18890
	
	VAT  — input tax credit — taxable person purchasing car for purposes of business — whether intended to be made available for private use — information from VAT helpline — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

 
 	
	PETER WALTER MASON	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	 Mrs E Gilliland (Chairman)
						 Miss C A Roberts (Member)	

Sitting in public in Manchester on 24 October 2004

The Appellant in person

Mr Jonathan Cannan of counsel instructed by the Solicitor’s office of HM Customs and Excise for the Respondents 

	© CROWN COPYRIGHT 2004

DECISION
1.	The appeal before the tribunal is that of Peter Walter Mason (the Appellant) against an assessment of  the Commissioners disallowing input credit tax which he had claimed on the purchase of a vehicle.  The assessment was dated 9 October 2003 but the appeal relates to part only that is the sum of £1908 for the period 07/01.  The Appellant has presented his own case and given oral testimony. Counsel for the Commissioners Jonathan Cannan has called the assessing officer John Rollason.               
2.	The Appellant has explained that he is a chartered engineer qualified in three disciplines and an experienced businessman.  After a setback through illness he proposed to set up a consultancy and for this his view was that he needed a prestige vehicle.  It was however important to him that he should be able to claim back the Vat paid on any purchase. He took what he considered were reasonable steps to check the position.  With the assistance of Rosalyne Taylor (Mrs. Taylor) who then worked for him enquiries were made of Autocar in Chesterfield from whom the vehicle was later bought and also from the Commissioners by way of a hypothetical question put via a Vat helpline.  The Appellant was confident that what he was being told was that Vat was recoverable if the vehicle was used solely for business purposes.  Accordingly he went ahead with the purchase of an Alfa Romeo 156 (the vehicle) on 1 September 2000 and claimed input tax credit for the Vat paid in the period 07/01.
3.	The issue of the tax claimed back came up on a visit from the Vat officer Mr. Rollason on 24 September 2003. The officer has acknowledged that the item was brought to his attention by the Appellant though as a large amount he would have found it in any event.  He had discussed with the Appellant the criteria for deduction and although not optimistic that the result would be what the Appellant wanted he had nevertheless contacted the specialist car unit.  After consultation with them the input was disallowed and he had written to the Appellant accordingly on 3 October 2003.  The Appellant disputed this decision and the officer had expected to hear from him again. When there was no further response he had issued the demand.  
4.	In his evidence the Appellant gave details of the steps he had taken to prevent private use of the vehicle.  He has said that he had an alternative vehicle and the use also of his wife’s car.  His main office was in his own home but in addition he had offices in the centre of Bakewell and in Sheffield.  It was normal for him to drive between the offices and he sometimes worked unsocial hours.  The vehicle was put in the lock-up garage at his home and his other car sat outside.
5.	Counsel for the Commissioners asked the Appellant in cross-examination about the insurance on the vehicle.  The copy certificate of insurance in the bundle of documents before us shows that the policy is in the name of the Appellant and that use for “ social, domestic and pleasure purposes” as well as the Policyholders business or profession is included.  The Appellant has contended that the insurance is for the business and there was no extra cost for the rest.  He is the business; it is not a limited company and as is clear from the Vat correspondence he has trading names of Rutland Investments / Connaught Investments.  The broker could have chosen any of the names and the use of the Appellant’s home address was merely the address of the principal office.                                                                              
6.	Mr. Cannan has referred us to the relevant legislation and regulations and to the case law. Section 25(2) of the Value Added Tax Act 1994  (the Act) allows a taxable person at the end of each accounting period credit for so much of his input tax as is allowable under s.26, and then to deduct that amount from any output tax that is due from him.  Under ss.7 of s 25 however the Treasury may by order restrict input tax credit and the relevant order in the instant case is the Value Added Tax  (Input Tax) Order 1992 (SI 1992/3222) (the Order). Article 7(1) of the Order provides:
“ Subject to paragraph (2) to (2H) below tax charged on…the supply …to a taxable person…of a motor car shall be excluded from any credit under section 25 of the Act.”
Article 7(2) provides:
“ Paragraph (1) above does not apply where…(a) the motor car is …(i.) a qualifying motor car…(iii.) and the relevant condition is satisfied”.
The relevant condition is defined (2E):
“For the purposes of paragraph 2(a) above the relevant condition is that the…supply…is   to a taxable person who intends to use the motor car either-
(a)	exclusively for the purposes of a business carried on by him, but this is subject to  paragraph (2G) below; …
(2G) A taxable person shall not be taken to intend to use a motor car exclusively for the purposes of a business carried on by him if he intends to-…
(b)	
make it available… to any person (including where the taxable person is an individual, himself, or where the taxable person is a partnership, a partner) for private use, whether or not for a consideration”.                                         
7.	Since the decision of the Court of Appeal in Upton  (Customs and Excise Commissioners v Upton (trading as Fagomatic) [2002] EWCA Civ 520) it is established law that the terms of Article 7 (2E) and (2G) are not synonymous and that there is a clear distinction to be drawn between the intention to use (2E) and the intention to make available for use (2G). Thus (2G) is not simply (2E) phrased differently.  The Appellant has contended throughout that he intended to use the vehicle exclusively for his business, that he did not need to use it for private purposes and had taken steps accordingly. The Court of Appeal in Upton were looking to legal and/or physical restraints to be in place of which the effect had to be to prevent private use.  Buxton LJ stated that the question had to be decided at the moment of acquisition of the car; and that a further way of testing the point was to ask whether the car was available for use generally.  In the Upton case it was held that it was and that the then appellant “did not restrict the general nature of that availability by deciding that he would only use the car for one of the two purposes for which at the time of purchase it became available”.  Similarly the Appellant when he bought the vehicle could use it for private and business uses.  He had sole ownership and control.  He could put it to private use; that was the natural consequence of his actions.  The vehicle was available in fact and without restraint for private as well as business purposes.  Accordingly on this point the Appellant cannot succeed.
8.	We would address the submission made by the Appellant that he had not been correctly advised by the Commissioners in response to telephone enquiry made on his behalf to a helpline specifically set up to deal with Vat queries.  He has said that he had not been told about putting the vehicle beyond private use. Mr Cannan has submitted that the tribunal has no power to consider this complaint as it falls within the scope of an extra-statutory concession to be taken up by the Appellant with the Commissioners direct and within their protocols.  We would observe that quite apart from any issue as to extra-statutory concession, we do consider that it is within our authority to look at whether a misrepresentation has been made as a result of which the Appellant took steps to his detriment, which he would not otherwise have taken.  The Appellant has made it clear to the tribunal that the benefit of input tax credit was of significant importance to him.  However the Appellant did not seek a written ruling and there is limited evidence available to us as to the question put and the precise reply given.  It is indeed recorded in a letter (undated) to Mr. Rollason from the Appellant that the advice given had been that “there were circumstances where the vat could be recovered providing that the car was for the sole use of the business”.  We do not consider that on the evidence before us it has been established that a sufficiently clear misrepresentation was given and on this ground also the appeal must fail.
9.	The appeal is dismissed.
10.	The Commissioners have not sought costs and we make no direction as to costs.     

E GILLILAND
CHAIRMAN
Release Date: 29 December 2004
MAN/04/0153