision of The Commissioners for Her Majesty’s Revenue and Customs (“the
Commissioners”) that the Appellant is liable to register for VAT purposes on
the grounds that he is a sole proprietor making taxable supplies of shooting in
the course of a business, and against consequential assessments to VAT made by
the Commissioners on the Appellant in relation to such supplies, those
assessments totalling £75,459. The Appellant also appeals against a penalty
assessment made by the Commissioners in respect of the Appellant’s failure to
notify the Commissioners that he was liable to be registered for VAT purposes.
2. Licences
to the shooting rights over two adjoining estates were respectively granted by
the landowners of those estates in the names (initially) of the Appellant and
another individual and in the case of one estate the shooting was enjoyed by a
syndicate of individuals (all close friends of the Appellant) and including the
Appellant himself, with the Appellant administering the affairs of the shoot
and the syndicate; in the case of the second estate the shooting was enjoyed by
a second syndicate of individuals (all known to the Appellant, but close
friends of, and chosen by, the person who became the syndicate shoot captain,
and not including the Appellant) with the Appellant again administering the
affairs of the shoot and the syndicate.
3. The
Commissioners claim that the Appellant was, by these arrangements, making
taxable supplies of shooting, and was doing so in the course of a business, and
that since the value of the supplies made exceeded the VAT registration
threshold, the Appellant was liable to register for VAT purposes, and was also
liable for the VAT he should have accounted for had he duly registered, and for
penalties for non-compliance.
4. The
Appellant argues that the arrangements between himself and the two syndicates
did not give rise to any supplies; that if they did, the supplies in question
were supplies only of administrative services whose value did not exceed the
registration threshold; that even if the Appellant supplied shooting rights to
the syndicates, the value of those supplies did not exceed the registration
threshold; and that even if the Appellant supplied shooting rights and the
value of those rights exceeded the registration threshold, the arrangements
between the Appellant and the syndicate members were such that the Appellant
did not supply those rights in the course of a business, but as the shared
enjoyment of a private pleasure. The Appellant also argues that, at least for
the initial years, since the shooting licence over the first estate was granted
jointly to himself and another individual, the assessments for those years, in
the name only of the Appellant, were wrongly made.
The Commissioners’ decision and the assessments and penalty under appeal
5. The
Appellant appeals against the following (the appeals were consolidated by the
tribunal’s direction):
(1)
A decision of the Commissioners dated 6 May 2008 determining that the
Appellant was liable to be registered for VAT purposes pursuant to Schedule 1
to the Valued Added Tax Act 1994 (“VATA 1994”) with effect from 1 March 2003 as
a sole proprietor on the grounds that he is a person making taxable supplies of
shooting in the course or furtherance of a business. This decision was upheld
on review by the Commissioners in their letter of 11 July 2008 to Grant Thornton
UK LLP, who acted for the Appellant.
(2)
A number of assessments, made on a “best judgment” basis, assessing the
Appellant for VAT in the sum of £66,900 for the period 1 March 2003 to 31
August 2008; for £2,979 for the period 1 September 2008 to 30 November 2008;
for £2,798 for the period 1 December 2008 to 28 February 2009; and for £2,782
for the period 1 March 2009 to 31 May 2009.
(3)
A penalty for late notification of liability to be registered served on
7 May 2009 pursuant to s 67(1) VATA 1994 at a rate of 15 per cent of the
Appellant’s net tax liability for the period 1 March 2003 to 5 May 2008 or £50,
if greater.
6. The
Appellant appealed against the decision, the assessments and the penalty on the
grounds that he is not making taxable supplies of shooting, and that if he is,
he is not making such supplies in the course or furtherance of a business.
The issues and our determination of the issues
7. The
principal issue for us is whether the Appellant is liable to be registered for
VAT purposes, that is, whether he makes taxable supplies which are chargeable
to VAT the value of which exceeds the registration threshold. There is also
the issue of whether, if he should have been registered, the Appellant has a
reasonable excuse for failing to notify the Commissioners of his liability to
register so that he is not liable to the penalty for which he has been
assessed. This issue broadly stated can be divided into the following
questions:
(1)
What supplies, if any, did the Appellant make, and if he made supplies
were they taxable supplies;
(2)
If the Appellant made taxable supplies, were they made in the course or
furtherance of any business carried on by him (and hence chargeable to VAT);
(3)
If so, did the value of those taxable supplies made by the Appellant
exceed the registration threshold at any time so that he thereby became liable
to register for VAT purposes; and
(4)
If so, is the Appellant nevertheless excused from liability to a penalty
for late notification of liability to register.
8. It
is our decision that:
(1)
The only supplies which the Appellant made were supplies of services of
administering and managing shoots operated by the syndicates to which he
supplied those services. The Appellant did not make a supply comprising the
grant of shooting rights or the provision of a shoot;
(2)
The value of the supplies of services of administering and managing
shoots did not exceed the registration threshold;
(3)
Even if, contrary to our decision, the Appellant made a supply
comprising the grant of shooting rights or the provision of a shoot, those supplies
were not made in the course or furtherance of any business carried on by him
and hence were not chargeable to VAT;
(4)
In consequence the Appellant was not liable to be registered for VAT
purposes, and his appeals against the decision of the Commissioners that he is
liable to be registered and the assessments to VAT and the penalty assessment
made in consequence of that decision are allowed; and
(5)
If we are wrong, and the Appellant was liable to register for VAT
purposes, the Appellant had a reasonable excuse for his failure to notify the
Commissioners of his liability to be registered and therefore is not liable to
a penalty for such failure.
The legislation
9. The
source of the UK legislation relevant to this appeal is now the European
Community Council Directive 2006/112/EC (“the VAT Directive”) which relates to
the common system of VAT throughout the Community.
10. Article 2 of the
VAT Directive provides that “the supply of services for consideration within
the territory of a Member State by a taxable person acting as such” shall be
subject to VAT.
11. Article 9(1) of
the VAT Directive defines a “taxable person” as “any person who, independently,
carries out in any place any economic activity, whatever the purpose or results
of that activity”. Article 9(1) then proceeds as follows (by way of guidance
as to what comprises “economic activity”):
“Any activity of producers, traders or persons
supplying services, including mining and agricultural activities and activities
of the professions, shall be regarded as ‘economic activity’. The exploitation
of tangible or intangible property for the purposes of obtaining income
therefrom on a continuing basis shall in particular be regarded as an economic
activity.”
12. The UK legislation giving effect to these VAT Directive provisions are, so far as relevant to
this appeal, found in sections 3 and 4 VATA 1994. Section 3(1) VATA 1994
provides that “a person is a taxable person for the purposes of this Act while
he is, or is required to be, registered under this Act”. There follows a
reference to Schedule 1 to VATA 1994, which concerns registration. Paragraph
1(1) of Schedule 1 to the VATA 1994 imposes a liability for a person making
taxable supplies to be registered, in these terms:
“…a person who makes taxable supplies but who is not
registered under this Act becomes liable to be registered under this Schedule –
(a) at the end of any month, if the value of
his taxable supplies in the period of one year then ending has exceeded
[£55,000]; or
(b) at any time, if there are reasonable
grounds for believing that the value of his taxable supplies in the period of
30 days then beginning will exceed [£55,000].”
The “threshold” figure of £55,000 is that which applied
in March 2003, the date on which the Commissioners contend the Appellant became
liable to be registered for VAT purposes.
Paragraph 5(1) of Schedule 1 to the VATA 1994 imposes the
liability on a person to notify the Commissioners that he is liable to be
registered:
“A person who becomes liable to be registered by
virtue of paragraph 1(1)(a) above shall notify the Commissioners of the
liability within 30 days of the end of the relevant month.”
The Commissioners had power to register a person who is
liable to be registered even if that person fails to notify them of his
liability.
13. Section 4 VATA
1994 deals with the meaning of “taxable supply”:
“(1) VAT shall be charged on any supply of
goods or services made in the United Kingdom, where it is a taxable supply made
by a taxable person in the course or furtherance of any business carried on by
him.
(2) A taxable supply is a supply of goods or
services made in the United Kingdom other than an exempt supply.”
14. There is no
definition of “business”: section 94(1) VATA 1994 provides that, for VAT
purposes, “ ‘business’ includes any trade, profession or vocation”, and certain
activities (not relevant to this appeal) are deemed to be the carrying on of a
business.
15. The parties
agree that case law establishes that the concept of “business” in the UK
legislation is congruent with the concept of “economic activity” in the VAT
Directive: the point is material since an issue in the Appellant’s appeal is
whether he is carrying on a business, and, as will appear, there is European
case law which concerns the question of whether or not a particular activity is
an “economic activity”.
16. In this appeal
the parties are not in dispute as to the meaning of the relevant provisions,
but are in dispute as to whether the circumstances of the Appellant are such as
to bring him within the scope of those provisions.
The evidence
17. In evidence
before us we had an agreed bundle of documents in two lever arch files
comprising letter and email correspondence between the parties; file notes of
meetings between officers of the Commissioners and, respectively, the Appellant
and a Mr Tilney (those notes were made by the officer attending the meeting in
each case); letter and email correspondence between the Commissioners and a Mr
Clifton-Brown; letter and email correspondence between the Commissioners and a
Mr Batt and an officer’s notes of her meeting with Mr Batt; and a range of
documents relating to the two shooting syndicates relevant to this appeal,
including shooting licences, vehicle registration documents, employment
contracts of gamekeepers, and annual accounts of each shooting syndicate for
each year for which the Commissioners have made assessments.
18. As to witness
evidence, there were, by way of evidence adduced by the Appellant, witness
statements of the Appellant, Mr Neville Tilney, and a number of the shooting
syndicate members; in addition there was a report prepared by Mr Charles Loyd,
an associate partner in the firm of Strutt & Parker, chartered surveyors.
