UT/2023/000023 - [2024] UKUT 00096 (TCC)

Mr Blades argues that, in any event, a distinction between knitted and woven fabric is a decisive factor. Why else, he submits, would the classification regulation have mentioned the woven nature of the fabric? We reject that argument too. As mentioned, whether something is decisive will depend on the context. The reasoning in the classification regulation here pivoted on the respective roles of the fabric covering the product’s structure and the wood in the structure. There were two key elements in the reasoning. First, it was the fabric covering which was essential to the product’s purpose; not the wood of the underlying structure. Second, as regards that covering material, it was the material coveringthe structure in the greatest degree which gave the classification. In the case of the particular covering fabric of the product the regulation was concerned with it was necessary to state the product was woven because that was what was relevant to the particular eight-digit classification specified. However, that did not mean the woven nature of the fabric was a decisive characteristic in determining which, as between the competitors - wood of the structure or the fabric covering - won out. That the product was covered to a greater degree with a fabric that was knitted as opposed to woven would not therefore rule it out from being considered sufficiently similar to the product described in the regulation.

Mr Blades also argues it is significant that HMRC have not been able to advance any authority which shows the reasoning in the regulation can be applied to achieve a different eight-digit code to that specified in the classification regulation. We disagree. To adopt such a restrictive approach would undermine the significance of the regulation going to the trouble of giving express reasoning which explained why one classification at a higher level, for instance at chapter level, was to be preferred to a competing one. It is not clear, as a matter of principle, why that higher level reasoning should be rendered completely irrelevant and discarded simply because of a difference between the products at a much lower level of classification detail which had no bearing on the higher-level reasoning. That is not to say, as the passages quoted in V-Tech indicate, that reasoning by analogy, should not require taking “great care”. The real safeguard, however, against inappropriate application of the regulation lies in the requirement that the products are sufficiently similar. That will need an appraisal, in the light of the reasoning given in the regulation, of which of the characteristics and factors mentioned there are decisive. Here, the FTT correctly identified in its analysis in the alternative that the decisive factor with regard to classification between the competing chapters (the structural elements (the wood) and the surface covering (the plush/sisal)) was that it was the surface covering present to the greatest degree which was the element relevant to classification.

We also reject Mr Blades’ argument that the FTT erred in its analysis because it failed to make any relevant factual findings about the products covered by the classification regulation. The characteristics of such products are those set out in the description contained in the classification regulation. It is not appropriate, or even possible for a tribunal to make factual findings about such products. It will not have received evidence about the product precisely because the description and reasoning sections in the classification regulation are clearly meant to provide sufficient information for a meaningful comparison to be made. The tribunal will of course need to make relevant factual findings about the taxpayer’s product(s) in question, but the FTT did do that here. Cozy Pet suggests that the FTT did not make findings as to height, weight, relative weights, thickness of plush, size of wooden base, whether platforms were covered in textile both sides and on the differences between trees and scratchers and in particular on the relative proportions of the constituted parts. In our view the FTT did make such findings as it was able to in view of the detail of the evidence before it on many of these matters e.g. height. To the extent the FTT did not make findings on the other matters mentioned that is either consistent with such detail not appearing in the evidence (Mr Fraser’s statements did not for instance set out the precise proportions of the constituent parts) or with the FTT reasonably considering that such level of detail of finding was not relevant to the question of which, as between the competing wood/structure based classifications and the surface covering based classifications applied.

Cozy Pet also seeks to distinguish the cat trees from the goods covered by Regulation 350/2014 on the basis that the regulation goods were comparatively small and so were not meant to attract cats to climb on them. In contrast Mr Fraser’s evidence was that one feature which attracted a cat was “…being able to climb the heavy wooden structure”. Another difference was that with respect to the regulation goods, the plush was designed to attract the cats to scratch whereas Mr Fraser’s evidence was that this was not the purpose of the plush. Mr Blades highlights the fact that the FTT stated it accepted Mr Fraser’s evidence.

It is important to recognise however the FTT did not accept the entirety of Mr Fraser’s evidence but only his evidence of fact. The statement of agreed facts had highlighted that the parties disputed the purpose of coloured plush fabric: HMRC considered its purpose was to attract cats whereas Mr Fraser considered it was “for the aesthetic benefit of humans”. It is clear the FTT rejected Mr Fraser’s evidence of what attracted cats describing it (at FTT [15]) as opinion and concluding (at FTT [73]) the function of providing scratching and occupation (as an alternative to scratching and occupying furniture intended for human use) would not be fulfilled. On a similar basis it was open, although the FTT did not state this in terms, for the FTT to disregard Mr Fraser’s evidence as to what cats were attracted to as regards climbing as opinion evidence and to reach its own view on its consideration of all the evidence that cats were attracted to the plush. Accordingly, neither of the factual differences advanced were actually borne out in the FTT’s analysis of the evidence and they do not provide a means of distinction as Cozy Pet argues.

Cozy Pet also refer to evidence Mr Fraser gave in his statement regarding the thin nature of the plush fabric and its unsuitability for being scratched by a cat without the plush being shredded. However, that evidence does not mean it was not open to the FTT to reach the findings it did. The FTT’s conclusion as to the purpose of the plush did not link it exclusively to being scratched but also attracting cats to “nestle down” and occupy something other than household furniture.