'29. It should be borne in mind that, according to the fundamental principle which underlies the VAT system, and which follows from art 2 of the First and Sixth Directives, VAT applies to each transaction by way of production or distribution after deduction of the VAT directly borne by the various cost components...

30. It follows from that principle as well as from the rule enshrined in the judgment of [BLP], para 19 according to which, in order to give rise to the right to deduct, the goods or services acquired must have a direct and immediate link with the taxable transactions, that the right to deduct the VAT charges on such goods or services presupposes that the expenditure incurred in obtaining them was part of the cost components of the taxable transactions. Such expenditure must therefore be part of the cost of the output transactions which utilise the goods and services acquired. That is why those cost components must generally have arisen before the taxable person carried out the taxable transactions to which they relate.'

[18] As it is put by Jonathan Parker LJ in Dial-a-Phone Ltd v Customs & Excise Comrs [2004] EWCA Civ 603 at [28], [2004] STC 987 at [28]:

'... in applying the "used for" test prescribed by art 17 (2) of the Sixth Directive the relevant inquiry is whether there is a "direct and immediate link" between the input cost in question and the supply or supplies in question; alternatively whether the input cost is a "cost component" of that supply or those supplies. [Underline emphasis supplied.] It is clear from the judgments of the ECJ in BLP and Midland Bank, as I read them, that there is no material difference between these alternative ways of expressing the basic test.'

[19] Thus there are two separate tests but each is reflective of the other and they come to the same thing: the one seeks a direct and immediate link between the goods or services acquired and the output transactions giving rise to the right to deduct; the other seeks to identify the cost of acquiring those assets as a cost component of the output transaction."

[7] These observations make the general scope of the factual inquiry clear in the case of direct costs. Direct costs of production and distribution of a product, such as raw materials, must have been incurred, in general in advance, in the acquisition of the goods used in the course of the taxpayer's business activities so as to be regarded as elements of the product's cost. Overhead expenditure of the kind in question in the present case may have, but does not necessarily have, such a direct and immediate link with the output transaction in the sense of the jurisprudence of the ECJ. Expenditure may be incurred in consequence of the transaction, and will continue to be incurred during the contract hire period. And in general terms much of the overhead costs are of their nature indirect expenditure in relation to the specific output transactions of the taxpayer. The Midland Bank case involved indirect expenditure of that kind. At paragraph 31 of the judgment of the Court, it is said, as a result of the approach set out in paragraphs 29 and 30 quoted above:

"31. It follows that... there is in general no direct and immediate link in the sense intended in the BLP Group judgment... between an output transaction and services used by a taxable person as a consequence of and following completion of the said transaction. Although the expenditure incurred in order to obtain the aforementioned services is the consequence of the output transaction, the fact remains that it is not generally part of the cost components of the output transaction, which Article 2 of the First Directive none the less requires. Such services do not therefore have any direct and immediate link with the output transaction. On the other hand, the costs of those services are part of the taxable person's general costs and are, as such, components of the price of an undertaking's products. Such services therefore do have a direct and immediate link with the taxable person's business as a whole, so that the right to deduct VAT falls within Article 17 (5) of the Sixth Directive and the VAT is, according to that provision, deductible only in part."

[8] Article 17 (5) of the Sixth Directive provides:

"5. As regards goods and services to be used by a taxable person both for transactions covered by paragraphs 2 and 3, taxable transactions in respect of which value added tax is deductible, and for transactions in respect of which value added tax is not deductible, only such proportion of the value added tax shall be deductible as is attributable to the former transactions."

Section 26 (3) of the 1994 Act provides for regulations to be made by the Commissioners "for securing a fair and reasonable attribution of input tax" to mixed supplies and in particular supplies which have elements that are taxable and elements that are exempt.

[9] It was not disputed that in order to secure the fair and reasonable attribution of input tax on overhead expenditure there has to be identified an acceptable proxy for the concept of the "use" of the goods and services in the supply of taxable services. It was also agreed that in proposing a special method of attribution, it is for the taxpayer to demonstrate that the method proposed secures a fair and reasonable attribution of input tax.

[10] Prior to the dispute focused in this appeal, the proportion of any unattributable or residual input tax recoverable was computed in accordance with a method of calculation agreed between the Finance Houses Association (now the Finance and Leasing Association) and HMCE the predecessor of HMRC. The first step in the calculation required the allocation of Lombard's total unattributable input tax as between instalment credit business and total receipts:

Input tax for apportionment x Instalment Credit Receipts

Total receipts

That step identified the amount that thereafter had to be allocated as to standard rated business on the one hand and as to exempt business on the other. A fixed percentage of the resulting sum, 15%, was allowed to be recovered against the standard rated output tax in accordance with the agreement negotiated between the Association and HMCE. The 15% was a compromise, reached following negotiations, for general application across the industry.