For the Commissioners there were two witness statements of Mrs Karen Randall,
the officer of the Commissioners responsible for the decision made to register
the Appellant and for the consequent assessments and a witness statement of Mr
Colin Scott, also an officer of the Commissioners, who had accompanied Mrs
Randall at certain of her meetings.
19. The Appellant
gave oral evidence at the hearing and was cross-examined by Mr Ruck Keene
appearing on behalf of the Commissioners. The Appellant’s evidence dealt with
the background to the decision to form the first syndicate in what became known
as the Gresham Shoot; the grant by the estate owner of the shooting rights and
the terms of those rights; the membership of the syndicate and the involvement
and contributions of syndicate members; the expenses of the syndicate and the
sharing of those expenses between the syndicate members; the employment of a
gamekeeper; the bank account held for the syndicate; the accounts of the shoot
and the way in which surpluses and deficits were dealt with at the end of each
year; the circumstances which led to the formation of a second syndicate and
its membership; the shooting rights licence granted for the benefit of the
second syndicate; and the role of the Appellant and Mr Tilney in the operation
of the two syndicates.
20. Mr Tilney’s
witness statement was not challenged by the Commissioners (Mr Tilney was in any
event too ill to attend the hearing). His evidence also related to the
circumstances leading up to the grant of the shooting rights over the estate
and the formation of the first syndicate; his experience of running shoots; his
role in the shoots over the estate and in the operation of the first syndicate;
and the basis on which the syndicate operated.
21. The witness
statements of the various syndicate members were not challenged by the
Commissioners. The witnesses were members of either the first syndicate or the
second syndicate, and their evidence related to the formation of the
syndicates; the membership of the syndicates (and the procedures followed if a
member left the syndicate); the contributions by members to the running of the syndicates
(in kind and in cash); the role of the Appellant in organising the syndicates
and the finances of the syndicates; and the way in which members use the number
of days’ shooting allocated to them. One of the witnesses, Mr George Barran,
also gave evidence that he chose the members of the second syndicate and gave
evidence as to how replacement members were chosen. Mr Christopher Harrison,
the son of the Appellant, (and who is not a member of either shooting
syndicate) gave evidence in his witness statement in his capacity as the
contract-farmer of the East Beckham Estate. His evidence was not challenged by
the Commissioners.
22. Mr Loyd gave
oral evidence at the hearing and was cross-examined by Mr Ruck Keene. Mr
Loyd’s evidence is summarised below. Mrs Randall had produced a second witness
statement in response to Mr Loyd’s report (dealing with such matters as the
cost per bird of different shoots; the charge per gun or charge per bird made
for a day’s shooting; and “guaranteed” or “expected” number of birds shot in a
day’s shooting) and Mr Loyd commented on that evidence of Mrs Randall.
23. For the
Commissioners, Mrs Randall gave oral evidence at the hearing and was
cross-examined by Mr Thomas appearing on behalf of the Appellant. Mrs Randall
is a member of a specialist team established by the Commissioners to deal with
the VAT treatment of shooting and other game activities, and in that capacity
has taken part in the National Shooting Project operated by the Commissioners.
Mrs Randall’s evidence related to the history of her investigation of the
Appellant and the two shooting syndicates; her enquiries made of the Appellant,
Mr Tilney and the landowners who granted the shooting rights; the conclusions
she reached and the reasons for her decision that the Appellant was liable to
be registered for VAT; the basis of the assessments subsequently made on the
Appellant; and the grounds on which she considered that the Appellant was
liable for the penalty for late notification of liability to be registered. As
mentioned, Mrs Randall also gave evidence in response to that of Mr Loyd as to
the operation and financial basis of shooting syndicates. The witness
statement of Mr Scott was not challenged: Mr Scott’s evidence related to the
meeting he and Mrs Randall had with Mr Tilney in the course of the
investigation at which Mr Tilney described his involvement with the two shoots.
Mr Loyd’s evidence
24. Mr Loyd’s
evidence covered various factual matters relating to the shoots enjoyed by the
syndicates the subject of this appeal, and he compared the operation of those
syndicates (which he characterised as “private” shoots) with the operation of a
large shoot in Suffolk with which he is familiar, and which he characterised as
a typical “commercial” shoot. He distinguished between such “commercial” and
“private” shoots in the following way:
(1)
A commercial shoot will actively seek new members by advertising to the
shooting “public” through websites and the specialised press, and will also
seek purchasers for single days (“let days”);
(2)
A commercial shoot is normally operated by the shoot owner, whereas a
private syndicate will normally be operated by the agreement of the members
according to their joint policy;
(3)
In a commercial shoot any surpluses or deficits will be for the account
of the owner, whereas in a private syndicate they will be for the account of
the members;
(4)
A commercial shoot will incur additional costs (advertising, agency and
legal fees) as well as providing a more up-market product (with good quality
food and drink, comfortable transport around the shoot, the option for
overnight accommodation, etc) as compared with a private shoot, where the costs
will relate solely to the quality of the shooting;
(5)
A commercial shoot will charge the highest price for a day’s shooting
that the market will stand: that will reflect not just the shoot’s costs per
bird and the non-shooting facilities provided, but also such factors as the
location of the shoot and the size of the expected “bag”. A private syndicate
will share the costs of the shoot, and members’ contributions will be fixed
accordingly;
(6)
Members of a commercial shoot (including purchasers of let days) will
expect to shoot a certain number of birds – a “guaranteed bag” – and will have
a refund in certain circumstances if that is not delivered by the shoot. In a
private syndicate there will be no such arrangement.
The findings of fact
25. From the
evidence before us we find the facts as set out in paragraphs 26 and 27 below.
26. As to the
shooting rights and syndicate in respect of shooting on land forming the East
Beckham Estate:
(1)
On 11 April 2002 Mr Geoffrey Clifton-Brown, the owner of the East
Beckham Estate at Gresham in Norfolk granted the sporting rights on and over
that estate to the Appellant and Mr Tilney (together as “Licensee”) for the
period 2 February 2002 to 1 February 2005. The Licensee was responsible for
preserving a proper and sufficient head of game on the estate, for controlling
vermin and preventing poaching. The licence extended to the use of a cottage
for occupation by a gamekeeper employed by the Licensee, the use of a shoot
trailer and the use of shoot pens. The Licensee agreed not to assign or
underlet the shooting rights, “save that the Licensee may himself arrange and
manage a syndicate of guns”. The Licensee agreed to provide for Mr
Clifton-Brown “in each season four days shooting for 10 guns with the
opportunity of shooting 150 birds per day fully keepered and staffed at the
expense of the Licensee”, together with the right for him to shoot informally with
not more than 3 guns on either Boxing Day or New Years Day. The Commissioners
valued those rights enjoyed by Mr Clifton-Brown at an annual amount varying
from £15,289 to £19,915.
(2)
When the grant of these sporting rights was renewed in 2005, since Mr
Tilney had in February 2005 ceased to participate in shooting activities, the
licence was granted to the Appellant alone.
(3)
The Appellant farms in Norfolk in partnership with his wife and two
sons, and the farming partnership is registered for VAT purposes. Throughout
his adult life the Appellant has enjoyed shooting and other countryside
pursuits and has a circle of longstanding farming and other friends who share
those interests. In the past he has held a shoot over the partnership’s land,
but that had ceased before 2002.
(4)
Mr Clifton-Brown first offered the shooting rights over his land to the
Appellant’s son, Mr Christopher Harrison (who farms the estate under contract),
but as Mr Christopher Harrison did not wish to take up the offer the Appellant
and Mr Tilney investigated the feasibility of running a shoot over the land and
a syndicate was formed to enjoy the sporting rights which Mr Clifton-Brown was
prepared to make available by licence. The licence of the shooting rights was,
as mentioned, granted in the name of the Appellant and Mr Tilney jointly.
(5)
Mr Tilney was very experienced in all the practical matters of running a
successful shoot, having had a career as a keeper on large estates and of
breeding birds for supplying to shoots. He had a high reputation in the area
for such matters. The Appellant had known Mr Tilney for many years. Mr Tilney
was also known to all those who became syndicate members, all of whom regarded
his involvement as a strong inducement for them to join the syndicate.
(6)
When the opportunity of taking the shooting rights arose and its
feasibility had been investigated by the Appellant and Mr Tilney, they told
shooting friends of the opportunity (and some friends, having heard of it,
approached them), and a syndicate of ten members was formed. All the members
of the syndicate (“Syndicate 1”, also known as “the Gresham Shoot” or “Gresham
Shoot 1”) were longstanding friends of the Appellant and of each other. Some
had been members of the shoot at the Appellant’s farm. In the Appellant’s view
they had a common approach to shooting: enjoying the social camaraderie of the
sport; enjoying the sport as a countryside pursuit in its widest sense (without
undue focus on the size of the day’s “bag”); and wishing to participate in a
well-run shoot confined to their friends and without the need for the
trappings often found in shoots run on a commercial basis (lavish lunches and
other refreshments, guaranteed “bags”, etc), and where costs were shared and
kept to a minimum with members prepared to contribute their skills or time as
and when circumstances required.
(7)
The shooting rights in relation to Syndicate 1 extend over
approximately 1,500 acres, including 29 acres of game cover. There are 16
drives and 5 release pens and the shoot offers 20 days’ shooting per year, with
an average bag of about 200 birds per day over the season. 8 guns shoot per
day. Partridge and pheasant are shot.
(8)
Mr Christopher Harrison farms the estate under contract, and in the
course of so doing provides cover crops for the game birds and generally
co-operates with the shoot in the course of the management of the farm land,
consistent with the terms of the licence of the shooting rights. In return,
the syndicate allows him an occasional day’s shooting.
