International cases update – July 2013 – when is an asset owned by a partnership?

In July 2013 the following cases dealing with VAT and GST were handed down in the UK and New Zealand.

This month I discuss the decision of the UK First Tier Tribunal in Wrag Barn Golf & Country Club v Revenue & Customs [2013] UKFTT 406 which involved the difficult question of determining what are the assets of a partnership and what is the property of an individual partnership. That is an important question in the context of Australian GST because the effect of s 184 of the GST Act is to make a partnership a separate “entity” for the purposes of GST and it is the partnership which is required to account for GST if those assets are disposed of (although the partners are jointly and severally liable). My analysis of the decision can be found here.

I also note the decisions of the Tax Court of Canada in Kaur v The Queen 2013 TCC 227  and McKenzie v The Queen 2013 TCC 239 which involved the question of whether the director was personally liable for the unpaid GST of a company. The basis of the claim is similar to the Director Penalty regime in Australian whereby directors can be personally liable for a company’s unpaid PAYG withholdings and superannuation contributions for employees. At present, the regime in Australia does not extend to unpaid GST of companies. One does wonder whether Treasury has plans to extend the regime to unpaid GST at some future date.

New Zealand

Taxation Review Authority

XX (An Exporter) v Commissioner of Inland Revenue [2013] NZTRA 4

  • whether the supply of stainless steel spheres to a UK based company zero-rated as an export of goods – whether goods exported or used in New Zealand first in the manufacture of a sculpture and subsequently exported to the UK by another party

United Kingdom

First Tier Tribunal

Astral Construction Ltd v Revenue & Customs [2013] UKFTT 374

  • VAT – zero rating – building work – construction of residential care home integrating existing church – whether taken out of zero rating by being works of enlargement, extension, or conversion – Value Added Tax Act 1994 Schedule 5 Group 8 Item 2 – appeal allowed

Basslabs Ltd v Revenue & Customs [2013] UKFTT 383

  • VAT – transfer of VAT registration number – s 49 VATA 1994 – Reg 6 General Regs 1995 – HMRC refusal to transfer VAT number – evidence of no transfer of a going concern – Appeal dismissed

Bryan Burton v Revenue & Customs [2013] UKFTT 401

  • VALUE ADDED TAX – DIY builders scheme – conversion of barn adjacent to a dwelling (a listed building) to enlarge the dwelling – whether the works were ‘a residential conversion’ within the meaning of section 35(1A)(c) VATA – whether works consisted in the conversion of a “non-residential building” or a “non-residential part of a building” into a building designed as a dwelling or a number of dwellings – held they were not – the works were therefore not a ‘residential conversion’ within section 35 VATA – whether the Tribunal could consider and give effect to any legitimate expectation of the appellant that he would qualify for a refund under section 35 VATA – held, following HMRC v Abdul Noor [2012] UKUT 071 (TCC), that the Tribunal had no jurisdiction to consider the question of legitimate expectation – appeal dismissed

Chelmsford College v Revenue & Customs [2013] UKFTT 400

  • Value added tax – construction of an annexe to an existing building –current use of the building – purpose for which it was designed – capacity for functioning independently – VATA 1994 Sch 8 Group 5 Item 2 – appeal dismissed

Everycar Contracts Ltd & Sabrina Hammon (t/a SJM Group) v Revenue & Customs [2013] UKFTT 405

  • VALUE ADDED TAX – irregular tax invoices evidencing the purchase of cars by the appellants – the tax invoices irregular in that instead of giving the appellants’ names and addresses they gave the names and addresses of third parties who were aliases for the appellants – whether HMRC’s refusal to exercise their discretion to accept alternative evidence of entitlement to input tax was reasonable as a matter of domestic public law – held on the facts that it was – whether HMRC’s refusal contravened the Community Law principle of effectiveness – held on the facts that it did not – appeal dismissed

Oliver’s Village Cafe Ltd v Revenue & Customs [2013] UKFTT 396

  • VALUE ADDED TAX – Cancellation of registration – whether registration correctly made originally – yes – whether cancellation of registration made effective from the correct date – no, it should have been effective from 11 June 2009 rather than 11 September 2009 because the appellant had made the request for cancellation on the earlier date – paragraph 13(1), Schedule 1, VATA 1994 applied – appeal allowed in part

Palatial Leisure Ltd v Revenue & Customs [2013] UKFTT 396

  • VALUE ADDED TAX – partial exemption – whether attribution of input tax under regulation 101 of the VAT Regulations 1995 can take account of a taxable use of goods in a period more remote than the end of the prescribed accounting period in question which is brought about by a change in the law making what were formerly exempt supplies taxable supplies – held it cannot – appeal dismissed

Silvergum Solutions Ltd v Revenue & Customs [2013] UKFTT 397

  • VALUE ADDED TAX – VAT on supplies made to appellant – whether input tax deductible by appellant – supplies not used by appellant in its business or for making taxable supplies – supplies instead used in the business of an associated company which was a partially exempt trader – held the VAT in these circumstances was not the appellant’s input tax – appeal dismissed

Wrag Barn Golf & Country Club v Revenue & Customs [2013] UKFTT 406

  • VAT – option to tax land – whether golf course land was asset of Appellant at time of election to waive exemption – yes – whether golf course land was asset of Appellant at later time – yes – whether Appellant made supplies of land – yes – whether supplies taxable by virtue of election to waive exemption – yes 

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