[11] The first step remains applicable. The unattributable overhead expenditure incurred by Lombard covers a very large range of items of expenditure of varying classes and types. These are aggregated, according to the group's current accounting practices, in a single control account that covers the whole range of the group's activities of which instalment credit finance falling within item 3 of Group 6 is one only. The first stage is an apportionment by value, similar to the third stage in the standard method, and is not controversial so far as the present appeal is concerned. However, Lombard, in common with other suppliers of asset finance, became concerned that the fixed rate apportionment of the resulting balance of unattributed input tax was inappropriate. According to the Tribunal, doubt was cast on that approach by the decision in Sovereign Finance plc v C&E Commissioners (1998) Decision No 16237. It will be necessary to return to that case, which raises the only controversial issue between parties on the authorities. But at this stage it is necessary only to note that the negotiated special method was not in issue before the Tribunal and is not in issue before the court. It was one of a number of potential issues summarised in the case statement prepared by HMRC that in the event were not pursued before the Tribunal (notwithstanding that the Tribunal purports to have arrived at a decision on the fairness and reasonableness of the method). If the appeal succeeds, the method will continue to operate unless superseded by a new special method. The sole issue for the Tribunal was whether Lombard had demonstrated that the special method proposed by it secured a fair and reasonable attribution of input tax to the taxable supplies.

[12] The method proposed by Lombard, to have effect from 1 January 2005, was that the unattributed input tax on instalment credit business should be allocated as to 50% to the business of dealing in plant and machinery and motor vehicles and as to 50% to the provision of instalment credit finance.

[13] The basis on which that was proposed was set out in a letter to the Commissioners dated 12 September 2005 and in the outline submissions for Lombard presented to the Tribunal. The letter sets out the proposal succinctly as follows:

"It is our opinion that there are two main transactions involved in an HP agreement one taxable and one exempt. The input tax we incur is mainly attributable to the collection of the instalments. The instalments relate to the repayment of the VAT inclusive principal sum and to the payment of interest. Therefore, we would advise that with effect from 01 July 2002 we wish to treat 50% of overhead input tax allocated to instalment credit activity as attributable to the taxable supplies made under the agreement and thus make full recovery of the related input tax. The other 50% of the overhead input tax allocated to instalment credit activity will be treated as attributable to exempt supply made under the agreement and we will therefore make no recovery of the related input tax. Expressed as a formula -

Recovery % = No of taxable HP transactions

No of taxable and exempt HP transactions

Irrespective of the number of transactions the % will always be 50%.

This method would seem to accord with the decision of the VAT Tribunal in the case of Sovereign Finance (VTD 16237) where the Tribunal accepted the taxpayers contention that it was entitled to treat a hire purchase transaction as two deals one taxable and one exempt."

The proposed starting date was departed from following objection that it would operate retrospectively.

[14] The outline submission set out the following contentions, among others:

"12. The overhead costs with which this appeal is concerned... are all of the overheads of Lombard. No attempt is made - or could be made - to identify overheads attributable solely or principally to instalment credit (hire purchase) business: hence step (i) of the calculation... It will be seen that the expenditure is of the most general nature, including items such as professional fees, staff advertising, telephone calls, cleaning, and repairs and maintenance. The difficulty which gives rise to the present dispute is identification of an appropriate proxy for "use" of such goods and services.

...

14. The nature of Lombard's business is asset finance. So far as instalment credit (hire purchase) is concerned, this consists of the purchase by Lombard of an asset from a supplier and the hiring of that asset to Lombard's customer, on terms which provide for transfer of title to the asset to the customer when all payments under the hire purchase agreement have been made. Looked at from a non-VAT perspective, Lombard is supplying the customer with an asset, at a price which (i) is paid in instalments; (ii) includes the cost to the customer of obtaining credit for the purchase; and (iii) recognises the assumption by Lombard of the cost of hiring the goods and ultimately selling them to the customer or, in the event of repossession, to a third party. This analysis is clearly demonstrated by the terms of the hire purchase agreement. The activities undertaken by Lombard, in connection with which the overheads are incurred, are directed towards this single objective: namely, the provision of an asset at a price which includes the cost of delayed payment.

