UT/2023/000069 - [2024] UKUT 00278 (TCC)

It is convenient to frame this decision against the background of the issues before the FTT in the FTT 2021 decision.

Put short, if goods are removed by, or under the direction of, a trader from a location outside the United Kingdom to the United Kingdom, a charge to Value Added Tax (“VAT”) arises under the Value Added Tax Act 1994 (“VATA 1994”), section 7(2), (4)(a). The time of supply rules are relevantly found in VATA 1994, section 6(2).

It is common ground that Zamco Ltd has a business of acquiring goods (alcohol) from suppliers, which it on-sells to customers.

The question dealt with by the FTT in the FTT 2021 decision was whether Zamco Ltd had acquired alcohol at a location outside the United Kingdom and brought this alcohol to the UK in the course of its business. If the answer to that question is “yes”, a charge to VAT arises for Zamco Ltd. If the answer is “no”, no VAT charge arises.

HMRC assessed Zamco Ltd to VAT on 30 May 2018 for the periods 02/16 to 08/17 (“the relevant period”): [2] FTT 2021 decision. Zamco Ltd has not appealed against the assessments, nor has it paid the VAT which HMRC say is due. On 23 October 2018, HMRC also fixed penalties on Zamco Ltd under Finance Act 2007 (“FA 2007”), Schedule 24, paragraph 1: [3]. Zamco Ltd has not appealed against or paid the penalties. Finally, on 26 October 2018, HMRC issued Mr Zaman with a Personal Liability Notice (“PLN”), on the basis that there were “deliberate” inaccuracies in the VAT returns for the relevant period, which were “attributable” to Mr Zaman, under FA 2007, Schedule 24, paragraph 19(1): [4]. Mr Zaman appealed against the PLN. It was common ground that, if a trader appeals a PLN, that appeal may encompass an appeal against the underlying assessment and penalty, whether or not appealed by the trader: see, Bell v HMRC [2018] UKFTT 225 (TC) and most recently, Jarvis v HMRC [2020] UKFTT 54 (TC) (see [24] and [21] of the UT 2022 decision).

Mr Zaman has maintained that Zamco Ltd did not remove, or direct that the alcoholic goods be removed, to the United Kingdom, which means that both the VAT assessments and the PLN are wrong in law and should be quashed. This is what the FTT, in the FTT 2021 decision (at [10(1)]), called the “‘inaccuracy’ issue”, in that Mr Zaman’s position was that there was no “inaccuracy” in Zamco Ltd’s VAT returns for the relevant period at all, so that not only were the VAT assessments for the relevant period wrong, but also no penalties are due and the PLN must, therefore, fall away.

The FTT, in the FTT 2021 decision, determined the “‘inaccuracy’ issue” in favour of Mr Zaman: ([80]-[96]). The FTT found that the relevant alcoholic goods had not been removed to the United Kingdom either at the time that they were required by Zamco Ltd or the time that these goods were on-sold to Zamco Ltd’s customers: [96].