UT/2023/000067 - [2024] UKUT 00106 (TCC)

Between 29 November 2019 and 11 March 2020, the Respondents (‘HMRC’) assessed the Appellant, then called AssetHound Limited but later called Qubic Advisory Services Limited (together ‘QASL’), for penalties (“the penalties”) amounting to £14,821,380 under section 69A of the VAT Act 1994 (‘VATA’).

A penalty arises under section 69A VATA 1994 where a person fails to comply with a requirement of regulations made under section 13(5)(a) or (b) of the Finance Act 1999. The regulations are found within the Value Added Tax Regulations 1995 (‘VAT Regulations’) and in particular regulation 31A(1) which requires taxable persons who make specified supplies of investment gold to issue invoices and maintain records containing such details “as may be specified in a notice published by the Commissioners for the purposes of this regulation”. The relevant notice is Notice 701/21 Gold Imports and Exports, published in January 2013, (‘the Notice’).

HMRC imposed the penalties because they considered that QASL had breached:

QASL appealed to the First-tier Tribunal (Tax Chamber) (‘the FTT’) on the grounds that the record keeping requirements of sections 6.4 and 7.1 of the Notice did not apply to QASL’s transactions. The FTT directed that the following question should be heard as a preliminary issue:

“Did the record keeping requirements of sections 6.4 and 7.1 of VAT Notice 701/21 (Gold Imports and Exports) apply to the Appellant in relation to the transactions for which HMRC has issued penalties?”

The only issue at the preliminary issue hearing was whether the record keeping requirements applied to QASL’s transactions. QASL submitted that the record keeping requirements in the Notice did not apply because the investment gold which was the subject of the relevant transactions was never “delivered or otherwise made available to [QASL’s] customer” as required by Section 6.1 of the Notice or “delivered or available to be taken away” by QASL’s customers as required by Section 7.1. HMRC contended that the invoicing and record keeping requirements in section 6.4 and 7.1 of the Notice applied to QASL because the gold was made available to the customers or, alternatively, it was delivered to them. HMRC submitted that, in both cases, a right of possession (which may be de jure or de facto), is sufficient.

In a decision released on 4 April 2023 (‘the Decision’), the FTT held, at [55], that:

“55.

The gold bullion is therefore delivered or available to be taken away within the meaning of section 7.1 of the Notice and accordingly the Appellant should have complied with the requirements set out in the Regulations.”

With the permission of the FTT, QASL now appeals to the Upper Tribunal on nine grounds, namely that the FTT:

Essentially, QASL contends that the FTT reached the wrong conclusion when it decided that QASL sold exempt investment gold which was delivered or available to be taken away by its customers within the meaning of section 7.1 of the Notice. The issue in this appeal turns on whether the FTT was wrong to conclude that the terms of the agreements between QASL and its customers meant that the gold was delivered or available to be taken away. As it was before the FTT, the central question in this appeal is the meaning of “delivered or made available” and “available to be taken away” in paragraphs 6.4 and 7.1 of the Notice when read in the light of regulation 31A(1).

QASL was represented by Mr Denis Edwards and Ms Charlotte Brown appeared for HMRC. We are grateful to both counsel for their submissions.