15. For VAT purposes, and only for VAT purposes, it is necessary to characterise the supply by Lombard to its customer as consisting, on the one hand, of a supply of the goods hired and, on the other, of a supply of credit. The approach taken by the Respondents is to attempt to classify the various activities of Lombard's staff as attributable to either the goods or the credit. Most of the activities are, the Respondents contend, more closely related to the supply of credit. The Appellant submits that this approach is misconceived. There is, in reality, no separate supply of credit by Lombard. Such a 'supply' is merely an artificial construct for VAT purposes. It follows that there is no separable objective to which particular activities ought to be regarded as referable. A method of attribution of input tax which is founded upon the artificial VAT distinction will not therefore produce a fair and reasonable result.

16. In these circumstances, the Appellant has proposed that if, as is the case, the supply of the goods must be regarded for VAT purposes as consisting of two supplies, it is appropriate to treat each of these supplies as a transaction and to attribute input tax on overhead costs on the basis of a transaction count. In Sovereign Finance plc v C&E Commrs (Decision No 16,327), the Tribunal, when construing the expression 'taxable deal' in a special method, reached its decision on the basis that a hire purchase 'deal' should be regarded as consisting of a taxable transaction and an exempt transaction. The method proposed by the Appellant is consistent with this decision.

...

18. The method proposed by the Appellant acknowledges that Lombard's overheads, in so far as allocated to instalment credit business, are used in an undifferentiated and indistinguishable way for its business activity of the hiring of assets to customers at a price which takes account of the provision of credit and of the ultimate transfer of title. There is a direct and immediate link between the overhead expenditure and that activity. Since the activity falls to be regarded as two transactions for VAT purposes, it is appropriate when attributing input tax for VAT purposes to do so on the basis of a transaction count. The method proposed is fair and reasonable. The Respondents' refusal to allow its use is unreasonable..."

[15] The Tribunal found that the special method proposed did achieve a fair and reasonable result, and it is against that decision that HMRC now appeal. For the Commissioners, Mr Currie made three broad submissions. First he argued that the Tribunal had made no relevant findings in fact, or alternatively no sufficiently detailed findings in fact, to support the characterisation of the method as fair and reasonable. On the evidence led for the taxpayer, findings in fact were made from which it could be inferred that overhead expenditure was incurred in procuring goods and services that were used in the provision of taxable services. But there were no findings in fact at all that supported the proposition that a fifty:fifty allocation was fair and reasonable. The decision had to be, and bore to be, based on fact, but the decision did not disclose what the facts were. None were set out.

[16] Secondly, Mr Currie argued that there was no explanation provided of the Tribunal's decision. In the context of the decision, one was left with an impression that the Tribunal elected to support the taxpayer's method because there was no other contender. But that was not the issue: the taxpayer had to show that the method proposed secured a fair and reasonable result.

[17] Thirdly, the Tribunal appeared to think that it had the support of Sovereign Finance, and, to that extent, it misdirected itself.

[18] Mr Tyre submitted on behalf of Lombard that the appeal should be refused. He argued that it was in the nature of overhead expenditure that, because it was not attributable to particular supplies, something by way of a proxy for use had to be found. Lombard had shown the wide ranging nature of the overhead expenditure in question, thereby demonstrating the nature of the problem. The method proposed was a proxy for actual use.

[19] The parties, he submitted, started with very different concepts in attempting to characterise the business. HMRC contended that the business was the provision of credit, or very largely the provision of credit. Therefore the recoverable percentage was low. Lombard disputed that proposition, and it was not accepted by the Tribunal. Its characterisation was very different, namely the provision of a sound asset at a price which included the cost of delayed payment. By implication, the tribunal found that the business was simply the purchase and sale of the assets. Lombard were not money lenders.

[20] The required split into two transactions was necessary only for the purposes of VAT. It had no reality otherwise. Just as in Sovereign Finance, one could say that there were two transactions, based on transaction number. Because the exercise was an artificial construct for VAT purposes, one had an artificial result. Mr Melville [the Commissioners' witness] identified a number of "processes". But it had to be recalled that the question before the Tribunal was not the fairness and reasonableness of Mr Melville's method. That method had not been directed by HMRC. Cross examination was directed at showing that Mr Melville's method nevertheless demonstrated the artificiality at the core of any method of attribution by reference to what was done: it could be done so many ways. Mr Melville's method was unworkable.

