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HMRC internal manual

VAT Export and Removal of Goods from the UK

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Removals of goods to other Member States - evidential requirements: Tribunal decisions: Aruna Rani Vig

In the case of Aruna Rani Vig, trading as One by One Fashions - MAN/96/137 – the appellant was visited in August 1994 when the officer examined selected sales invoices in respect of EC sales. He noted that he was satisfied with the evidence but ruled that in cases where the EC customer collects the goods, the trader should obtain and hold the vehicle registration number, a written order, a signature on the invoice, commercial evidence of removal and the customer’s EC VAT number.

The appellant was visited again in October 1995 to verify repayment claims made for periods 08/94 to 09/95. During the visit it became apparent that the appellant did not hold adequate evidence of removal for supplies made to other EC Member States. The appellant was given time to obtain the relevant documentation with the 09/95 repayment processed and repaid in full. In November 1995 a return visit was made but it was clear that the appellant held insufficient evidence to substantiate numerous supplies. In January 1996 an officer wrote to the appellant confirming what evidence was required to substantiate the zero-rating of supplies to EC customers and enclosing a schedule which showed the supplies for which no adequate evidence was held.

Later in the month the trader was assessed. The central issue in the appeal which followed was whether the appellant was entitled to rely on the apparent acceptance of the evidence of removal by the officer during the August 1994 visit.

In the Tribunal’s mind the essential question was whether the appellant had complied with the conditions for zero-rating contained in Notice 703 (now in Notice 725) and in particular the detailed and specific requirements regarding evidence of removal. The Tribunal stated that it was clear from the visiting officer’s notes that only selective checks were made and the evidence found to be satisfactory only in respect of those specific checks. It rejected the suggestion that any concession could be implied from the officer’s conduct as to the evidential requirements of the Notice, and even if the reverse were true this could not excuse the appellant’s subsequent failure to provide sufficient evidence of removal. The Tribunal cited Lord Grantchester in Fran Facilities (Fork Lift) Ltd. who stated

“there can be no estoppel against the Crown in the person of the Commissioners of Customs and Excise which prevents them from recovering tax which is lawfully due under the provisions of an Act of Parliament and regulations made thereunder”.

This case remains a precedent for the importance of complying with evidential requirements, and the extent to which the approach of an officer can bind subsequent rulings. But see the guidance on Teleos PLC at VEXP70400 for a modification of the principle on which this case was decided.

The appeal was dismissed.