(9)
Syndicate 1 was established on informal lines: there was no written
syndicate agreement and no professional advice was sought in establishing the
syndicate. It is not clear exactly when the syndicate came into existence, but
the “Gresham Shoot” bank account (see below) was opened on 30 January 2002 and
the first accounts of Syndicate 1 are expressed to be for the year to 31
January 2003. The arrangements between the syndicate members included the
following:
(a)
There are ten members of Syndicate 1. The Appellant was a “half-gun”
member of Syndicate 1, but initially Mr Tilney was not a member. Mr Tilney
acted as shoot captain (organising the practical side of the day’s shoot), and
when he was not a member he shot at the end of the line of guns (where birds
were fewer);
(b)
The Appellant and Mr Tilney contributed some equipment and a small
amount of cash to establish the shoot activity. When he retired from shooting,
Mr Tilney received out of the then cash surplus of Syndicate 1 repayment of his
cash contributed and an amount in respect of the equipment he had contributed;
(c)
The Appellant and Mr Tilney opened a bank account with Barclays Bank on
30 January 2002. The name of the account is “Gresham Shoot”, and the
signatories at that time were the Appellant and Mr Tilney (either signatory
could sign cheques or instruct the bank);
(d)
The Appellant purchased a second-hand vehicle and made it available to
Syndicate 1 for transporting the guns around the shoot. The vehicle was
initially fitted out, and then over the years serviced and repaired, without
charge, by the Appellant and several other members of the syndicate, the
syndicate purchasing any equipment or spare parts required;
(e)
Any new or replacement equipment required for the shoot (rearing huts,
release pens etc) were purchased out of surplus funds in Syndicate 1’s account;
(f)
A gamekeeper was employed: his statement of terms of employment show his
employer to be Gresham Shoot Syndicate 1, and in matters relating to the
keeper’s holiday entitlement, sickness and grievance procedures the Appellant
is named as the person to whom the keeper must apply or report. The
gamekeeper’s wages and other employment costs are an expense met out of
Syndicate 1’s funds;
(g)
A Land Rover was purchased by Syndicate 1 for the gamekeeper’s use and
registered in the name of “Gresham Shoot Syndicate”;
(h)
Each year every syndicate member contributes a payment to Syndicate 1 in
proportion to the number of gun places he wishes to use (for example, eight
days’ shooting over the season, or four days’ shooting). For the forthcoming
season the Appellant determines an annual charge to syndicate members after the
end of the preceding season. The annual charge is based on the Appellant’s
estimate of the costs of running the shoot for the forthcoming season, but also
takes into account any surplus or deficit carried over from the season just
ended. No profit element is included in the annual charge – the aim is to
share the costs, and no more. Each member pays his annual charge in two equal
instalments, in July before the season begins and in September, as it begins.
The syndicate bank account has an overdraft facility, but the Appellant will
contribute his share so as to reduce drawings on that facility, or by defraying
an expense himself and delaying reimbursement, depending on the cashflow – the
Appellant’s contribution in this way does not necessarily strictly equate to
the half-gun contribution which otherwise would be payable by a member with his
level of participation in the shoot;
(i)
Certain syndicate members have on occasion arranged to take all their
days’ shooting for the season on one day or over two days (i.e. if he has eight
days’ shooting for the season the member will take eight – or four – places on
one day’s shoot, inviting friends or family to fill the places (often returning
similar “hospitality” offered to him on another shoot));
(j)
In arranging the shooting days at the beginning of each season Mr
Clifton-Brown’s choice of his four reserved days has priority. During those
days Mr Clifton-Brown and his guests will shoot birds reared by and at the cost
of the syndicate and will have, at the syndicate’s cost, the attendance and
services of the gamekeeper and beaters;
(k)
With the exception of the arrangements negotiated with Mr Clifton-Brown
on the grant of the licence, and the occasional day’s shooting offered to Mr
Christopher Harrison in return for his provision of ground cover in the farming
of the estate, Syndicate 1 has never provided “let” days of shooting, that is,
has never made available for a fee a day’s shooting for anyone outside the
syndicate. If for any reason a member cannot shoot on a particular day he may
try to “exchange” that day with another member not then due to shoot, or invite
a friend to take his place without charge (if so, the expectation would be that
the friend is known socially to at least some of the other members shooting
that day and that he will fit in with the ethos of the syndicate). Otherwise
his day is forfeit, and there is no refund of a portion of his members’ charge;
(l)
The syndicate is run with an emphasis on the sport: a mid-morning
alcoholic drink is provided, but no other refreshments are provided (members
supply their own), and facilities (such as transport around the shoot and a
portakabin shelter for the lunch break) are rudimentary;
(m)
At the end of each day’s shooting the members of the syndicate take
however many birds they wish, and the rest are sold to a game dealer and the
sale proceeds brought into account towards defraying the expenses of the
syndicate. The syndicate’s accounts for the year ended 31 January 2003 show
income for bird sales of £2,067 (approximately 4.5 per cent of total income);
for the year ended 31 January 2005, £1,107 (approximately 2 per cent of total
income);
(n)
There have been few changes in the membership of Syndicate 1. If a
member leaves the syndicate the continuing members decide whether they will
take the extra days available or who may join the syndicate, to ensure the
continuation of a syndicate of like-minded people with existing ties of
friendship. When a member has left, no payment is made to him by the syndicate
for the value of any assets held by the syndicate, and, correspondingly, no
payment is required of an incoming member. There is no provision for what
would happen to the shoot’s equipment and other assets if Syndicate 1 ceased;
(o)
Usually (but not every year) at the end of the season the syndicate
members meet informally to discuss the running of the shoot, the possible
purchase of any major items of equipment which it is thought the shoot requires,
possible new syndicate members and other matters relevant to the syndicate.
There is no chairman of such meetings, and no matters are minuted. Any action
agreed upon is generally taken by the Appellant. If in the course of the
season there are decisions to be taken outside the routine running of the
shoot, the Appellant will sound out the views of syndicate members before
taking action;
(p)
For each year the Appellant produces for Syndicate 1 simple accounts,
showing income and expenses and a balance sheet (initially the accounts
comprised only an income and expenses account – a balance sheet for each year
was drawn up later). Income comprises the contributions made by syndicate
members, and (for most years) income from bird sales; the principal expenses
are the employee costs of the gamekeeper, the cost of young birds and rearing
costs, and costs of feeding and medication for the birds. The balance sheets
show the only assets as being debtors and cash (in surplus years) and
liabilities as being creditors (including the bank in deficit years). Members’
contributions range from £37,750 in 2007 to £52,077 in 2005. Deficits were
recorded in 2003 and 2004 and were carried forward, and in 2005 (the year of
the highest contributions) there was a surplus which enabled Mr Tilney to be
paid out for the value of the equipment he originally contributed and the
balance eliminated the carried-forward deficit. In 2006 there was a deficit
carried forward which was eliminated by the surplus in the following year, and
in 2008 there was a small surplus. With the exception of the sums paid to Mr
Tilney, no funds have been paid out to the members who have left the
syndicate. No amounts have been paid out to the Appellant;
(q)
The Appellant manages the “business” side of the syndicate, acting as
secretary/manager. The Appellant has no agreement with the syndicate to carry
out these functions and makes no charge, but regards it as part of his personal
contribution to the workings of the shoot. His tasks have in the past included:
fixing and collecting members’ contributions; paying the costs and expenses
incurred by the syndicate; paying the gamekeeper’s wages and ensuring
compliance with PAYE and NIC requirements; dealing with the bank (originally as
joint signatory, then as sole signatory); arranging liability insurance cover;
maintaining records and preparing the annual accounts; dealing with any matters
arising under the gamekeeper’s employment contract where the Appellant is the
named contact; liaising with members to arrange shooting days; and arranging
the members’ meeting in years when they are held; and
(r)
Syndicate 1 shares some facilities, equipment and costs with Syndicate 2
(see below), and the two syndicates have joint liability insurance cover. This
is done under informal and pragmatic arrangements rather than on a strict
cost-sharing basis.
27. As to the
shooting rights and syndicate in respect of shooting on land at West Beckham:
(1)
The exact way in which the shoot on land at the West Beckham Estate came
about is unclear. It seems likely that various circumstances came together at
about the same time. There was interest, by friends of those who were members
of Syndicate 1, in joining the syndicate, but it was felt that the shoot would
not withstand further shooting without taking shooting rights over additional
land. It also became apparent that the shooting rights over land at the West
Beckham Estate adjoining the East Beckham Estate might be available, but the
members of Syndicate 1, whilst recognising the benefits of having shooting over
that land, were unwilling to incur the extra costs of extending the shoot in
that way, and they were reluctant to expand the syndicate at the risk of losing
or diluting the particular social dimension which they regarded as a valuable
part of their shoot.
(2)
After discussion between the members of Syndicate 1 it was decided to
approach the two landowners who held the land at West Beckham to see if they
would grant shooting rights, and that if they were, whether a second syndicate
could be formed to enjoy those rights. The members of Syndicate 1 recognised
that their own shoot would benefit from having a like-minded, and
similarly-managed (and similarly-keepered), shoot on adjoining land, not only
in terms of opportunities to share equipment and costs and reap the benefits of
economies of scale, but also to reduce the “loss” of game (more particularly,
the “loss” from birds flying from the territory of their shoot would be broadly
matched by the “gain” of birds flying in from the territory of the neighbouring
shoot). Their own shoot would benefit in these ways without their having to
bear the additional costs of expanding their own shoot or risk losing the
social cohesion they enjoyed from their own particular syndicate.
(3)
The Appellant, a longstanding friend of the principal owner of the
neighbouring land, a Mr Robert Batt, was asked by the Syndicate 1 members to
approach Mr Batt and a Mr Mermegan (who owned a smaller parcel of the
neighbouring land) to negotiate shooting rights for a second syndicate. They
agreed to this.
