Masterlease Ltd v Revenue & Customs [2010] UKFTT 339 (TC) (15 July 2010)

Masterlease Ltd v Revenue & Customs [2010] UKFTT 339 (TC) (15 July 2010)

Customs are entitled to offset underdeclared VAT on the sale of repossessed cars against regulation 38 adjustments under section 80(1) of the Value Added Tax Act 1994. The 'same condition' requirement in article 4(1)(a) of the VAT (Cars) Order 1992 is satisfied if only cleaning, valeting, or minor work (not exceeding 1-2 hours or £50 in parts) is performed; more substantial work materially changes the condition and precludes de-supply relief. The Cars Order does not permit apportionment of VAT to only the value added by remedial work.

Citation
[2010] UKFTT 339
Parties
Appellant: Masterlease Ltd; Respondents: The Commissioners for Her Majesty’s Revenue and Customs (VAT)
Jurisdiction
United Kingdom
Judgment Date
15 July 2010
Procedural Posture
VAT Repayment Appeal / Decision in Principle; Quantification Adjourned
Outcome
Decision in principle; appeal adjourned for parties to agree figures based on de minimis approach
Legal Topics
VAT Repayments, Hire Purchase Agreements, Repossession of Goods, De Supply Provisions, Interpretation of 'same Condition' in VAT (cars) Order 1992
Tax Law VAT VAT Repayments Hire Purchase Agreements Repossession of Goods De Supply Provisions Interpretation of 'same Condition' in VAT (cars) Order 1992

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Parties

Masterlease Ltd

Appellant

The Commissioners for Her Majesty’s Revenue and Customs (VAT)

Respondents

Procedural Posture

VAT Repayment Appeal / Decision in Principle; Quantification Adjourned

Legal Issues

  1. 1 Whether Customs were entitled to offset underdeclared VAT on sale of repossessed cars against regulation 38 adjustments without an assessment now out of time
  2. 2 Whether, on proper interpretation of the VAT (Cars) Order 1992, the Appellant was liable to VAT on the sale of repossessed cars, specifically regarding the 'same condition' requirement

Ratio Decidendi

Customs are entitled to offset underdeclared VAT on the sale of repossessed cars against regulation 38 adjustments under section 80(1) of the Value Added Tax Act 1994. The 'same condition' requirement in article 4(1)(a) of the VAT (Cars) Order 1992 is satisfied if only cleaning, valeting, or minor work (not exceeding 1-2 hours or £50 in parts) is performed; more substantial work materially changes the condition and precludes de-supply relief. The Cars Order does not permit apportionment of VAT to only the value added by remedial work.

Court Disposition

Decision in principle; appeal adjourned for parties to agree figures based on de minimis approach

Orders

  • Parties to attempt agreement on figures within three months or agreed extension; if not, appeal to be relisted for further evidence and submissions