20682
 VAT – exemption for postal services – not applicable – appeal dismissed.

	
MANCHESTER TRIBUNAL CENTRE 			   

 
 	
	IAN GEORGE COATES	Appellant

	- and -

THE COMMISSIONERS FOR
	HER MAJESTY’S REVENUE AND CUSTOMS	Respondents

Tribunal:	Richard Barlow (Chairman)	
		Alban Holden (Member)

Sitting in public in Manchester on 14 February 2008

The Appellant in person.

Joshua Shields, counsel, instructed by the Solicitor for HM Revenue and Customs for the Respondents 

© CROWN COPYRIGHT 2008
DECISION
1.	This is an appeal against an assessment of value added tax for periods ending March 2005 to June 2006 in the total sum of £12,788.  The calculation of the assessment was not in issue in this appeal. 

2.	The appellant was registered at all material times and traded in goods through the eBay internet site.  The assessment relates to charges to the appellant’s customers for packing and delivery of goods sold in that way.

3.	The appellant had treated those charges as exempt from VAT as postal charges under Group 3 of Schedule 9 to the VAT Act 1994 and the respondents contend that they are taxable at the standard rate.  Group 3 reads as follows so far as is relevant to this appeal:

“1. The conveyance of postal packets by the Post Office company.

 2. The supply by the Post Office company of any services in connection        with the conveyance of postal packets”.

4.	We find the facts to be as follows based on Mr Coates’s evidence which we found to be truthful in all respects and indeed it was not challenged by the respondents, though Mr Shields did cross examine Mr Coates to elicit further details as necessary.  

5.	Mr Coates had a contract with Parcelforce which we were told is owned by the Post Office but which it was accepted is not “the Post Office company”.  The contract included an agreement that Parcelforce would deliver any item up to 30 Kg for him to an address in the United Kingdom for a standard charge of £5 per item.  Although Mr Coates allowed his customers to collect their goods, that happened only rarely and most of the goods he sold were sent by Parcelforce.  He charged his customers more than £5 per item when he sent them by Parcelforce.

6.	Mr Coates agreed that nothing on the eBay site suggested that he was acting as his customers’ agent or Parcelforce’s agent when he arranged the deliveries and he accepted that he was not in fact acting as an agent.

7.	He complained that both he and his accountant had telephoned the Customs advice line and had not received correct advice about the delivery charges.  He did not go so far as to say that he had been given positively wrong advice just that he had not been given clear advice.  Customs Notice 700/24 was drawn to Mr Coates’s attention when those phone calls were made and we note that it says that if a delivery charge is included in a single contract, i.e. with the sale of the goods, then that is a single supply of delivered goods and also that postal charges are only exempt if made by the Post Office.

8.	It is not strictly necessary for us to make a finding of fact about what was said to Mr Coates or his accountant in those phone calls because it is well established that the tax is charged according to the applicable legal provisions regardless of what might have been said to the taxpayer by the authorities and any question of misdirection by HMRC lies outside the tribunal’s jurisdiction.  We do however find that, so far as the evidence we heard went, we do not consider that it established any misdirection (though we did not hear evidence from the accountant).

9.	Mr Coates conceded that in law he does owe the tax assessed and his case was that he had not been correctly advised by HMRC or his accountant.  As we have already held, those are not grounds on which the appeal could be allowed.  However, as Mr Coates is a lay person we will consider whether he was right to make the concession that in law he is liable to pay the assessed tax.

10.	Mr Shields reminded us of the House of Lords case of Customs and Excise Commissioners –v- Plantifor Ltd [2002] STC 1132.  In that case deliveries had been made by Parcelforce but is seems that the taxpayer had not sought to argue that the supplies of delivery services were exempt, which may have been because Parcelforce was not “the Post Office” (which was the relevant wording of the exempting provision at that time), but rather had relied upon an argument that the deliveries were arranged by the taxpayer on behalf of the purchasers, as agent only not as principal, so that the charges for delivery were not taxable as supplies made by the taxpayer.  

11.	On facts materially similar to those applying in this case it was held that the customers, when they paid a delivery charge, were paying the vendor of the goods for the service of delivery of the goods and the fact that the vendor arranged that delivery through Parcelforce did not alter the conclusion that the supply was a taxable supply by the taxpayer consisting of arranging and effecting the delivery.  That conclusion applies whether the contract with the customer is a single contract for delivered goods or two separate contracts.  On the facts of this case it seems clear that the contracts between Mr Coates and the customers were single contracts for delivered goods and applying the well know principles derived from Card Protection Plan –v- Customs and Excise Commissioners [1999] STC 270 we conclude that there would be no scope for arguing that there were two separate contracts between Mr Coates and his customers.  Even if there had been two separate contracts they would both have been for standard rated supplies because the delivery contract would not be by the Post Office company it would be by Mr Coates.

12.	It follows that Mr Coates was correct to concede that he does owe the tax assessed and unless he has any argument arising from the alleged lack of correct advice, which we have held he has not, the tax assessed is due.  The appeal must therefore be dismissed.          

MAN/07/379

Richard Barlow
CHAIRMAN
Release Date: 14 May 2008