(4)
A brief and undated document (signed only by the Appellant) is the only
record of the shooting rights granted by Mr Batt. In relation to Mr Batt’s
land, the Appellant is granted the rights to shoot over the estate in
consideration of the payment of £1 per annum; Mr Batt retains the rights to
shoot over the estate for two days each year. The Commissioners valued these
rights enjoyed by Mr Batt at an annual amount varying from £7,644 to £9,304.
There is no document in evidence as to the grant of rights over the land
originally owned by Mr Mermegan (now owned by a Mr Wilson), but the evidence of
the Appellant is that the syndicate pays an annual licence fee calculated at £5
per acre and £100 per acre for cover crop.
(5)
Syndicate 2 was formed some time in 2003 to have the benefit of the
shooting rights over the West Beckham land. The members were chosen by Mr
George Barran, a member of Syndicate 1, from amongst his friends. Syndicate 2
has between ten and twelve members. Neither the Appellant nor Mr Tilney has at
any time been a member of Syndicate 2. Changes in membership have been few,
but replacement members are admitted only after consultation between the
continuing members, and there is no payment either to departing members or by
joining members. The ethos of Syndicate 2 is similar to that of Syndicate 1,
with members who know each other well, enjoy each other’s company, and value a
well-managed but low-cost shoot where the emphasis is on the sport.
(6)
The shooting rights in relation to Syndicate 2 extend over approximately
900 acres, including 33 acres of game cover. There are 13 drives and 5 release
pens and the shoot offers 14 days’ shooting per year, with an average bag of
about 200 birds per day over the season. 8 guns shoot per day. Partridge and
pheasant are shot.
(7)
Syndicates 1 and 2 co-operate in the management and running of their
respective shoots. Thus certain matters (including purchase of day-old birds,
arranging liability insurance) are managed for both Syndicates together and the
costs shared; the rearing field for birds destined for both Syndicates is
situated on the East Beckham (Syndicate 1) land; the keepers employed
respectively by the two Syndicates are expected to work co-operatively.
(8)
Syndicate 2 operates in much the same way as Syndicate 1. Thus:
(a)
Syndicate 2 has its own bank account, with the Appellant as signatory
(Mr Tilney was originally a joint signatory, as with Syndicate 1);
(b)
Members’ contributions are assessed and paid as in Syndicate 1;
(c)
Syndicate 2 prepares its own accounts. Syndicate 2 incurs and pays its
own costs and expenses. If an expense is incurred on an item which benefits
both Syndicate 1 and Syndicate 2, the expense will be shared between the two
syndicates;
(d)
There is no profit element, but a sharing of costs between members of
the syndicate, and deficits and surpluses are carried forward in the accounts
from year to year (Syndicate 2 has been in deficit in only one year);
(e)
There are no “let” days, and a member who cannot use a day will
“exchange” that day with another member or forfeit it;
(f)
A gamekeeper is employed by Syndicate 2, and the Appellant has the same
functions with regard to his employment contract as with the employment
contract of the gamekeeper employed by Syndicate 1;
(g)
In most years there is an informal meeting of syndicate members to
review the past season and discuss any plans for the next season. This takes
place in a pub, as a social gathering rather than as an organised meeting, and
often with the members of Syndicate 1. As with Syndicate 1, in the course of
the season the Appellant will informally seek the views of members if any major
matters require a decision;
(h)
Although not a member of Syndicate 2, the Appellant carries out for
Syndicate 2 the same tasks as he does for Syndicate 1. Again, there is no
agreement for the Appellant to do this, and he receives no payment. The
Appellant has never shot with Syndicate 2; and
(i)
During the period he was involved with Syndicate 1, Mr Tilney carried
out similar tasks for Syndicate 2. He had no agreement and received no
payment.
The Appellant’s submissions
28. Mr Thomas, for
the Appellant, submitted that the Appellant was not liable to register for VAT
purposes. He argued first that the Appellant had made no supplies for VAT purposes;
secondly, that if the Appellant had made supplies, the value of those supplies
in any year did not exceed the registration threshold; and thirdly, that if the
Appellant had made supplies and the value of those supplies exceeded the
registration threshold, those supplies were not chargeable to VAT as they were
not supplies made in the course or furtherance of a business.
29. As to his first
submission (that the Appellant had made no supplies), Mr Thomas referred to the
two decisions on shooting rights, the case of Customs & Excise
Commissioners v Lord Fisher [1981] STC 238 and the decision of the tribunal
in the case of John Oswald Williams v Customs & Excise Commissioners VAT
Decision 14240. Both those cases concerned landowners seeking to exploit their
land by the grant of shooting rights over their land. That is not the
Appellant’s situation: he is a person to whom the shooting rights are granted
(either as agent for the two syndicates or as a principal – jointly with Mr
Tilney in the case of the East Beckham Estate for the early years – who then
makes them available to the two syndicates).
30. The facts
strongly indicate that the shooting rights were granted to the respective
syndicates, with the Appellant, or the Appellant and Mr Tilney jointly, acting
in an agency or fiduciary role in entering into the licence agreements with the
landowners: in each case the syndicate was established before the licence was
granted; bank accounts in the name of the respective syndicates were opened at
or before the licences were granted; key initial arrangements such as the
employment of the gamekeepers were made by the syndicates; syndicate members
contributed practically to the arrangements necessary to equip the shoot.
31. On that analysis
the Appellant made no supplies whatsoever in relation to the shooting rights:
at most he supplied each year to each syndicate the services of managing and
administering the syndicates. The Appellant received no payment for such
services. In the case of Syndicate 1 he was a member who paid his
contributions (albeit on a different basis from the twice-yearly contributions
of other members), and in the case of Syndicate 2 he was not a member and did
not shoot with that syndicate. Even if there were an argument that his right
to shoot as a member of Syndicate 1 was in some way the consideration for the
services he supplied to that syndicate, the value of that consideration was
substantially below the VAT registration threshold.
32. If, to the
contrary, the Appellant acted as principal in taking the licence of the
shooting rights (jointly, for the first three years, with Mr Tilney in the case
of the East Beckham rights) and then supplied those shooting rights to the two
syndicates, the Appellant received no consideration for so doing since the syndicate
members’ contributions were not payments to the Appellant, but were a sharing
of the costs of the shoot, that is, the costs of the syndicate itself (the
payment of the syndicate’s gamekeeper employee; the payment for day-old birds
invoiced to the syndicate and paid out of the syndicate’s bank account, and so
forth). There was no fee paid to the Appellant, and he had no entitlement to
any surplus which arose in any year in the accounts of the syndicates. It is
entirely wrong, so Mr Thomas argues, to characterise this as a case where a
person, the Appellant, provides at his cost all that is necessary for a
season’s shooting and then charges fees to those who contract for a specified
number of days’ shooting.
33. Assuming,
against the Appellant, (and also disregarding the role of Mr Tilney) that the
Appellant can be said to be providing the shooting rights per se to the
respective syndicates, those rights, as valued by the Commissioners (in the
context of their value to the respective landowners who granted them) do not
exceed in any year an aggregate value of £28,000, which is substantially below
the registration threshold. Therefore the Appellant’s second argument is that,
even if he is regarded as making supplies of granting shooting rights, the value
of those supplies is such that he is not liable to register for VAT purposes.
34. As to the third
submission, that any supplies made by the Appellant were not made in the course
or furtherance of a business and therefore were not chargeable to VAT, Mr
Thomas made extensive reference to the European case law on the meaning of
“economic activity” as it appears in the VAT Directive, and the UK case law on
the meaning of “in the course or furtherance of any business” in section 4(1)
VATA 1994.
35. In Mr Thomas’s
submission, the European jurisprudence makes it clear that not everything which
involves consideration is an economic activity, and the outcome (in terms of
whether an activity generates profit) is irrelevant in determining whether an
activity is an economic activity: it is necessary to look at the activity as a
whole and then assess whether the activity is carried on with a predominant
business or commercial objective with a view to obtaining income from that
activity (in which case there is sufficient economic content for it to
constitute an economic activity) or whether it is carried on with some other
predominant purpose (in which case it is not an economic activity). He
referred to the decisions of the Court of Justice in the cases of Floridienne
SA and another v Belgian State (Case C-142/99) [2000] STC 1044 and Banque
Bruxelles Lambert SA v Belgian State (Case C-8/03) [2004] STC 1643.
36. In his
submission, the UK cases have been consistent with this approach in their
consideration of the question of whether an activity is a supply made in the
course of a business. Thus in Lord Fisher’s case (where it was conceded
that there was a supply of services for a consideration, which is not the
Appellant’s primary case) the court was concerned to distinguish between what
was a business activity and what was an activity carried on for pleasure and
social enjoyment (even if in some circumstances such activity could be carried
on as a business). The court considered that the existence or otherwise of a
profit motive is highly relevant to the making of this distinction, but not
necessarily determinative: the issue is whether the way in which the activity
is carried on shows a predominant purpose of carrying it on for a consideration
or for some other purpose. This is also the basis of the decisions in Customs
& Excise Commissioners v Yarburgh Children’s Trust (Ch) [2002] STC 207
(a playgroup organised as a co-operative venture, charging fees to cover its
costs, was not making supplies in the course of a business) and Customs
& Excise Commissioners v St Paul’s Community Project Ltd (Ch) [2005] STC 95 (a nursery project carried out as a social project and charging fees to
cover a shortfall in grants and donations was not making supplies in the course
of a business).
37. Applying this to
the Appellant’s circumstances, it is clear from the facts that the syndicates
are run for the sporting pleasure and social enjoyment of the members, all of
whom are close friends who participate in a shoot run with a particular ethos
which they share and on the basis that costs are shared. The predominant
concern is not to operate a shoot for a consideration, but to operate a shoot
which provides good game shooting for a group of friends on a cost-sharing
basis.