[21] It was not a matter of evidence before the Tribunal whether as a matter of professional expertise a fifty:fifty split was fair and reasonable. So far as reasons for the Tribunal's decision were concerned, it could be assumed that the Tribunal had accepted the reasoning which the taxpayer had advanced. It was a fair reading of what the Tribunal had said that it had accepted the characterisation put forward by Lombard. The Tribunal had clearly accepted that the transaction was a sale at a price including the cost of credit. There was an artificial split for purposes of VAT that otherwise did not have to be made.

[22] Dealing with Mr Currie's submissions, Mr Tyre argued in the first place there was only one material fact: the nature of the business, and it had been held there was only one transaction. Secondly, so far as explanations were concerned, if one made the assumption that the taxpayer's submissions were accepted, that provided a sufficient explanation. Thirdly, so far as Sovereign Finance was concerned, neither he nor the Tribunal placed weight on the decision. But it provided some support for giving equal weight to the two components of the transaction.

[23] It is appropriate to deal with the case of Sovereign Finance plc against the background of the letter and the submissions. Apart from narrating the likely significance of the decision in explaining the departure of the industry representative body from the agreed special method, the Tribunal does not deal with the case, and places no reliance on it. In our view the decision is not relevant to the question that arises in the present case. The decision was not concerned with whether the special method in question was fair and reasonable, but with the very different question whether in construing the formulae contained in the agreement a hire purchase transaction was comprised of two "deals" or only one. Once it was concluded that hire purchase comprised two transactions, one taxable and one exempt, and that each was a "deal" for the purposes of the application of the special method in question, the formula set out in the parties' agreement had to be applied on that basis. That is not an issue in the present case: there is no equivalent term for interpretation in any special method, and in any event the parties agree that for VAT purposes a hire purchase contract is comprised of two transactions, one of which is taxable and one exempt.

[24] Despite Mr Tyre's arguments based on the artificiality of any attempt to split the hire purchase transaction into two components, it is fundamental to a proper approach to this case to note that the contract does in fact have two components that fall to be characterised differently for VAT purposes. It is because of that fact that any attribution of input tax to the taxable component falls to be made. It is really nothing to the point that Lombard may not analyse the transactions in that way for general business purposes. In the context of VAT, the necessary hypothesis is that there are two transactions, each of which may cause Lombard to incur specific expenditure, and both of which may cause the group to incur expenditure for mixed purposes. In evidence, Lombard appear to have adopted the extreme position that none of the overhead expenditure allocated to instalment finance could be related directly to either activity. There are no findings in fact that deal with the point, but one must assume for present purposes that, on the accounting system in force, that is so. However, it requires little imagination to envisage a situation in which indirect expenditure on, for example, the inspection of assets, their insurance, and the monitoring of maintenance and repair during the contract period could be attributed to an asset hire function, and on credit checking, for example, attributed to the provision of finance. There may be practical accounting problems when the taxpayer aggregates the whole overhead expenditure of the group into a single control account and proceeds to allocate the aggregate on a value basis as in step (i) of the method in this case. But that tells one little about the essential reality of an approach to attribution by reference to activity: it tells one only that Lombard's accounting system, as described in evidence, is not designed to produce a relevant result automatically.

[25] Given the requirements of the statutory scheme, any special method of allocating input tax as between the taxable and exempt transactions comprised in hire purchase contracts must attempt to relate the goods and services consumed in the course of administering the contracts to the two functions that require to be performed: the purchase, hiring and disposal of the physical asset and the provision of finance. Neither party relied on the value of the supplies in this case. The Tribunal noted that a method based on value would produce a high attribution to the taxable supply because "the goods will almost invariably cost substantially more than the credit facility". That appears to confuse the cost of the input supplies with the value of the output supplies which has to be the relevant basis. The credit supplied by Lombard may exceed or be less than the purchase price of the goods. Lombard obtain discounts from suppliers of assets that are not necessarily passed on to its customers. In many cases customers are required to pay deposits. The relative values of the goods and of the finance provided are likely to be affected by the casual features of individual transactions that might be difficult to accommodate in a simple generally applicable formula. It is unnecessary to form any view on the applicability of value-based methods, however. Given the Tribunal's expressed view about such a method, it is plain that a value-based approach formed no part of the decision in favour of Lombard's fifty percent attribution of input tax to each of the supplies.

