Vidhani Brothers Ltd v Customs and Excise [2005] UKVAT V18997 (22 March 2005)
18997
VALUE ADDED TAX — wristbands — whether to be regarded as clothing — no — whether suitable only for young children — yes — VATA 1994 Sch 8 Group 16 Item 1 — wristbands not within Item and therefore standard rated — appeal dismissed
MANCHESTER TRIBUNAL CENTRE
VIDHANI BROTHERS LIMITED Appellant
- and -
THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents
Tribunal: Colin Bishopp (Chairman)
Marjorie Kostick BA FCA CTA
Sitting in public in Birmingham on 15 February 2005
Sunil Vidhani, managing director, for the Appellant
James Puzey, counsel, instructed by the Solicitor's office for HM Customs and Excise for the Respondents
© CROWN COPYRIGHT 2005
DECISION
- In this appeal, Vidhani Brothers Limited, which trades as Teritex Sportswear, challenges an assessment, issued on 2 December 2002, by which the Commissioners seek to recover output tax for which, they say, the Appellant should have accounted on supplies of wristbands. The Appellant's contention is that the wristbands are zero-rated because, it says, they come within Item 1 of Group 16 of Schedule 8 to the Value Added Tax Act 1994, being "articles designed as clothing or footwear for young children and not suitable for older persons".
- We are required to determine two issues: whether the wristbands can properly be described as "clothing"; and whether they are suitable exclusively for young children.
- The Appellant was represented by its managing director, Sunil Vidhani. We had a brief, informal, but uncontroversial statement from his father, Kishan Vidhani and we heard evidence from Julian Ellis, a chartered textile technologist. The Commissioners were represented by James Puzey of counsel, who called no oral evidence, although we had a purely formal statement from the assessing officer. Mr Puzey provided us with a bundle of documents, and the Appellant provided us with some samples of the wristbands.
- The Appellant's business is the manufacture of sportswear and accessories. It does not produce goods for general retail sale, but only in response to specific orders and the goods generally bear the customer's logo or emblem or other material specific to that customer. The wristbands are of the same category. They are produced for events such as school sports days and fund raising events and are given to the children as a reward or incentive. Mr Ellis' evidence did not deal with the composition of the wristbands but as they appeared to us to be of a standard type, manufactured of a stretchy towelling material. Both of the samples provided to us bear the words "Super Schools" and one also bears a number and a picture of an anthropomorphic banana, with a face and arms, wearing a baseball cap. One of the wristbands is rather smaller than the other. Both can be placed on a man's wrist, but they are uncomfortably taut.
- The argument that the items should probably regarded as "clothing" was advanced for the Appellant by Mr Ellis. It appeared to us from the career details with which he provided us that Mr Ellis' expertise is primarily in the technical qualities of textiles rather than the correct nomenclature of the uses to which they are put but he had nevertheless researched the subject in some depth, and referred us to a number of dictionary definitions, the legislation, and the Commissioners' own publications.
- Unfortunately, the dictionary definitions are somewhat circular, effectively defining "clothing" as something which clothes or covers the body; and resort to the definitions of words such as "clothes" and "garments" takes the matter no further. The Commissioners' Notice 714, published in January 2002, does provide a description of clothing by saying
"As well as all the obvious garments articles of clothing include items such as hats, caps, braces, belts, garters and scarves. It also includes items that although primarily designed as safety aids, such as cyclist's tabards or sailors lifejackets, do have the form and function of clothing. Articles of clothing do not include clothing accessories and items of haberdashery sold separately or safety accessories which are not themselves clothing such as:
- reflective armbands or buoyancy aids;
- fastenings such as buttons and zips;
- badges, collars, cuffs, patches and other sewn on or ironed on items;
- hand muffs and ear muffs."
- Mr Ellis maintained that wristbands are neither haberdashery nor safety items and are more properly to be regarded as akin to items such as braces, belts, garters and scarves. They are worn on the body and have a dual purpose: they are worn for decoration (they are, as we accept from the documentary evidence available to us, regarded by some as fashionable) and functional, in that they can be used to mop perspiration from the brow, and prevent perspiration passing from the arm to the hand of a racket sports player.
- Mr Puzey's argument was that the garments did not have the normal function of clothing, that is of covering the body for modesty or warmth, but they should instead be regarded as a fashion accessory. Further on in the Notice from which Mr Ellis had quoted, it was made clear that headbands – that is sweatbands passing across the wearer's brow - are not to be regarded as clothing. That statement followed from the tribunal's conclusion in Cassidy trading as Balou v Customs and Excise Commissioners (1991, Decision 5760). It would be inappropriate to treat wristbands in a different fashion. The distinction between clothing and accessories had also been examined by the tribunal in Dauntgate Limited v Commissioners Customs and Excise (1993, Decision 11663) where it had been required to consider various items worn by Girl Guides. By analogy with that decision, it was clear that these were accessories and not clothing. He reminded us that the purpose of the statutory provision was to relieve children's clothing of the tax liability which would otherwise attach to it and, in accordance with ordinary principles, as it operated as an exemption, it should be construed narrowly.
- In our view, the wristbands cannot properly be regarded as clothing in the ordinary sense of the word. We think that the Commissioners' approach is correct, and that the term should be confined to those items which are conventionally worn for the purposes of keeping the wearer warm or of preserving his or her modesty. The wristbands perform neither function. Some heed must, of course, be paid to changing fashion and the rules must be operated in a commonsense fashion (for example, neck ties are regarded as clothing for reasons of tradition even though they do not keep the wearer warm nor do they preserve his modesty) but we accept Mr Puzey's argument that the mere fact that an item is worn as a fashion accessory or for functional reasons does not lead to the conclusion that it is clothing.
- We accordingly dismiss the appeal upon the grounds that the Commissioners were right to conclude that the wristbands are not to be regarded as clothing.
- We should merely add that, had it remained a live issue before us, we would have determined that these wristbands are suitable only for young children. That is apparent not only from their small size but also from the nature of the designs which they carry which, in our view, would not hold much appeal for children above the age of 12.
- We make no direction in respect of costs.
COLIN BISHOPP
CHAIRMAN
Release Date: 22 March 2005
MAN/04/0296
