Cabvision Ltd v Revenue & Customs [2013] UKFTT 721 (TC) (29 November 2013)

Cabvision Ltd v Revenue & Customs [2013] UKFTT 721 (TC) (29 November 2013)

VAT was due only on the amount actually received by Cabvision, taking into account the banking arrangements that restricted its access to part of the consideration, which was used as security for Taxi’s loan. Alternatively, the settlement agreement and collateral oral agreement between Cabvision and Taxi reduced the price for VAT purposes. The appeal was allowed, and VAT was due on the lesser amount, not the full invoiced sum.

Citation
[2013] UKFTT 721 (TC)
Parties
Appellant: Cabvision Ltd; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
29 November 2013
Procedural Posture
VAT Appeal / First Tier Tribunal (tax) Decision
Outcome
Appeal allowed
Legal Topics
VAT Consideration, Security Deposits, Price Reduction, Bad Debt Relief, Contractual Variation, Settlement Agreements
Tax Law VAT VAT Consideration Security Deposits Price Reduction Bad Debt Relief Contractual Variation Settlement Agreements

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Parties

Cabvision Ltd

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

VAT Appeal / First Tier Tribunal (tax) Decision

Legal Issues

  1. 1 What is the correct amount of VAT due on the sale of software by Cabvision to Taxi LLP given the banking and settlement arrangements?
  2. 2 Does the use of part of the consideration as security for a bank loan affect the VAT due?
  3. 3 Did the subsequent settlement agreement reduce the price for VAT purposes?

Ratio Decidendi

VAT was due only on the amount actually received by Cabvision, taking into account the banking arrangements that restricted its access to part of the consideration, which was used as security for Taxi’s loan. Alternatively, the settlement agreement and collateral oral agreement between Cabvision and Taxi reduced the price for VAT purposes. The appeal was allowed, and VAT was due on the lesser amount, not the full invoiced sum.

Court Disposition

Appeal allowed

Orders

  • VAT due is to be calculated on the amount actually received by Cabvision, not the full invoiced amount.
  • HMRC to repay the excess VAT paid by Cabvision, in accordance with the Tribunal’s findings.