[26] The Tribunal's decision states:

"In the first place the Tribunal had no hesitation in deciding as a matter of fact that the 15% figure operated at present did not produce a fair and reasonable attribution and was not of itself either fair or reasonable. That was clearly confirmed by the analysis conducted, whether misconceived or otherwise, by Mr Melville when viewed after cross-examination. In the light of that the Tribunal considered the Appellant's proposal, which since it had no competitor, fell to be judged as whether it of itself could be regarded as a fair and reasonable result..."

[27] Thereafter, having set out the approach to the exercise of its powers as set out in St Helen's School, the Tribunal states:

"Following that approach and considering the facts in the present case we have decided that the proposed special method on a transaction based approach is fair and reasonable and that it is more fair and reasonable than the method in operation. No other method was suggested to replace the unfair and unreasonable method currently operated. The Tribunal must not substitute its own views. Accordingly we allow the appeal."

[28] It is impossible to discern any basis for this decision other than the view that a hire purchase transaction comprises, for VAT purposes, one taxable supply and one exempt supply. In that respect the analysis is not particular to Lombard: it would appear to be common to all hire purchase business irrespective of the business practices of the taxpayer, so far as the reasoning of the Tribunal discloses.

[29] Lombard's contentions included a number of statements of fact. The first, reflected in step (i) of the calculation, was that Lombard's total overhead expenditure was not analysed out and could not be analysed out so as to identify overheads "attributable principally or solely" to instalment credit business. Part of that expenditure was allocated to instalment credit business on the basis of value, and that approach was not controversial. Allocation by value is consistent with the third element of the standard method. Since it must be capable of producing a fair and reasonable result in any case in which the standard method is applicable, it is a candidate for application generally.

[30] However, it is impossible to say what the Tribunal made of the statement. It is not referred to in the decision. It is of the nature of the overheads in question that they cannot be attributed "principally or solely" to a particular activity: if they could the standard method would be applicable at least to those solely attributable and one would have a basis in the assessment that others were principally attributable to one activity or another for proportionate attribution. It does not follow that there cannot be a basis for the fair and reasonable attribution of overheads to different activities. The fair and reasonable allocation of overhead expenditure across the several activities of any commercial company would appear to be an essential element of financial control. To fail to institute and maintain a system for allocating general overheads in pricing products, or in accounting for distribution and sale, might in some circumstances call in question the management of the business.

[31] In the outline submission, a similar point is reflected in paragraph 18: the overheads are said to be used in "an undifferentiated and indistinguishable way". The Tribunal has not made any finding in fact in relation to that proposition. However, in narrating the evidence of Mr Dagg, the Tribunal sets out a range of activities in a way that shows that Lombard does carry out activities that relate directly to purchase and disposal of the asset, and the condition of the asset and its maintenance and repair throughout the contract period.

[32] Paragraph 14 of that outline contains statements about the nature of the contracts used by Lombard, under reference to the examples produced. On any view the analysis is incomplete. The decision does not discuss the contract forms. In describing the business of Lombard, the Tribunal describes it as asset finance. The decision proceeds (pp.7-8) to describe the transaction as "the purchase of an asset...by Lombard from a supplier and the hiring of that asset to Lombard's customer on terms which provide for the transfer of the title of the asset from Lombard when all payments on the hire purchase agreement have been made." The contract form provides for hire with an option to purchase at termination of the contract period. Until the option is exercised, Lombard remains the owner of the asset. It is that element of the reality of the transaction that explains the emphasis in the evidence of Mr Dagg (Lombard's witness) on Lombard's interest in the health of the asset as such. It also underlines the factor of time in the relationship between overhead expenditure and the hire element of the contract.

[33] It is not clear on what basis in fact the Tribunal concludes in relation to the business that "In order to achieve a satisfactory transaction various activities are undertaken by Lombard but ultimately the object is the provision of a sound asset at a price which includes the cost of delayed payment" (p.8). On any view of the hire purchase contract forms, Lombard has a commercial interest in obtaining a return on the funds laid out to purchase and hire out the asset. The "Triple Choice Agreement" form allows the customer three interest basis options: a day to day compound interest basis; a balanced payment basis, also computed on a day to day basis compound; and a fixed rate basis, each capable of producing different total amounts of interest over the contract period. Again, Mr Dagg's evidence disclosed activities relating to the financial aspects of the transaction. The evidence shows that Lombard, unsurprisingly, investigates the credit worthiness of customers. There are no findings in fact relating to this evidence or to how it might be reconciled with the general statements in the submissions.