38. Finally, Mr
Thomas submitted that if it is held that the Appellant is making supplies which
are chargeable to VAT, he should not be liable to the belated notification
penalty imposed by the Commissioners on the grounds that he has a reasonable
excuse for failing to notify the Commissioners of his liability to register.
The issues in this appeal are complex and uncertain, as evidenced by three days
of substantial argument before the tribunal, and the extensive case law cited
by both parties. The Appellant has a reasonable excuse for failing to register
in such a case, as recognised in the tribunal decision in the case of Standing
Conference of Voluntary Organisations v Customs & Excise Commissioners
VAT Decision 17827.
The Commissioners’ submissions
39. Mr Ruck Keene,
for the Commissioners, argued that the Appellant is making supplies in the
course of a business in that he is exploiting intangible property (the shooting
rights acquired under licence) for the income to be derived from such
property. This is an “economic activity” as defined in Article 9 of the VAT
Directive. The issue in determining whether an activity is an economic
activity (or a business) is whether assets are exploited on a continuing basis
for a consideration, not whether there is a profit motive, as demonstrated in
the Court of Justice decisions in cases such as European Commission v The
Netherlands (Case C-235/85) and Enkler v Finanzamt Homburg (Case
C-230/94) [1996] STC 1316.
40. In deciding
whether assets are exploited for a consideration it is necessary to look at the
intrinsic nature of the activity, not the motive of the person carrying out the
activity. In the UK cases this is expressed as whether the “predominant
concern” of the activity is that it is carried on for a consideration: see Lord
Fisher’s case, the St Paul’s Community Project Ltd case, Riverside
Housing Association Ltd v Revenue and Customs Commissioners [2006] EWHC 2383 (Ch) and the tribunal decision in the case of Paola Sassi v Revenue and
Customs Commissioners [2009] UKFTT 280 (TC). The six indicia identified by
Gibson J in the Lord Fisher case are useful tools in helping to identify
whether an activity is a business, but of those indicia that of the
“predominant concern” is likely to be the major issue for any tribunal required
to determine this question.
41. The
Commissioners rely on the tribunal decision in the Williams case, which
concerns the exploitation of shooting rights, and where the tribunal found on
the facts that (unlike the case in Lord Fisher) the landowner was
running the shoot as a business and not as an activity of pleasure and social
enjoyment: the taxpayer (a landowner) provided the shoot to members in return
for a subscription (the shoot was also available to let on days on commercial
terms); the members were not involved in calculating the amount of their
contributions, and all aspects of the shoot were run by Mr Williams, with only
one meeting of members over the course of several years. In Mr Ruck Keene’s
submission the Appellant’s case was, on its facts, on the Williams side
of the line rather than on the Lord Fisher side of the line. He
accepted that in the present case there were no commercial let days, but argued
that the days made available to Mr Clifton-Brown (Syndicate 1) and to Mr Batt
(Syndicate 2) were equivalent (as with the commercial let days in Williams,
they had priority over syndicate days), and were more than simply rights
retained by those respective landowners when the shooting rights licences were
granted.
Conclusions
The nature of the supplies made by the Appellant
42. We consider
first whether, on the facts of this case, the Appellant was making supplies by
way of shooting rights (or, as Mr Ruck Keene developed his case in the course
of the hearing, by way of exploitation of shooting rights conferred on him).
Our decision is that he was not; that the only supplies he made were of
services in managing and administering the two syndicates; that the value of
those supplies was below the registration threshold; and that accordingly the
Appellant was not liable to be registered for VAT purposes.
43. The Appellant
was not in the position of the taxpayer in either the Lord Fisher case
or the Williams case – he was not a landowner granting shooting rights
over his land. Instead, there are three possibilities – either:
(1)
the landowner granted the shooting rights to the Appellant (the
Appellant and Mr Tilney jointly for the first three years in relation to the
East Beckham Estate and possibly also the West Beckham Estate), and the
Appellant (possibly with Mr Tilney) operated the shoots as his (or their) own
venture and at his (or their) own cost, providing to the syndicates the right
to shoot in consideration of the syndicate members paying an annual fee; or
(2)
the landowner granted the shooting rights to the Appellant (and Mr
Tilney, as mentioned), who in turn granted corresponding rights to,
respectively, Syndicate 1 and Syndicate 2, and those syndicates operated the
shoots (hired the gamekeeper, purchased and reared the birds, and so forth) at
their own cost; or
(3)
the landowner granted the shooting rights to the Appellant (and Mr
Tilney, as mentioned) who held them in an agency or fiduciary capacity on
behalf of the syndicates, and those syndicates then operated the shoots at
their own cost.
44. The
Commissioners argue that the first of these possibilities most closely accords
with the facts, and that the Appellant is in substance in the same position as
the taxpayer in the Lord Fisher and Williams cases as to the
nature of the supplies made – he was exploiting an asset (not the land, but the
shooting rights granted to him). The Appellant argues that the facts support
the third of these possibilities, so that the Appellant is making no supplies
(other than those of administering the syndicates). The Appellant is,
alternatively, prepared to accept that the circumstances accord with the second
of these possibilities, on the basis that the annual value of the supplies made
in such a case is below the registration threshold.
45. We cannot agree
with the Commissioners. For their case to hold good it is necessary that the
Appellant (we deal below with the circumstances of Mr Tilney’s involvement)
should be the person who, at his own expense and for his own account, operates
the shoot, seeking to recover the costs of so doing from fees or contributions
paid by syndicate members, and bearing any resulting loss or benefiting from
any resulting profit from year to year. This is not the case. Although the
informality of the arrangements gives rise to some uncertainties as to the
exact nature of the relationships between the parties, the clear weight of
evidence is that the shooting syndicates, and not the Appellant, operated the
shoots.
46. Thus it was the
respective syndicates (and not the Appellant) who employed the gamekeepers (the
fact that the Appellant was named as the reference person for administering
certain of the terms of employment is not material). Invoices for major items
of expenditure (such as those for day-old birds) were rendered to the
syndicates (either individually, or together as “the Gresham Shoot”). The Land
Rover used by one of the gamekeepers was registered in the name of the
syndicate which employed him (the similar vehicle used by the other was
registered in the gamekeeper’s name, but its insurance costs were paid for by
Syndicate 2). Each syndicate had its own bank account into which were paid the
contributions of the syndicate members and the proceeds from selling game, and
from which all expenses of operating the shoot were paid. The accounts which
were drawn up by each syndicate were accounts recording the income and
expenditure of that syndicate. In years when there was a deficit in the income
and expenditure accounts that deficit was borne by the syndicate members by
being carried forward to the following year, where contributions were assessed
at an increased level intended to eliminate the deficit in that year;
correspondingly, in years of surplus such surplus was carried forward to the
following year, and contributions for that following year were assessed at a
reduced level so that the surplus was thereby returned to the members. The
syndicate members usually met informally once a year to discuss the way the
shoot was being run, and, given their close friendships with each other and
with the Appellant, their views were made known informally over the course of
the season. The practice of the syndicates was that members contributed their
time and their skills to reduce costs or assist the smooth running of the
shoots.
47. Whilst it is the
case that the Appellant ensured that all these things happened (and, in the
initial years, Mr Tilney ensured that the practical side of the shoots was up
to standard), that is a management and administration function which, as Mr
Thomas put it, the syndicates would have had to hire at their expense if the
Appellant had not been prepared to do it himself. It is not the case that the
Appellant was himself engaged in running a shoot which he then provided to the
syndicate members for a fee.
48. The question
then is whether the shooting rights were granted to the Appellant (and Mr
Tilney) who in effect granted corresponding rights to each syndicate, or
whether the Appellant (and Mr Tilney) were no more than the representatives of
the respective syndicates, so that the shooting rights granted by the landowners
are to be viewed as conferred on the syndicates themselves.
49. Our conclusion
is that the facts support the case that the syndicates received the shooting
rights, and that the Appellant (and Mr Tilney) were the mechanism, so to speak,
which brought this about, rather than principals receiving and then conferring
corresponding rights. Although there is no clear evidence showing when either
syndicate came into existence, it does seem clear that, once the Appellant knew
from his son that Mr Clifton-Brown wished to grant shooting rights over his
estate, he involved first Mr Tilney and then, once the feasibility of the shoot
was established, brought together the Syndicate 1 members. The syndicate bank
account was opened several weeks before the shooting rights licence was
granted. It is the case that the licence refers only to the Appellant and Mr
Tilney as licensee, but there is acknowledgement in the licence of the
existence of the syndicate, in that the licensee is permitted to arrange and
manage a syndicate of guns. Further, it was intended by Mr Clifton-Brown that
his gamekeeper should be employed by those holding the shooting rights (and
there is provision in the licence for sharing redundancy costs should the
gamekeeper’s employment subsequently be terminated), and it was Syndicate 1 who
employed the gamekeeper as from 1 February 2002, again, some time before the
licence was granted. In correspondence between the Commissioners and Mr
Clifton-Brown’s accountants in 2008 the accountants refer to the Appellant as
the licensee (notwithstanding that the licence was granted to the Appellant and
Mr Tilney jointly), but they also acknowledge that the gamekeeper was the
employee of Syndicate 1.
50. Furthermore, the
terms on which Mr Clifton-Brown was entitled to his four days’ shooting suggest
that the shooting rights were regarded as being held by Syndicate 1: the right
he has is not simply to four days’ shooting for 10 guns, but four such days
“with the opportunity of shooting 150 birds per day fully keepered and staffed
at the expense of the Licensee”. There are also obligations placed on the
Licensee to preserve a proper head of game, control vermin, prevent poaching
and other matters pertinent to the proper running of a shoot. As mentioned,
these matters were agreed in April 2002, more than two months after Syndicate 1
was established. Both the entitlement on those terms to four days’ shooting
and such obligations can be conferred or fulfilled only by the entity operating
the shoot, that is, Syndicate 1. Neither the Appellant alone, nor the
Appellant together with Mr Tilney, were in any position to confer such an
entitlement or fulfil such obligations.
