March 2003

In a number of cases (particularly the mobile phone / computer chip cases), Customs have started to raise alternative assessments so that if they lose a case on one technical point they may still be able to pursue an amount of additional tax under another, entirely different technical point. The High Court have recently confirmed that Customs do indeed have the power to do this. The term "having your cake and eating it" springs to mind!

A business selling school uniform claimed that any item sold to a person under the age of 14 was zero-rated. However, Customs disagreed with this stating that the legislation provides that the clothing must be designed for young children and must not be suitable for older persons. Because the business bought in plain sweatshirts etc. and sewed the school badges on themselves, the Tribunal found that at the point when the garments were bought in, it was not obvious that it was school uniform and therefore designed for a young person. Furthermore the Tribunal refused to agree that a badged sweatshirt was not suitable for an older person - "it only reduced the class of persons who might wear the item"!

The EU commission has inserted a statement into the Malta accession treaty requiring all member states to charge VAT at a positive rate on food and medicines by 2010. The UK has always refused charge VAT on such items but if the UK fails to sign this statement then Malta will not be allowed to enter the EU.

Customs have recently introduced "self certification" for some businesses in the legal profession. This will involve the completion of a questionnaire with a requirement for the taxpayer to sign a declaration stating that to their knowledge there are no errors other than those found as a result of the questionnaire. The apparent benefit to this scheme is possible exclusion from the next VAT visit.

Finally for those of you who have attended one of my recent seminars in which a "warm-up" exercise is undertaken to test knowledge of liabilities of foodstuffs, you may remember that I myself was unsure as to the VAT liability of the mini chocolate cornflake bites. Well you will be pleased to know that there has recently (quite ironically) been a Tribunal case which appears to have clarified the position a little!

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