Drosden Plantruck Ltd v Revenue & Customs [2009] UKFTT 115 (TC) (27 May 2009)

TC00083 Drosden Plantruck Ltd v Revenue & Customs [2009] UKFTT 115 (TC) (27 May 2009)

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URL: http://www.bailii.org/uk/cases/UKFTT/TC/2009/TC00083.html
Cite as: [2009] UKFTT 115 (TC)

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Drosden Plantruck Ltd v Revenue & Customs [2009] UKFTT 115 (TC) (27 May 2009)
VAT - REGISTRATION
Other

[2009] UKFTT 115 (TC)

TC00083

VALUE ADDED TAX – appeal against refusal of request by Appellant to retrospectively amend the effective date of voluntary registration – error by Appellant on application form for registration – schedule 1, para 9 VATA 1994, Regulation 111(2) VAT Regulations 1995 – appeal dismissed

FIRST-TIER TRIBUNAL (TAX CHAMBER)

DROSDEN PLANTRUCK LTD Appellant

- and -

THE COMMISSIONERS FOR

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: Ian Vellins (Judge)

Sitting in public in Manchester on 15th May 2009

Mr. Dennis Ratcliffe, director, for the Appellant

Mr. David Griffiths of counsel, instructed by the General Counsel and Solicitor to Her Majesty's Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2009

DECISION

The appeal

In this appeal the Appellant is Drosden Plantruck Limited, a limited company carrying on the business of commercial vehicle sales from premises at Unit 3, Eastside Industrial Estate, Jackson Street, St Helens WA9 3AS, and registered for VAT with effect from 1 April 2007 under registration number 906732033. The Appellant had been voluntarily registered for VAT by the Respondents, following the submission by the Appellant of a VAT registration application form VAT1, sent to the Respondents by the Appellant's accountant on 21 March 2007. The application form had been signed by a director of the Appellant on 9 March 2007, and stated that the Appellant intended to make its first taxable supply on 1 April 2007 and wished to voluntarily register for VAT from that date. Subsequently the Respondents disallowed a VAT claim for a refund by the Appellant of £1,295, in respect of a claim by the Appellant that VAT had been incurred on the purchase of goods that had been supplied before the effective date of registration. The Appellant then requested the Respondents to retrospectively backdate the effective date of registration to 1 February 2007. The Respondents refused that request on 3 June 2008. The Appellant appealed by notice of appeal dated 15 June 2008.

Accordingly the Appellant appeals against this decision of the Respondents dated 3 June 2008 to refuse the retrospective amendment to the effective date of voluntary registration.

The Appellant stated in its notice of appeal, as the grounds of appeal, that "the Appeals Unit are being unreasonable. They are suggesting that it is ok if they make a mistake then the date of registration can be changed. However if we make a mistake it can't be changed".

At the hearing of this appeal at Manchester on 15 May 2009 the Appellant was represented by its director, Mr. Dennis Ratcliffe, and the Respondents were represented by Mr. David Griffiths, counsel.

Oral evidence was heard from the director, Mr. Dennis Ratcliffe, and from the Appellant's accountant, Mr. Gary Taylor. Written evidence was given on behalf of the Respondents in the form of three witness statements from officers of the Respondents, Christopher Paul Kelly, Sharon Hancox and Susan Marsh.

At the hearing of the appeal the facts were not in dispute, and the short issue was whether the Appellant was entitled in law to insist that the effective date of a voluntary registration, which had been chosen by the Appellant, be retrospectively amended and backdated.

The legal framework

Schedule 1, paragraph 9, of VATA 1994 provides;

"9. Where a person who is not liable to be registered under this Act and is not already so registered satisfies the Commissioners that he –

a) makes taxable supplies; or

b) is carrying on a business and intends to make such supplies in the course of furtherance of that business,

they shall, if he so requests, register him with effect from the day on which the request is made or from such earlier date as may be agreed between them and him."

Regulation 111(2) of the VAT regulations 1995 provides;

"111(2) No VAT may be treated as if it were input tax under paragraph (1) above -

a) in respect of –

1) goods or services which had been supplied, or

2) save as the Commissioners may otherwise allow, goods which had been consumed,

by the relevant person before the date with effect from which the taxable person was, or was required to be, registered;"

Facts and conclusions

I make the following findings of fact and make the following conclusions in this appeal.