51. The position is
similar in relation to the shooting rights over the West Beckham Estate.
Again, the weight of the evidence is that the Appellant and Mr Tilney first put
in place a syndicate (it was Mr Barran who actually selected the members, in
order that there should be ties of friendship and a common approach between the
members of that syndicate also) after assessing the feasibility of a shoot over
the land and then agreed the licence terms. There is no suggestion that the
Appellant would have taken the licence had the syndicate not been in place,
engaged the services of a gamekeeper and so forth. The (undated) shooting
licence runs to four lines only, conferring the shooting rights on the
Appellant, and Mr Batt’s entitlement to two days’ shooting has no provision as
to an expected bag. Again it is a reasonable inference that all parties knew
that the Appellant was no more than the representative of the entity which
would enjoy the shooting rights by operating the shoot and confer some
significance and value to Mr Batt’s entitlement.
52. We therefore
conclude that the Appellant did not, other than in some agency or fiduciary
capacity, receive the shooting rights, and could not have granted such rights
to either Syndicate 1 or Syndicate 2. For VAT purposes there was no supply by
the Appellant of shooting rights.
53. The Appellant
accepts that he has provided administration or management services to both
syndicates, which is a supply of services for VAT purposes. He received no fee
or similar remuneration for doing so. There is some question as to whether, in
the case of Syndicate 1, of which he was a “half-gun” member, he contributed in
cash the full amount of his contribution, and that if he did not, whether he
received consideration to the extent and value he enjoyed the benefit of a
reduced contribution. That question does not arise in relation to the services
he supplied to Syndicate 2, of which he was not a member. But assuming the
worst case against the Appellant (that he enjoyed the full value of his
Syndicate 1 membership as consideration for the services he supplied) there can
be no suggestion, and none has been made by the Commissioners, that the value
of such consideration or of the supplies in their own right was such as to
require the Appellant to be registered for VAT purposes.
54. If we are wrong
in finding that the Appellant did not receive the shooting rights as principal,
the analysis is that he (jointly with Mr Tilney) was granted the shooting
rights over both estates and granted corresponding shooting rights to,
respectively, Syndicate 1 and Syndicate 2 (that is, the second of the three
possibilities identified above). In that case (and leaving aside for the
moment the complication of Mr Tilney’s involvement), the Appellant is supplying
services in terms of the grant of such corresponding rights.
55. This raises the
question of the consideration for such a supply. It is not the contributions
of the members – we have found that those contributions are the sharing of the
costs incurred by the syndicates in running the shoots. Mr Thomas’s approach
was to say that since the rights granted exactly correspond to the rights
originally conferred under the licences by Mr Clifton-Brown and Mr Batt, then
the supply must be regarded as made for a consideration having a value which
corresponds to the consideration given for the original rights granted by those
landowners. The Commissioners take the view that the landowners received
consideration for the grants they made of the shooting rights in the form of
the shooting days to which they were entitled (which were not simply reserved
rights, but rights conferred on them enhanced in value by the activities of the
syndicates in operating a well-run and well-stocked shoot). Mrs Randall was
able to put a market value on that consideration by reference to the rate for
let days in other comparable shoots. But as Mr Thomas pointed out, in the year
when the aggregate value of the consideration enjoyed by the two landowners was
at its highest (some £28,000 in the year to 31 January 2008), the figure was
very substantially below the threshold at which the Appellant would have been required
to be registered for VAT purposes, and this remained the case even if there
were added the worst-case value attributed to the administration services
supplied by the Appellant to the syndicates.
56. This approach by
Mr Thomas as to the value of the consideration received was not challenged by
the Commissioners, and we agree with it. Therefore, even if the proper
analysis of the facts is that the Appellant, as principal, made a supply of
shooting rights to the syndicates corresponding to those rights granted to him,
it remains the case that he is not liable to be registered for VAT purposes.
57. These reasons
are sufficient for us to allow the Appellant’s appeal.
58. However, in case
we are wrong and the Commissioners are right in arguing that the Appellant was
himself operating the shoot (that is, the first of the three possibilities
referred to above), there are two further matters we need to deal with. The
first concerns the involvement of Mr Tilney, and the second is the question of
whether or not the Appellant, even if supplying taxable services, is supplying
those services in the course or furtherance of a business – if he is not, he is
not required to charge VAT on such supplies nor, in consequence, is he liable
to be registered for VAT purposes.
Questions raised by the involvement of Mr Tilney
59. As to Mr Tilney,
the Commissioners found themselves in some difficulties at the hearing. It
transpired that Mrs Randall, in the course of her investigations, was given
only a copy of the later licence granted by Mr Clifton-Brown taking effect
after the original licence expired in 2005, by which time Mr Tilney had
retired, and the Appellant alone is shown as licensee. She was also wrongly
informed by Mr Clifton-Brown’s accountants in 2008 that throughout the licensee
was the Appellant alone. Mrs Randall made her decision that the Appellant
should have registered and then made the consequential assessments on that
understanding. The original licence of April 2002, with the Appellant and Mr
Tilney as joint licensee, came to light in preparing the hearing bundles, but
only in the course of the cross-examination of Mrs Randall did the significance
of this become apparent to the Commissioners – Mr Ruck Keene’s skeleton
argument, for example, asserted that the Appellant alone was the licensee. It
is not clear whether Mrs Randall was aware that Mr Tilney was a signatory to
the shoot bank accounts (but the point was noted in the Commissioners’ skeleton
argument).
60. Both parties
took the view that, should it be necessary to have regard to the matter at all,
the Appellant and Mr Tilney should not be regarded as being in partnership, but
should be regarded as joint or co-owners of the shooting rights granted over
the East Beckham Estate for the period from February 2002 until Mr Tilney’s
retirement in February 2005.
61. If that is the
proper analysis of the arrangements we would be inclined to find on the facts
that Mr Tilney was likewise, and for the like period, also co-owner of the
shooting rights granted over the West Beckham Estate. He was not named as
licensee in the agreement with Mr Batt, but too much reliance should not be
placed on a four line undated document. What is clear is that Mr Tilney had
the same involvement in relation to Syndicate 2 and the shooting rights enjoyed
by that syndicate as he had in relation to Syndicate 1: he assessed the
feasibility of the shoot; his involvement was a strong inducement to members to
join the syndicate; he was joint signatory of Syndicate 2’s bank account; he
fulfilled the same practical role of ensuring that the shoot was up to
standard. It is the case that he was never a member of Syndicate 2 (but then
neither was the Appellant, and Mr Tilney was not initially a member of
Syndicate 1). Thus from the context it is reasonable to infer that Mr Tilney
stood in relation to the rights granted by Mr Batt as he stood in relation to
the rights granted by Mr Clifton-Brown.
62. We are, however,
reluctant to make findings on this question, both in relation to the West
Beckham Estate shooting rights and the East Beckham Estate shooting rights.
First, the parties did not offer us a considered view of this question at the
hearing nor of the implications of any findings we might make on this point;
and secondly, just as any such findings are likely to have implications for the
Appellant, so they may have possible implications for Mr Tilney. We had the
benefit of a witness statement of his evidence by Mr Tilney, but it did not
deal with this question. Mr Tilney might well wish to make representations on
a matter which could possibly result in a finding of fact which is detrimental
to him.
63. What we can
conclude is that Mrs Randall’s decision which is the subject of this appeal is,
in so far as it relates to the years 2002 to 2005, based on what most probably
is a false premise, namely that the Appellant alone held the shooting rights
throughout that period. No criticism attaches to Mrs Randall – it is clear
from the documents that her investigation was persistent and thorough, and she
reached her decision on the facts as they were disclosed to her. Some
criticism can, however, be made of those preparing this case for the hearing,
when this pertinent matter should have been identified so that a considered
case could have been put before us, including the implications for both the
Appellant and Mr Tilney and the effect, if any, on the decision and assessments
under appeal.
64. None of this is
of significance unless our decision is reversed on appeal. Should that be the
case we would respectfully suggest that the case is remitted back to us for the
parties to make considered submissions and for us then to make findings on this
question.
Is the Appellant supplying taxable services in the course of a business?
65. The second
question we have to deal with if we are wrong in our primary decision is
whether the Appellant (as a person exploiting shooting rights he holds by
operating a shoot for syndicate members who pay contributions), is supplying
taxable services in the course or furtherance of a business. Having regard to
Mr Tilney’s involvement, the proper question in relation to years 2002 to 2005
may well be whether the Appellant and Mr Tilney are so supplying such
services. Since the question can be answered without regard to that
distinction, for the sake of simplicity we will deal with it by reference to
the Appellant alone (that is, as though the Appellant alone had been granted
the shooting rights throughout). Also, in our view, no distinction material to
this question is to be made between Syndicate 1 and Syndicate 2. The question
turns in large part upon the nature and conduct of the activities of the
syndicates and the part the Appellant plays in those activities, and little
difference in these respects can be discerned between the two syndicates.
66. Counsel for both
parties dealt at some length with the European case law on this issue – what
constitutes “economic activity” for the purposes of the VAT Directive. Their
submissions are summarised above. Although there were points of difference
between Mr Thomas and Mr Ruck Keene, essentially they were in agreement that
the issue, as it has emerged both in the European cases and the UK cases, is
whether the predominant concern or purpose in carrying on the activity is that
there should be some payment or other consideration given in return for the
activity or whether the activity is carried on for some other purpose which is
the predominant concern in carrying out that activity. In some cases this is
expressed as the intrinsic nature of the activity as that is to be discerned
from such predominant concern.