[34] For HMRC an attempt was made to analyse the activities related to the operation of the asset finance operations of Lombard. The decision tells us (pp.10-11):

"In an attempt by the Respondents to sub-divide the above transaction into 'processes' a document was produced and spoken to my Mr Melville. While the narration therein of what could be done was accepted as broadly correct, its relevance and the attribution of various items as a 'process' were disputed. Cross-examination of Mr Melville by Mr Tyre was destructive of virtually all Mr Melville's conclusions and attributions.

Mr Tyre was able in his final submissions virtually to reject the whole attribution by Mr Melville, although Mr Tyre stressed that he was not to be taken as agreeing that the consideration of 'processes' was relevant or the correct way to proceed."

The Tribunal does not disclose what items in Mr Melville's analysis were not destroyed by cross examination. Nor does it disclose what the evidence was, nor, perhaps more crucially, does it disclose the basis on which cross-examination was conducted. Attribution of overhead expenses cannot in the nature of things be a matter of precise science. What one is concerned with is the fair and reasonable allocation of an undifferentiated sum. There are no findings in fact that relate to that issue.

[35] There was a clear requirement in the present case for the Tribunal to examine Lombard's overhead expenditure in some detail and to set out and to explain its findings in fact on the basis of whatever of that evidence was acceptable. As already mentioned, Mr Dagg's evidence demonstrated that there was overhead expenditure that was closely, if not directly, referable to the transactions relating to the asset. Similarly there was expenditure that was closely, if not directly, referable to the transactions relating to the provision of credit. In the nature of things there is likely to have been expenditure that was not so related to either aspect of the transaction. Without appropriate findings it is not possible to say how the Tribunal approached these issues.

[36] The Tribunal appears to have thought that it was following St Helen's School. However, there are aspects of that decision that are not dealt with at all. At paragraph [17] Warren J cites the Midland Bank case, and the statement there that the cost components must generally have arisen before the taxable transaction to which they relate. There may be difficulties in applying that approach to overhead expenditure generally. But it draws attention to the need to relate costs incurred to supplies over a period of time. The transaction basis on which Lombard relied arises at the point the initial transaction is entered into. It is established finally at that point, and is not affected by experience during the currency of the hire contract or by any event that occurs. It does not vary during the contract period, and it subsists irrespective of the actual experience of the parties relating to that contract, and the costs incurred by Lombard in the performance of its obligations under the contract or in the administrative steps required to protect its interests as owner during the contract period. Without a clear explanation it is impossible to understand how the analysis of the transaction into two elements for VAT purposes, which Lombard insisted is a wholly artificial construct for tax purposes only, could in any real sense be an appropriate proxy for the use of the group's overhead expenditure. In the end of the day the Tribunal provides no explanation of the basis of its decision

[37] It is apparent that there are methods of allocating the input tax incurred by Lombard. Mr Tyre produced an analysis based on examination of "processes" which differed in its result from that produced by Mr Melville. An analysis of activities might have been a better way of expressing the exercise. "Process" accounting might best be left to manufacturing industry. But there is nothing unreal or artificial in posing the question whether particular input tax arises in respect of an activity that has a connection with the administration of the asset hired or with the administration of credit. If such an approach is to be rejected it must be for reasons particular to the case that require to be explained so that they can be tested. As an alternative, value might have been considered as a possible basis for a result approximating to that sought by Lombard. This is not a case in which one is driven to a wholly artificial result on the simple premise that the exercise is founded on a wholly artificial construct required for VAT purposes. The scheme of the statute requires one to make an allocation. The fairness and reasonableness of the method adopted must depend on facts found on the basis of the evidence.

[38] In the circumstances it is clear that the Tribunal's decision cannot stand and must be quashed. The first two arguments advanced by Mr Currie are sound: there are no relevant findings in fact sufficient to support the decision of the Tribunal and its decision is, in substance, unexplained. A question arose whether in the event of such a view being taken the case should be sent back to the Tribunal. However, there is no basis on which the case could be sent back other than for re-hearing. It is open to either party to give notice to the other in terms of regulation 102A or C contending that the current special method does not fairly and reasonably represent the extent of use of goods and services used in making taxable supplies. That is the approach that Lombard must take to re-open the issue.

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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> HM Revenue & Customs, Re Decision Of The Edinburgh Vat & Duties Tribunal [2008] ScotCS CSIH_49 (21 August 2008) URL: http://www.bailii.org/scot/cases/ScotCS/2008/CSIH_49.html Cite as: [2008] CSIH 49, [2008] ScotCS CSIH_49

Scottish Court of Session Decisions

Lord President

Lord Kingarth

Lord Penrose

[2008] CSIH49