The Appellant's accountant, Mr. Taylor, wrote to the Respondents on 21 March 2007 enclosing a VAT registration application form VAT 1 signed by Mr. Dennis Ratcliffe, a director of the Appellant on 9 March 2007. That form VAT 1 was received by the Respondents on 22 March 2007. That form stated that the Appellant intended to make its first taxable supply on 1 April 2007 and wished to voluntarily register for VAT from that date.

The form VAT 1 contained a number of boxes which had been completed and answered by the Appellant's accountant. In box 13 the Appellant's accountant wrote "no", in answer to the question "Have you made any taxable supplies yet?". The accountant in his own handwriting wrote that the date of first taxable supply was 01.04.2007. The accountant completed box 22, which included the statement "I am applying for voluntary registration because my taxable turnover is below the current registration threshold. I would like to be registered from 01.04.2007". At box 28 there was a legal declaration stating "I declare that the information given on this form and the accompanying document is true and complete". Mr. Dennis Ratcliffe signed that declaration as a director of the Appellant, and the accountant inserted the date 09.03.2007 below Mr Ratcliffe's signature.

The Respondents in accordance with the application of the Appellant registered the Appellant for VAT with effect from 1 April 2007.

The Appellant submitted its first period VAT return, which was received by the Respondents on 6 August 2007. That return was a claim by the Appellant to be repaid the sum of £7,628.52.

An officer of the Respondents visited the Appellant's premises on 4 September 2007 to verify the first period claim return. She established that the Appellant had claimed VAT incurred on the purchase of goods that had been supplied before the effective date of registration, and that these three vehicles were stated to have been exported to Malta, with no VAT due to export.

Following that visit the Respondents wrote to the Appellant on 6 September 2007 stating that the first period VAT return was amended to a repayment return in the sum of £6,333.52 only, and that the Respondents were disallowing the VAT claimed in respect of the three vehicles of £1,295.

The Appellant's accountant wrote to the Respondents on 20 September 2007 requesting that the Appellant's effective date of registration be backdated to 1 February 2007, which was the date of incorporation of the Appellant company.

The Respondents replied to the Appellant requesting the Appellant for information as to the date when the Appellant first charged VAT and for clarification as to why the Appellant wished to change the registration date if no VAT had been charged.

The Appellant's accountant replied to the Respondents on 19 March 2008, enclosing a copy of the first invoice raised by the Appellant in respect of the three vehicles, and stating that the reason for the change in registration was in order to claim VAT on the purchase of commercial vehicles before they were exported to Malta.

The Respondents replied to the Appellant on 27 March and refused the Appellant's application to backdate the effective date of registration. The Respondents stated that the only circumstances when they may vary the Appellant's date of registration were if there had been a departmental error made by the Respondents during the registration process, or if information came to light to indicate that the Appellant was liable to be registered from an earlier date. The Respondents concluded that there was no evidence of departmental error by the Respondents and no evidence that the Appellant was liable to be registered from an earlier date. The Respondents therefore confirmed that the effective date of registration remained as 1 April 2007.

The Appellant's accountant then wrote to the Respondents on 2 April 2008 and asked for the letter to be treated as an appeal against the decision to refuse the backdating of the effective date of registration. The accountant stated "We, as the accountants, completed the form inadvertently to commence trade on 1 April 2007 rather than the correct date of 6 March 2007. As the letter applying for the registration was dated 21 March 2007 and the documents showing proof of trade were dated 6 March, it is obvious this is a clerical error and the date was meant to be 1 February 2007, the date of incorporation".

The Respondents wrote to the Appellant's accountant on 3 June 2008 to uphold the decision to refuse backdating of the effective date of registration, stating "the requested date of 1 April 2007 was clearly entered on the form and as there was nothing to suggest that there had been uncertainty or confusion on its completion."

The Appellant appealed against that decision, the grounds of appeal having been set out earlier in this decision.

At the hearing of the appeal the director of the Appellant, Mr. Dennis Ratcliffe gave evidence that he was not disputing any of the facts. He stated that the Appellant had made a mistake by buying stock before the date that the Appellant started trading, and that his accountant had made a mistake in requesting the date of registration to be 1 April 2007. He said that he regarded it as unfair that the Respondents would not backdate the effective date of voluntary registration when the error was on the part of the taxpayer, as the Respondents would have amended the date if the error had been on the part of the Respondents. He agreed that it was his signature on the application form and that his accountant had come to him with the form for signature, which he looked at briefly and then signed. The form had been filled in by the accountant. He agreed that he had run other business that had been registered for VAT and that he was aware of procedures.