67. Thus in Lord
Fisher’s case the predominant concern in running the shoot was not that the
taxpayer should receive the contributions which members of the shoot paid, but
that the shoot should result in pleasure and social enjoyment. In the Yarburgh
Children’s Trust case and the St Paul’s Community Project Ltd case,
although fees were charged to the parents using the playgroup and nursery
facilities provided by the charities, the predominant concern of the activity
which was carried out was to provide the social and child care which was the
objective of the charities concerned, and not to earn the fees which were
charged for the purpose only of defraying the expenses of the facilities
provided to the extent they were not met out of other sources of funding. Any
services supplied were therefore not supplied in the course of a business
carried on by the respective taxpayers in those cases.
68. Applying this to
the circumstances of the Appellant’s case, in our judgment the predominant
concern of running the shoots over the East and West Beckham Estates was not to
earn or receive the contributions of the syndicate members, but to provide the
shoot as sport and social enjoyment on terms whereby the costs were met by
member contributions. We consider that the following features of the shoots
show this to be the case:
(1)
It was a matter of high significance in both shoots that all the members
should be good friends and well-known to each other from other pursuits,
like-minded and from a similar background. This was so not only in relation to
the original members when the syndicates were first established, but was an
important factor in bringing in new members when old members retired;
(2)
Great care was taken, when a member was prevented from taking up a day’s
shooting, either to exchange his place with another member, or to offer the
day, at no cost, to someone outside the syndicate who was nevertheless known to
the other members who would be shooting that day;
(3)
The shoots had a particular ethos which all the members wished to
preserve: essentially the shoot comprised local farmers and their friends who
wanted quality and well-run shooting sport in its widest country pursuit sense
without the trappings and costs associated with shoots aimed at a more wealthy
clientele;
(4)
A feature of that ethos was the readiness of members to contribute
skills and time to provide or improve shoot facilities, and to help run a shoot
day on days when they were not shooting – as one syndicate member put it in his
witness statement: “everyone mucks in”;
(5)
Contributions are made for the sole purpose of meeting the shoot
expenses, and not to result in a profit. In any year deficits are borne
rateably by members and surpluses are returned rateably to members through the
mechanism of being carried forward and contribution adjustments made for the
following year. No payment is made to members as they retire, and no joining
fee is required of new members;
(6)
Decisions affecting the shoot, other than routine matters, are reached
on an informal consensus basis by all members;
(7)
There is no advertising for new members;
(8)
No days are let.
69. In Lord
Fisher’s case Gibson J pointed out that a shoot may be run as a business,
notwithstanding the element of sport and social enjoyment:
“It is not difficult, for example, to imagine
circumstances in which a man, controlling estates like those of the taxpayer,
would so organise his shooting activity that it would rightly be regarded as a
business. A longstanding love and pursuit of the sport, and genuine delight in
the society of other people who shoot, and no doubt shoot well, could not by
themselves prevent the activity from being a ‘business’ if in other respects it
is.
The running of the shoot for profit, the widening of
the source of participants outside a genuine circle of friends and relations,
the intensifying of the activity beyond what is normal for a private shoot and
the use of advertising to obtain customers or participants are examples of
matters which, as it seems to me, would be relevant for consideration on the
question whether the shoot is run as a business. For my part I find it
difficult to think of a case in which the pursuit of profit from contributions
by participants would not be decisive to show that it was a business.”
70. The operation
of the two syndicates in the present case had none of these “business”
characteristics or features. Mr Loyd’s evidence was helpful in this context in
distinguishing what he described as “commercial” shoots from “private” shoots,
but it is, of course, a question of law to be determined on the facts of a
particular case as to whether or not an activity is a business for VAT
purposes. That question is answered in the Appellant’s favour in the present
case.
71. Mr Ruck Keene
invited us to follow the decision of the tribunal in the Williams case.
There the tribunal concluded on the facts that the shoot fell on the “business”
side of the line since it was much more than an activity of pleasure and social
enjoyment. In that case the tribunal attached particular significance to the
fact that the shoot was organised for commercial let days. The tribunal said
this (at paragraph 45):
“For example, whereas in Lord Fisher there was one
single occasion when due to inflation in a particular year the shooting was let
to a firm connected with a relative and in very much a one-off departure from
what was and had always been for very many years an entirely private shoot, in
this case the whole operation has in the years with which we are concerned been
planned and organised on the basis that there will be commercial lets around
which the shoot for the members has to fit its dates.”
72. That is a very
material difference from the way in which the shoots in the present case were
organised. Far from the “whole operation” being planned and organised to
facilitate commercial lets, in the present case no part of the operation was
conceived for or directed towards that end – in every respect the aim was to
ensure good sport amongst a small and defined group distinguished by their
long-standing friendships and their wish to enjoy good shooting together. Mr
Ruck Keene argued that the days’ shooting enjoyed by the landowners should be
regarded as the equivalent of commercial let days. But that is to
misunderstand the nature and purpose of those arrangements. They were the
consideration given by the syndicates for the grant of the shooting rights
(equivalent to the licence fees paid to Mr Wilson in the case of the shooting
rights he granted to Syndicate 2); they were not (unlike commercial lets)
exploitation of the shooting rights for a fee.
73. The game shot
which the guns did not require themselves was sold after each day’s shooting to
a game dealer, and the sale proceeds brought into account by each syndicate to
help defray the costs of the shoot. The amounts received for game sold were
hardly material to the finances of the shoots. We consider that to be a matter
entirely incidental to the operation and purpose of the shoots, and not a
factor which in itself renders the activities of the shoots a business for VAT
purposes.
74. We therefore
conclude that any supply which may have been made by the Appellant (whether by
himself or jointly with Mr Tilney) was not made in the course or furtherance of
any business carried on by him, so that no VAT is chargeable on any such
supply.
The penalty
75. The Appellant
has been assessed to a penalty under section 67(1) VATA 1994 for failure to
notify in due time the Commissioners of his liability to be registered for VAT
purposes. The Appellant’s appeal against that penalty succeeds since we have
held that he has not made any supply of goods or services which is chargeable
to VAT. If we are wrong in our decision, and he has made chargeable supplies
and therefore should have been registered we have to consider whether the
penalty assessment should stand. Section 67(9) VATA 1994 provides: “Conduct
falling within subsection (1) above [i.e. failure to notify of a liability to
be registered when liable to do so] shall not give rise to liability to a penalty
under this section if the person concerned satisfies the Commissioners or, on
appeal, a tribunal that there is a reasonable excuse for his conduct.” Section
70 VATA 1994 specifies a number of matters which cannot be taken into account
in considering whether any circumstance gives grounds for reasonable excuse for
the conduct in question. The only one of such matters which could possibly be
relevant in the present case is that the person liable to the penalty has acted
in good faith.
76. Mr Thomas said that
the complexity of this case and of the question of law which it concerns
provided a reasonable excuse for the Appellant’s failure to notify the
Commissioners of his liability to be registered. He said that the UK cases cited by both parties showed that the Commissioners themselves and the courts also
have found it difficult to draw the line in individual cases between what was a
business activity for VAT purposes and what was not. He pointed out that it
had taken a three-day hearing for the parties to argue these questions as they
related to the Appellant’s circumstances. It was therefore entirely reasonable
that the Appellant should find it a difficult matter and form a view that his
circumstances were not such as to render him liable to become registered.
77. Whilst a
tribunal will rightly be cautious in accepting as a reasonable excuse the
argument that a taxpayer was unaware of his responsibilities, we see the
justice of the Appellant’s argument in this case, which we accept. This is
clearly not an instance where a taxpayer has ignored the obvious circumstances
which render him liable to become registered or where in some other way the
taxpayer has been neglectful in a situation where his responsibilities are
clear, or would be clear to him had he acted prudently and circumspectly and
with knowledge of the principles of law applicable to his circumstances.
Although the Appellant did not seek professional advice when he entered into
these shooting arrangements, he did seek such advice as soon as the Commissioners
began their investigation, and on the basis of that advice continued to assert
that he was not liable to be registered. We note, too, the further
complication of the role of Mr Tilney and the possible consequences and
uncertainties which that posed for the Appellant in considering whether or not
he was liable to be registered (questions which apparently defeated the
Commissioners both before and during the hearing).
78. Therefore, even
if the Commissioners should eventually succeed in any appeal in their argument
that the Appellant is making taxable supplies which are chargeable to VAT and
that therefore he should have been registered as from March 2003, we conclude
that there was a reasonable excuse for the conduct of the Appellant in failing
to notify the Commissioners of his liability to be registered and that
accordingly he is not liable to the penalty assessed.
79. For the reasons
given we allow the Appellant’s appeal against the Commissioners’ decision, the
assessments and the penalty in this case.
Costs
80. The proceedings
in this appeal were commenced in the VAT and Duties tribunal. The Appellant
applied at the hearing that we should direct that, pursuant to the discretion
we have under paragraph 7 of Schedule 3 to the Transfer of Tribunal Functions and
Revenue and Customs Appeals Order 2009 (“the Transfer Order”), Rule 29 of the
Value Added Tax Tribunals Rules 1986 (Award and direction as to costs) (“Rule
29”) should apply to this appeal. Without such a direction the parties would
be within the scope of The Tribunal Procedure (First-tier Tribunal)(Tax
Chamber) Rules 2009, which has a different costs regime (which, in short, would
not entitle the Appellant in this case to recover his costs). The Appellant
made a further application, that, if we determined that Rule 29 should apply to
this appeal, then we should award costs to the Appellant should he succeed in
his appeal.
81. We therefore
have to decide, first, whether this is a case where it is appropriate to apply
Rule 29, and, secondly, if it is, whether we should award the Appellant his
costs (he having succeeded in his appeal), and if so, on what terms.
