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Ampleaward - purchaser using UK VAT number not liable for UK acquisition VAT where goods housed in overseas warehousing regime

08 July 2020. Published by Michelle Sloane, Partner

In Ampleaward Ltd v HMRC [2020] UKUT 0170 (TCC), the Upper Tribunal (UT) has found in favour of the taxpayer and confirmed that HMRC was not entitled to claim UK acquisition VAT on the purchase of alcohol from a supplier situated in a second EU state, which was then delivered to a tax warehouse in a third EU state.

Background

Ampleaward Ltd (Ampleaward) is a UK VAT registered alcohol wholesaler approved to own excise duty suspended alcoholic goods in tax warehouses in the UK. Ampleaward's EU supplier used its taxpayer's UK VAT registration number in its domestic tax returns so that the transaction was deemed an exempt movement of goods across an EU border. Ampleaward did not account for VAT in the delivery jurisdiction, where the alcohol was housed in a tax warehouse, and from where it was then sold on to end users in a fourth EU state.

HMRC argued that section 13(2), Value Added Tax Act 1994 (VATA), which transposes the relevant EU Directive into domestic law, applied as a result of the supplier using Ampleaward's UK VAT registration number in its domestic tax returns and issued assessments accordingly. Ampleaward appealed to the First-tier Tribunal, who agreed with HMRC and upheld the assessments. Ampleaward  appealed to the UT.

UT decision

The appeal was allowed.

The main thrust of Ampleaward's case was that UK VAT law (in particular sections 13 and 8, VATA) makes no reference to the fact that the goods must actually be acquired into a warehouse that is physically located in the UK. It argued that what is required is simply that the goods are placed into a warehousing regime in any  EU member state.

The UT said that section 13(1) makes the provisions regarding the place of acquisition subject to section 18, VATA and section 18(3) treats certain acquisitions as taking place outside the UK. Section 18(3) was engaged in the instant case because references in VATA to a "warehousing regime" were not limited to those within the UK.

Comment

This decision demonstrates how complex the world of indirect tax can be when goods are traded across international borders. In addition to the usual complexity of the VAT rules, when goods are also liable to excise duty and are traded within the confines of a fiscal warehouse, the tax rules become even more difficult to apply. 

Ordinarily, when a member state has failed to implement a provision of EU law correctly, the tax tribunals interpret the domestic law in a manner which conforms with EU law, but on this occasion the UT felt unable to do so.

The decision can be viewed here.