H Ripley & Co Limited v The Commissioners for HMRC
[2024] UKFTT 125 (TC)
Procurement International Limited v The Commissioners for HMRC
24 October 2024
[2024] UKFTT 949 (TC)
First-tier Tribunal
A company that sends gifts directly to customers of its clients overseas argued they shouldn't pay UK sales tax (VAT) because the goods were exported. The tax office disagreed. The court sided with the company, saying they controlled the delivery and it was one combined service, not two separate ones; hence, it was a zero-rated export.
Key Facts
- •Procurement International Limited (Appellant) provides goods for reward recognition programs, fulfilling orders from Reward Programme Operators (RPOs) and delivering directly to Reward Recipients (RRs).
- •HMRC assessed the Appellant for VAT on supplies deemed incorrectly zero-rated as exports.
- •The Appellant argued that supplies were properly zero-rated as direct exports, as it arranged for transportation to RRs outside the UK/EU.
- •HMRC countered that the supply was to the UK-registered RPO, with subsequent export by the RPO.
- •The Appellant used two shipping methods: Royal Mail for small items and UPS for larger ones, with UPS handling customs clearances.
- •The Appellant's invoices reflected the location of the RR, using 'NOVAT' for exports.
- •Disputed VAT amounted to £485,258.33.
Legal Principles
VAT is a territorial tax; supplies are taxed where final consumption occurs.
EMAG Handel Eder OHG v Finanzlandesdirektion fiir Karnten C-245/04
For intra-community supplies with a single movement, exemption and acquisition obligation apply to only one supply.
EMAG
Intra-community supply and acquisition liability apply only when the right to dispose of goods as owner has transferred and goods have physically left the supplying member state.
Regina (Teleos plc and others) v Customs and Excise Commissioners C-409/04
The same principle applies to exports to third countries.
BDV Hungary Trading Kft v Nemzeti Adó- e´s Vámhivatal Köze´p-magyarországi Regionális Adó Fo˝igazgatósága C-563/12
'Right to dispose as owner' doesn't require formal legal ownership transfer, but transfer of economic ownership.
Staatssecretaris van Financien v Shipping and Forwarding Enterprise Safe BV Case C-320/88
The place of departure is the place of supply only for the supply causing dispatch/transport; other supplies in the chain are where the goods are located.
Euro Tyre Holding BV v Staatssecretaris van Financiën C-430/09
A supply involving dispatch/transport requires a temporal and material link between the supply and transport, and continuity in the transaction.
X v Skattenverket C-84/09
Twelve principles from HMRC v The Honourable Society of Middle Temple [2013] UKUT 250 (TC) regarding single vs. multiple supplies were considered.
HMRC v The Honourable Society of Middle Temple
In ASOS plc v HMRC [2018] UKFTT 353 (TC), a single supply of delivered goods was found.
ASOS plc v HMRC
Outcomes
Appeal allowed.
The Tribunal found that the Appellant's supply was a single composite supply of delivered goods, with the dispatch/transport properly ascribed to the Appellant's supply. The RPO did not take possession until delivery to the RR. The supply was zero-rated under section 30(6) VATA as a direct export.