82. We are within
the scope of paragraph 7 of Schedule 3 to the Transfer Order since before 1
April 2009 (the date on which the Transfer Order came into force) the Appellant
had served his notice of appeal on the VAT and Duties tribunal and thereby
commenced his proceedings in that tribunal. (In this appeal there were several
notices of appeal, each relating to the sequence of decisions and assessments
made by the Commissioners as matters unfolded: the notice of appeal against the
decision of the Commissioners that the Appellant was liable to be registered
for VAT was dated 31 July 2008, and the consequent assessment made by the
Commissioners on the Appellant was appealed against by a notice of appeal dated
28 November 2008. Further assessments and penalty assessments were made by the
Commissioners, and in each case (but after 1 April 2009) the Appellant served a
further notice of appeal. Mr Thomas, reasonably in our view, described these
further assessments and related notices of appeal as “parasitic” upon the two
principal matters in contention, namely the decision as to liability to be
registered and the principal assessment made on the basis that the Appellant
should have become registered. All the appeals were consolidated by the
direction of the tribunal. These further assessments and penalty assessments
do, however, raise an issue which we deal with below.)
83. Paragraph 7(3)
of Schedule 3 to the Transfer Order is in these terms, applying to tribunal
proceedings commenced before 1 April 2009:
The tribunal may give any direction to ensure that
proceedings are dealt with fairly and justly and, in particular, may –
(a) apply any provision in procedural rules
which applied to the proceedings before the commencement date [1 April 2009];
or
(b)
disapply any provision of Tribunal Procedure Rules.
It is clear from paragraph 7(4) of Schedule 3 to the
Transfer Order that “procedural rules” in sub-paragraph (3)(a) means, in
relation to this appeal, the Value Added Tax Tribunals Rules 1986.
84. Paragraph 7(7)
of Schedule 3 to the Transfer Order provides:
An order for costs may only be made if, and to the
extent that, an order could have been made before the commencement date [1
April 2009] (on the assumption, in the case of costs actually incurred after
that date, that they had been incurred before that date).
85. Rule 29 gives a
tribunal power to direct that a party shall pay to the other party to an appeal
the costs of that other party which are the costs of and incidental to and
consequent upon the appeal. The tribunal may either specify the amount which
it determines as such costs, or direct that that such costs are taxed in the
normal way on a basis specified by the tribunal.
86. Therefore,
applying these various provisions to the circumstances of this appeal, we have
proceedings which began before 1 April 2009 and which are therefore within the
ambit of paragraph 7 of Schedule 3 to the Transfer Order and at their
commencement were subject to the Value Added Tax Tribunals Rules 1986
(including Rule 29); we have a discretion to give any direction to ensure that
the proceedings are dealt with fairly and justly, including a direction to
apply Rule 29; and any direction we may make as to the costs of the appeal must
be within the ambit of Rule 29 on the assumption that all such costs had been
incurred whilst the Value Added Tax Tribunals Rules 1986 were actually in
force.
87. Mr Thomas argued
that we should exercise the discretion which we have, and apply Rule 29, and
having done so, should direct the Commissioners to pay the Appellant’s costs of
his appeal. He pointed out that the tribunal’s discretion is to be exercised
in a manner which ensures that proceedings are dealt with fairly and justly,
and that in the present case it is fair and just that the Appellant’s costs
should be dealt with under the rules which applied when he began his appeal, at
which time the new rules were not yet published nor their likely terms publicly
known. He mentioned that there had been delays in the appeal proceedings on
the part of the Commissioners, who first had raised objections to the tribunal
entertaining the appeal without the payment of the tax assessed and then had
asked for extensions of time to prepare their statement of case (which was not
served until 3 April 2009): without such delays it was possible that the
hearing of the appeal could have taken place before April 2009, or shortly into
the new regime. This is not a case of an appellant who, knowing of the new
costs regime, had hurried to bring his appeal before 1 April 2009, but a case
where an appellant, when filing his notice of appeal, had a legitimate
expectation that the then current rules as to costs would apply in the event
that his appeal succeeded.
88. Mr Ruck Keene
argued that we should not exercise our discretion to apply Rule 29. He
accepted that on two occasions the Commissioners had applied for an extension
of time and had opposed the Appellant’s hardship application, but there had been
no improper motive in so doing on the part of the Commissioners, and no
intention of delaying the hearing until the new regime was in place. He said
it was not realistic to surmise that the appeal could have been heard before 1
April 2009 without such action on the Commissioners’ part, since that was only
seven months after the first notice of appeal. He said that there had been
agreed joint directions on 16 March 2009 and also a pre-trial directions
hearing attended by the parties on 3 July 2009: either of those provided a
proper occasion on which the Appellant should have raised this matter, but the
Appellant had failed to do so.
89. We have decided
that we should exercise our discretion, and we direct that Rule 29 apply to
these proceedings. Whilst we share Mr Ruck Keene’s scepticism as to whether
the hearing of this appeal would have taken place before 1 April 2009 absent
the delays resulting from the Commissioners’ actions, we accept that the
Appellant began his proceedings with the perfectly reasonable expectation that
they would be governed by the costs rules then in place. We also consider that
if there had not been delays occasioned by the Commissioners so that the
hearing had been held in the early months of the new regime, both parties and
the tribunal itself would, in all likelihood, to judge from previous practice,
have expected Rule 29 to apply as a matter of course. Whilst we consider that
as a matter of practice it would have been preferable for this question to have
been raised in case management proceedings (so that the parties would know
where they stood on this issue in continuing with the appeal), the fact that it
was not so raised is not in any way fatal to the Appellant’s application on the
matter made at the conclusion of the hearing. In all the circumstances these
proceedings are dealt with fairly and justly if Rule 29, rather than the new
costs regime, is applied.
90. As mentioned,
certain of the notices of appeal strictly before us were lodged after 1 April
2009 in response to subsequent assessments and penalty assessments made by the
Commissioners. They may be regarded as assessments of a “procedural” (rather
than a “substantive”) nature. We accept the point made by Mr Thomas that such
assessments and notices of appeal are essentially “parasitic” upon the
principal matters in this appeal which were the subject of decisions and
consequent assessments (and, in turn, consequent notices of appeal) all made or
served before 1 April 2009.
91. Nevertheless, a
question arises as to whether we have power under paragraph 7 of Schedule 3 to
the Transfer Order to apply Rule 29 to that part of the proceedings which might
be said to be attributable to those later assessments and notices of appeal.
Paragraph 7 applies to “current proceedings that are continued [i.e. on or
after 1 April 2009] before the tribunal”, and “current proceedings” are defined
in paragraph 1(2) of Schedule 3 to the Transfer Order as proceedings where,
before 1 April 2009, any party has served notice on an existing tribunal for the
purpose of beginning proceedings before the existing tribunal and the existing
tribunal has not concluded those proceedings (the “existing tribunal” for
present purposes being the VAT and Duties tribunal).
92. In a case such
as this, where the substantive matters in the proceedings are “current
proceedings” as defined, and where subsequent matters which are brought within
those proceedings are entirely consequential upon or derived from those
substantive matters, it is correct to regard all the proceedings, even those
which (assuming they can be separated out) relate only to the consequential or
derivative matters, as “current proceedings”, since the notice to begin those
proceedings was served before 1 April 2009 and the subsequent matters and any
proceedings attributable to them would have no basis or existence apart from
the substantive matters and the proceedings commenced in relation to them. The
fact that the tribunal directed that the various appeals should be consolidated
supports this conclusion. The case may well be different where, say, an
assessment is made on an alternative basis (and notice of appeal served) on or
after 1 April 2009 and those proceedings are joined with other proceedings
commenced before that date, but that is not the present case. Rule 29 should
therefore apply to all the matters before us.
93. In applying Rule 29, since
the Appellant succeeded in his appeal without reservation, we see no reason
(and the Commissioners offered no reason) to do other than order that the
Commissioners pay the Appellant’s costs of this appeal, such costs (being the
costs of and incidental to and consequent upon the appeal) to be determined in
default of agreement by a Taxing Master on the standard basis, and we so
direct. Either party has leave to apply to the tribunal for further directions
should that be required to give detailed effect to our costs order.
Right to appeal
94. This document
contains full findings of fact and reasons for the decision. Any party
dissatisfied with this decision has a right to apply for permission to appeal
against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal)
(Tax Chamber) Rules 2009. The application must be received by this Tribunal
not later than 56 days after this decision is sent to that party. The parties
are referred to “Guidance to accompany a Decision from the First-tier Tribunal
(Tax Chamber)” which accompanies and forms part of this decision notice.
EDWARD SADLER
TRIBUNAL JUDGE
RELEASE DATE: 23 May 2011
Authorities referred to in skeletons
and not referred to in the decision:
Wellcome Trust Ltd v Customs
& Excise Commissioners (Case C-155/94) [1996] STC 945
Empresa de Desenvolvimento
Mineiro GSPS (EDM) v Fazenda Pública (Ministério Público, intervening) (Case
C-77/01) [2005] STC 65
Customs & Excise
Commissioners v Apple and Pear Development Council (HL) [1986] STC 192
Institute of Chartered Accountants in England and Wales v Customs & Excise Commissioners (HL) [1999] STC 398
National Water Council v
Customs & Excise Commissioners (QBD) [1979] STC 157
Institute of Chartered Accountants in England and Wales v Customs & Excise Commissioners (QBD)
[1996] STC 799
Customs & Excise
Commissioners v Morrison’s Academy Boarding Houses Association (Inner House
of Court of Session) [1978] STC 1
Notts Fire Service Messing
Club v Customs & Excise Commissioners (VAT Tribunal) VAT Decision 348
Van Tiem v Staatssecretaros
vam Financiën (Case C-186/89) [1993] STC 91
Riverside Housing Association
Ltd v Revenue and Customs Commissioners [2006] EWHC 2383 (Ch)
Quarriers v Customs &
Excise Commissioners (VAT Tribunal) VAT Decision 20660
