Customs & Excise v Elm Milk Ltd

Customs & Excise v Elm Milk Ltd

A bona fide contractual restriction imposed by a company on its sole director, prohibiting private use of a company car, can be effective to show no intention to make the car available for private use under art 7(2G) of the 1992 Order, even if the director could theoretically revoke the restriction. The tribunal's finding of fact on intention and arrangements was not perverse and stands.

Parties
Appellant: Commissioners of Customs & Excise; Respondent: Elm Milk Limited
Jurisdiction
England and Wales
Judgment Date
03 March 2006
Procedural Posture
Civil Appeal / Appeal From High Court to Court of Appeal
Outcome
appeal dismissed
Legal Topics
Input VAT Deduction, Business Versus Private Use of Company Assets, Statutory Interpretation, Contractual Restraints in Company Law
Tax Law Company Law Input VAT Deduction Business Versus Private Use of Company Assets Statutory Interpretation Contractual Restraints in Company Law

Case Brief

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Parties

Commissioners of Customs & Excise

Appellant

Elm Milk Limited

Respondent

Procedural Posture

Civil Appeal / Appeal From High Court to Court of Appeal

Legal Issues

  1. 1 Whether a company with a sole director can recover input VAT on a car purchase where it claims the car is not available for private use
  2. 2 Whether contractual restrictions imposed by a company on private use of a car are effective to prevent the car being 'available' for private use under the Value Added Tax (Input Tax) Order 1992, art 7(2G)
  3. 3 Whether the tribunal erred in law or fact regarding the effectiveness of such restrictions and the terms of insurance

Ratio Decidendi

A bona fide contractual restriction imposed by a company on its sole director, prohibiting private use of a company car, can be effective to show no intention to make the car available for private use under art 7(2G) of the 1992 Order, even if the director could theoretically revoke the restriction. The tribunal's finding of fact on intention and arrangements was not perverse and stands.

Court Disposition

appeal dismissed

Orders

  • Appeal dismissed; tribunal's decision stands; Elm Milk Limited entitled to recover input VAT on the car purchase.