First-tier Tribunal (Tax)

[2010] UKFTT 36 (TC)

TC00350

Appeal number LON/2009/0251

Date of deregistration – Output tax – Tour Operators’ Margin Scheme – Misdirection

FIRST-TIER TRIBUNAL

TAX CHAMBER

 

WESSEX CONTINENTAL TRAVEL COMPANY LTD                                                       Appellant

                                                                      - and -

                                 THE COMMISSIONERS FOR HER MAJESTY’S

                                             REVENUE AND CUSTOMS (VAT)         Respondents

                                                TRIBUNAL: MRS FIONAGH GREEN (Judge)

                                                                        MR MARK BUFFERY

                                                                       

Sitting in public in London on 9 November 2009

No appearance by the Appellant

Mr David Yates for the Respondents

© CROWN COPYRIGHT 2009

DECISION

1.         This is an appeal by the Appellant set out in a notice of appeal dated 24 January 2009 against the refusal by the Commissioners for Her Majesty’s Revenue and Customs to amend the Appellant’s effective date of deregistration.

The relevant legislation

2.         The VAT Act 1994 Schedule 1 paragraph 13.1 which states that:

“Subject to sub-paragraph 4 below where a registered person satisfies the Commissioners that he is not liable to be registered under this Schedule they shall if he so requests cancel his registration with effect from the day on which the request is made of from such later date as may be agreed between them and him”.

3.         The Tour Operator’s Margin Scheme (“TOMS”) for the Appellant who is a tour operator to account for value added tax. 

4.         The VAT Act 1994 s.83 and public law principles.

5.         The Tribunals Court and Enforcement Act 2007 s.15-21.

The Issue

6.         Whether the Respondents, following a visit to the Appellant in 1995, should have advised the Appellant to deregister at that time and whether such complaint is within the jurisdiction of the Tribunal. 

The evidence and submissions of the parties

7.         The Appellant contends that:-

(a)       “In no publication relating to TOMS it is stated that this is a self-assessing tax.  HMRC visiting officers on their control visit should have observed that VAT should not be paid due to the threshold not being exceeded.  Surely control visit applies to all aspects?”

(b)       There has been an overpayment of VAT and requests a refund.

(c)       He had a legitimate expectation to be directed by the Respondents regarding advice on the payment of VAT.

8.         The Respondents contend that:

(a)       the Appellant’s case appears to amount to a complaint of misdirection by omission and that such a matter is not properly within the jurisdiction of the Tribunal.  There is no provision under paragraph 13 of Schedule 1 to the VAT Act 1994 for HMRC to deregister the Appellant to a date prior to the date on which a request for deregistration was made since the Appellant was always entitled, if indeed not liable, to registration.

(b)       in any event such a case is wholly misconceived as it is ultimately a trader’s responsibility to make himself aware of his business entitlements and liabilities including turnover for VAT purposes and that the Commissioners will cancel a registration upon request from the taxable person once they are satisfied he has no liability to be registered.  There is no obligation on the Commissioners to invite application for deregistration from taxable persons trading below the deregistration limit and that the Appellant has admitted that he erroneously calculated the turnover of his business for VAT registration purposes.

(c)       There is no case for misdirection by omission and that any limited Tribunal jurisdiction does not apply in this case.

The findings

9.         The Appellant is a tour operator and has been using the Tour Operators Margin Scheme to account for value added tax.  The company registered on 24 September 1988 with VAT registration number 501 3650 94.  The Appellant has remained registered for VAT despite the company’s turnover being below the relevant threshold.  It would appear that the Appellant had been mistakenly looking at his total turnover when considering liability to be registered rather than using the margin on his sales for the basis of his turnover. 

10.       The Appellant is solely a coach holiday operator and does not own coaches or other vehicles. 

11.       In or around 1995 the Appellant was visited by officers of the Respondents to verify that the Appellant was following the correct procedures.  It is not within the remit of the assurance officers at that meeting to offer individual tax planning advice. 

12.       By e-mail of 31 December 2007 the Appellant made enquiries regarding how turnover for registration purposes is determined when using TOMS. 

13.       On 10 January 2008 the Appellant submitted a VAT 7 request for deregistration which was received on 17 January 2008.  The Appellant stated on the VAT 7 request that he had erroneously used his turnover as the operative figures.

14.       By letter dated 12 February 2008 the Appellant was informed of the Commissioners’ decision to refuse the application to deregister and the reason given was that the Appellant was trading above the deregistration limit. 

15.       By letter dated 15 February 2008 the Appellant asked for the decision to be reconsidered and explained his interpretation of the taxable turnover figures used.

16.       A visit was arranged for 19 May 2008 at which the Appellant was informed by the Commissioners that the Appellant was trading below the relevant threshold and was therefore entitled to deregister.

17.       The registration for VAT was cancelled with effect from 20 May 2008 with notice by letter to this effect being issued on 21 May 2008. 

18.       By letter dated 23 May 2008 the Appellant asked for the date of deregistration to be backdated to 1995 when the Appellant had had the assurance visit.  The Appellant stated that the visiting officers should have noticed that he was trading below the threshold and advised him to deregister. 

19.       The date of the registration has been amended by the Respondents to take effect from 17 January 2008 following a complaint made by the Appellant.  The effective date of deregistration is 17 January 2008.

20.       It was the Appellant’s responsibility to make himself aware of his business entitlement and liabilities including turnover for VAT purposes.  A routine assurance visit was carried out at the Appellant’s premises during April 1995 however it is not within the remit of the assurance officers to offer individual tax planning advice and it is the Appellant’s responsibility as to whether or not to register for VAT purposes and to be aware of his entitlement and liabilities. 

21.       There is no obligation on the Commissioners to invite application for deregistration from taxable persons trading below the deregistration limit. 

22.       The Commissioners will cancel a registration upon request from the taxable person once they are satisfied that there is no liability to be registered. 

23.       Schedule 1 paragraph 13(1) of the Value Added Tax Act 1994 clearly states that where a registered person satisfies the Commissioners that he is not liable to be registered under this schedule, they shall, if he so requests, cancel his registration with effect from the day on which the request is made or from such later date as may be agreed between them and him.  There is no provision under paragraph 13 of Schedule 1 to the VAT Act 1994 for the Respondents to deregister the Appellant to a date prior to the date on which a request for deregistration was made.  The Appellant’s request to deregister for VAT was received on 17 January 2008.  The original request to deregister was refused in error with an effective date for deregistration being given as 20 May 2008.  The correct date for deregistration is 17 January 2008 the date of the receipt of the original request.  There is no provision under paragraph 13 of Schedule 1 to the VAT Act 1994 to deregister the Appellant to a date prior to the date on which a request for deregistration was made and having carefully considered all of the evidence and regulations and noting the comments of Sales J in his decision in The Queen (on the application of the Medical Protection Society Ltd) v HMRC, Case No.CO/12054/2008 at paragraphs 36-38 and the Tribunal also carefully considered the decision of Sales J in Oxfam v HMRC [2009] EHWC 3078 and the public law principles and legitimate expectation and decided that this case could be distinguished as any misdirection was by omission and it is the Appellant’s responsibility as to whether or not to register for VAT purposes and to be aware of his entitlement and liabilities.  The Respondents do not have a duty to advise as to the benefits between two valid options.  It was decided that the appeal has to be dismissed.  The Appellant’s complaint relating to registration for VAT and the advice given to him at the routine assurance visit is not a matter properly within the jurisdiction of the Tribunal. 

22.       We therefore dismiss the appeal.

MRS FIONAGH GREEN

TRIBUNAL JUDGE

RELEASE DATE: 14 January 2010