Mr. Gary Taylor, the accountant, gave evidence that Mr. Ratcliffe had purchased the Appellant company off the shelf, which had been incorporated on 1 February 2007. He said that there had been a decision to register the Appellant company for VAT from the date of incorporation, but he said that by error he had inserted on the application forms the date 04/07 instead of 02/07. He confirmed that he had been an accountant for over 21 years and had filled in hundreds of VAT application forms. He stated that his usual practice was to insert on the form VAT 1 the date of the incorporation of the company, as he would not have known the date on which a company had issued its first invoices. Both witnesses confirmed that they were not contesting any of the evidence of the Respondents. Mr. Ratcliffe agreed that the Respondents were acting in accordance with the law, but claimed that he thought that the law was unfair.

I find that the Respondents' decision was properly made in accordance with the law. I find that the decision was in accordance with the provisions of Schedule 1, section 9 of the VAT Act 1994, section 24 of that Act and Regulation 111(2) of the VAT Regulations 1995. I find that there is no provision within the law for amendment to the effective date of registration once it has been agreed, unless there is an element of departmental error by the Respondents, or if it is discovered that there is a liability to be registered from an earlier date. The date is deemed to be "agreed" when accepted and processed by HM Revenue & Customs. The Appellant had clearly applied on the application form to be registered for VAT on 1 April 2007, and the Respondents had registered the Appellant for VAT, agreeing that date.

The Appellant on the application form, which had been dated 9 March 2007, had stated that the Appellant had not made any taxable supplies yet, and had stated that the date of first taxable supply was 1 April 2007. Boxes had been completed on the application form by the Appellant's accountant that the Appellant would like to be registered from 1 April 2007 and stating that the taxable turnover was below the current registration threshold. The declaration form was signed as true and complete by Mr. Ratcliffe as a director, at the time that he went through the application form with Mr. Taylor, who had completed the details on the form.

I find that the Appellant had only wished to amend the effective date of registration when the Respondents corrected the first period VAT return to disallow the VAT claimed on the three vehicles that had been exported prior to registration. The right to deduct input tax can be exercised only by someone who is a "taxable person" at the time the relevant supplies were received. The status of taxable person is recognised in the United Kingdom by being registered for VAT. I find that the VAT incurred by the Appellant in respect of the three vehicles was consumed prior to the effective date of registration when the vehicles were supplied on 6 March 2007. I find accordingly that the VAT incurred in respect of those three vehicles is not input tax. Section 24 of the VAT Act 1994 clearly refers to supplies that are made to a taxable person at a time when he is a taxable person and are or to be used for the purpose of any business carried on by him at a time when he is a taxable person. I find that the Appellant was not a taxable person when the Appellant purchased the lorries and when they were sold, and as a matter of law the Appellant cannot recover the input tax paid on the three lorries.

I find that the Respondents have acted in accordance with their published guidance with respect to VAT registration as set out in public notice 700/1. Note 21 of that notice states "Important: if you request an earlier date than the one on which you are required to be registered, and we agree it, you must account for output tax on all your taxable supplies from that earlier date. Once the date is agreed it cannot be altered afterwards (unless it comes to light that you were liable to be registered from an earlier date than the one that was agreed)." I further find that with regards to VAT paid before registration, the Respondents have acted in accordance with their published guidelines in public notice 700/1.

The decision in John Dee Ltd v Commissioners of Customs and Excise [1995] STC 941 (CA) confirms that my appellate jurisdiction is limited, and that I cannot exercise a fresh discretion. The care and management of the tax is a responsibility given to the Respondents by parliament. I find that the Respondents have not acted in a way in which no reasonable panel of Commissioners could have acted. I find that the Respondents have not taken into account some irrelevant matter or disregarded something to which they should have given weight. I further find that the Respondents have not erred on a point of law. I have no jurisdiction to direct that the effective date of registration should be changed to an earlier date in the circumstances relating to this appeal.

As the decision of the Respondents was made in accordance with the law, I dismiss the Appellant's appeal. The Respondents did not seek any order for costs and I make no order as to costs.

MAN/2008/0819

IAN VELLINS

JUDGE
Release Date: 27 May 2009

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	First-tier Tribunal (Tax)
You are here: BAILII >> Databases >> First-tier Tribunal (Tax) >> Drosden Plantruck Ltd v Revenue & Customs [2009] UKFTT 115 (TC) (27 May 2009) URL: http://www.bailii.org/uk/cases/UKFTT/TC/2009/TC00083.html Cite as: [2009] UKFTT 115 (TC)