[2011] UKFTT 298 (TC)

TC01160

Appeal number TC/2010/05501

DIY housebuilders – reclaim of VAT on materials supplied – SP 01/07 – VATA 1994 s35 – VAT Regulations 1995 regulation 201 – adequacy of invoice – appeal allowed

FIRST-TIER TRIBUNAL
TAX CHAMBER

	IRENE SUSAN JENNINGS	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS (value added tax)	Respondents

				TRIBUNAL: 	Judge Malachy Cornwell-Kelly
     		Mr Michael Templeman 

Sitting in public at 45 Bedford Square, London WC1B 3DN on 15 April 2011

Mr J Jennings for the Appellant

Mr Philip Rowe of HMRC for the Respondents

© CROWN COPYRIGHT 2011
DECISION

1	This appeal is an adjourned hearing of the case heard by Judge Hellier and Mr Nigel Collard as case number LON/2009/0341 on 18 December 2009, in which a decision in principle was released on 28 January 2010.  The present tribunal being differently constituted, we informed the parties at the outset that they were entitled to the further hearing being held before the judge and member who had sat previously.  After a short adjournment, both parties indicated that they were content that the matter now before the tribunal should be heard and determined by us.  The matter comes before the tribunal under section 83(g) of the Value Added Tax Act 1994 as a full jurisdiction appeal.
2	The issue of law having been settled in the previous hearing, the only matter before us was the question whether the taxpayer was entitled to repayment of the sum of £15,712 charged as value added tax on the supply to the taxpayer of building materials for the construction of a log cabin at a site near King’s Lynn, Norfolk, the construction itself being undertaken by another person.  As it happens, the cabin constructed was subsequently destroyed by fire but, though it was of relevance to the previous hearing, the later destruction of the cabin had no bearing on the issue in this hearing.
3	The taxpayer’s claim for the repayment was made on 3 November 2008 and was for the tax on a supply by Leisurewood Limited summarised in a letter from that company dated 18 July 2005.  This is the document which is in dispute, the Crown contending that it is not an ‘invoice’ for the purposes of the DIY Housebuilders and Converters Scheme, given effect by section 35 of the Value Added Tax Act 1994; regulation 201 of the Value Added Tax Regulations 1995 regarding invoices is also in point.  The Commissioners, on review, refused the claim in a letter dated 1 June 2010.  In view of its central importance in the issue now to be determined, we will describe the letter of 18 July 2005 from Leisurewood in detail.  

4	The letter is addressed to Mrs Irene Jennings and is described as a “statement for the payments we have received for which our thanks and to confirm the outstanding balance that will be required 7 days prior to the delivery of the log house and its components.  This is due for dispatch on week 30 ... .”  The letter continues, “Expected delivery to Norfolk site is week 31, 3rd – 4th August 2005, and we will confirm the actual day when DFDS forward to us their confirmed loading documentation.”  Other than that, the letter sets out the amounts of the money paid so far and the one payment which remained, as to which there is no dispute, for the “Manufacture of Special Design Log House and Sauna Boat House Buildings”.  (It was accepted by the Commissioners that the description of the goods is adequately amplified in linked documents.)  The VAT on the total payment is shown clearly and separately as £15,712.  The letter is on Leisurewood’s headed stationery and shows their VAT registration number
5	Sworn evidence was given by both Mrs Jennings and her husband Mr Jennings.  We regarded both persons as truthful and straightforward witnesses.  It emerged from this evidence that there had at times been considerable confusion about whether the supply had been properly standard rated, about whether it had or had not included construction work, about whether a formal VAT invoice was required for the claim and whether any of the documents from Leisurewood could serve for that purpose.  It is clear from the oral evidence and from the documents that the supply in question was of materials only, that it was correctly standard rated and that the whole supply including the tax was paid for, and we so find.  

6	Regrettably, an inordinate amount of time has been spent by the parties in settling this straightforward matter.  A significant part of that time has resulted from the Appellant pursuing the misconceived argument that Statement of Practice 01/07 entitled “Input Tax deduction without a valid VAT invoice” entitled them to the exercise of the Commissioners’ discretion there provided for, and that it had been unreasonably refused.  

7	As the Commissioners have correctly argued, the Statement of Practice is simply not relevant because the claim here is not in respect of ‘input tax’.   The Statement of Practice deals only with VAT registered persons.  Further confusion resulted from the suggestion, this time by the Commissioners, that the insurance claim made by the taxpayer following the destruction of the log cabin would somehow enable the taxpayer to recover twice over for the same outlay.  The insurance claim, of which there were details in the bundle, related entirely to the costs incurred in replacing the cabin and had nothing to do with the VAT charged on the acquisition of materials for the original cabin.  

8	The principal matter at issue was, however, whether a valid VAT invoice from Leisurewood had been provided and, related to that, whether Leisurewood had actually accounted for the tax due.  A tangled story emerges around that issue, Mrs Jennings attempting to recover the VAT from Leisurewood, the Commissioners taking 17 months to respond to the repayment claim which Mrs Jennings says left her in the dark as to what she need to get from Leisurewood,  Leisurewood failing to issue a final receipt for the money paid and then going into liquidation on 1 June 2010, the day on which the Commissioners finally responded to the claim.
9	Regulation 201(b)(ii) provides for a person claiming a refund of tax in these circumstances to provide –
(ii) an invoice showing the registration number of the person supplying the goods, whether or not such an invoice is a VAT invoice, in respect of each supply of the goods on which VAT has been paid which have been incorporated into the building or its site.
10	Was the letter of 18 July 2005 from Leisurewood an ‘invoice’ within the meaning of this regulation?  We have found, and indeed it was agreed, that the letter adequately identified the subject matter of the supply.  The letter correctly identified the price payable, the amount that had been paid and that which remained to be paid, and it also identified the moment at which that final payment was due.  
11	We have looked at (though we were not referred to) the dictionary definitions of ‘invoice’ and we find nothing to suggest that this letter should not be within the ordinary meaning of that term, namely a statement identifying a supply of goods or services, the amount payable for them and the time when payment is to be made.  We find that the letter of 18 July 2005 to the taxpayer was clearly an invoice and that it is a sufficient basis to attest the refund claim under appeal.  There is no suggestion that the other requirements of the regulation are not met.  The appeal therefore succeeds.  
12	This document contains the 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 no 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.

Malachy Cornwell-Kelly
Tribunal Judge

RELEASE DATE: 6 May 2011