Neutral Citation Number: [2006] EWHC 1612 (Ch)
Case No: CH/2005/APP/0917
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 30/06/2006

Before :

MR JUSTICE MANN
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Between :

	MARLOW GARDNER & COOKE LIMITED DIRECTORS’ PENSION SCHEME	Appellant	
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	HM REVENUE & CUSTOMS	Respondent	

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MR. E. Mc NICHOLAS (instructed by Hunt & Coombs) for the Appellant.
MR. R. KELLAR (instructed by The Acting Solicitor for HMRC) for the Respondent.

Hearing dates: 15th and 16th June 2006
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Judgment

Mr Justice Mann : 
Introduction
1.	This is an appeal by Marlow Gardner & Cooke Limited Directors’ Pension Scheme from a determination of the VAT Tribunal (chairman Mr Stephen Oliver QC) given on 4th November 2005.  The hearing before the Tribunal was an appeal against a decision of HM Customs & Excise (“HMCE”) described as being a decision dated 27th February 2004 to accept belated notification by a taxpayer known as Net Support Limited (“Net Support”) of an election to waive exemption from VAT on certain real property in Peterborough (“the property”).  Mr Mc Nicholas appeared for the appellant; Mr Kellar appeared for the Revenue.
Factual Background
2.	Net Support acquired the property for £195,000 plus VAT on 6th September 1998.  On 31st October 1998 Net Support let part of the building to an associated company and made a decision to charge VAT on the rent of the premises from the outset.  Since then, VAT has been accounted for on the rent on quarterly VAT returns, and in the year ended 31st March 2000 an extension was built and the input VAT on the cost was recovered in full.  In January 2004 Net Support negotiated and agreed a sale to the appellant.  There was some debate as to whether or not VAT would be payable on the sale price.  The appellant sought to resist that suggestion because it was itself not registered for VAT.  The correspondence and conveyancing demonstrates some confusion as to the VAT position in relation to the property, to which I will come.
3.	Under the statutory provisions to which I shall come, Net Support was entitled to elect to bring the property into the VAT taxation regime.  That would have the consequence that it would be required to charge VAT on the disposal consideration.  The legislation requires two things for that to happen – first, an election, and second, a notification of that election to HMCE.  By the time of the completion of the sale of the property, notification had not taken place even if an election had.  On 27th February 2004 Net Support wrote a letter to HMCE which seems to have been treated and accepted as an effective late notification.  If it was a valid notification, then its effect was to make the effect of the election retrospective to the date of the election.  I have been shown documents passing between Net Support and the appellant which contain the debate as to whether VAT was chargeable.  The contract provided for a sale price of £400,000 plus VAT (with £15,000 plus VAT for a telephone system).  However, the dispute went on.  It seems that on completion Net Support agreed to keep the VAT element separate pending production of a VAT invoice.  In due course they produced a VAT invoice.  There is no clear evidence that Net Support then took the money and accounted to HMCE, but the inference is that it did. 
4.	I mention this background in outline at this stage in order to deal with certain procedural or technical points that arise out of it.
i)	The challenge as to whether or not VAT is payable in respect of this transaction comes not from the taxpayer (Net Support) but from the purchaser who has had to pay it, viz the appellant.  For the reasons debated in the decision appealed from, and debated before me, the purchaser was saying that the sale was not one which attracted VAT and it ought not to have been charged.  It is accepted that, as a purchaser, the appellant does indeed have the right to take that point.  These proceedings have been run on that basis.  However, it is apparent that were the appellant to succeed then there would be an effect on Net Support.  Essentially, the appellant is challenging the VAT status of the property in the hands of Net Support, and is therefore challenging steps which Net Support itself took in relation to that status.  Net Support is therefore a person affected by these proceedings.  There is no record in the decision that any steps were taken to procure the participation of Net Support.  However, I have been shown documents indicating that HMCE wrote to Net Support inviting its participation if it wished to participate and I have been shown sufficient correspondence to indicate that it declined to do so.  Although the point caused me some concern, I am satisfied that a case has been made out for saying that Net Support has had an opportunity to participate and have declined to do so in such a manner as does not render these proceedings a waste of time.  I was concerned that even if the appellant were successful, Net Support could nonetheless have taken all the same points itself in separate proceedings.  That could have been fixed by some form of joinder of Net Support in relation to these proceedings.  While I am not sure that the position has been entirely satisfactorily resolved in terms of getting a form of words which binds Net Support, bearing in mind where these proceedings have got to and bearing in mind the attitude of Net Support demonstrated in correspondence, it seems to me that it is proper to continue with these proceedings without any further formal steps being taken in relation to Net Support.
ii)	I have described above what is described in the decision as being the appeal which the Tribunal expressed itself as dealing with.  The notice of appeal filed in the Tribunal does not actually describe that as the decision appealed from, and I am not sure that the description given in the decision quite describes properly the real issues that arise.  However, the parties took no point on this.  It is apparent what the issue between the parties is, so I shall not dwell further on that.  The point of the case is whether or not the sale by Net Support was a taxable supply, and the questions underlying that are twofold, namely whether or not Net Support made a relevant election to take the property out of the normal exemption from VAT, and secondly, if there was such an election, whether it was entitled to make a notification of that election to HMCE (in order to complete its effect) at a point of time after it had parted with its interest in the property.
The relevant legislation
5.	The relevant legislation is to be found in two sources, first the Sixth Council Directive of 17th May 1977 (“the Sixth Directive”) and the Value Added Tax Act 1994.
6.	Article 13 of the Sixth Directive deals with the question of exemptions from VAT.  Part B, so far as relevant, provides as follows:
“Without prejudice to other Community Provisions, member States shall exempt the following under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of the exemptions and of preventing any possible evasion, avoidance or abuse;
….
(g)	The supply of buildings or parts thereof, and of the land on which they stand….”
Thus a sale or letting of land and buildings will normally not attract the addition of VAT, and inputs relating to the taxable supply arising out of a sale or letting will similarly not be deductible (see s.26 of the VATA 1994).  However, member states are allowed to give taxpayers a right to take properties out of this exemption.  Part C of article 13 provides that: 
“Member States may allow taxpayers a right of option for taxation in cases of:  
(a) letting and leasing of immovable property;  
(b) the transactions covered in B(d),(g) and (h) above.  
Member states may restrict the scope of this right of option and shall fix the details of its use.”
Thus it falls to member states to decide first whether to allow taxpayers to take themselves out of the exemption, and if so to lay down the requirements and conditions for their doing so.
7.	The United Kingdom has availed itself of the opportunity provided by article 13C, and has enacted the relevant conditions in schedule 10 of the VATA 1994.  Paragraph 2(1) provides for the effect of what it described as an election (the “option” referred to in article 13C) by providing that a taxable supply made at a time when an election is in effect shall not fall within the normal exemption of land transactions.  It does so in the following terms:
“2(1)   Subject to sub-paragraphs (2), (3) and (3A) and paragraph 3 below, where an election under this paragraph has effect in relation to any land, if and to the extent that any grant made in relation to it at a time when the election has effect by the person who made the election, or where that person is a body corporate by that person or a relevant associate, would (apart from this sub-paragraph) fall within Group 1 of Schedule 9, the grant shall not fall within that Group.”
Group 1 of Schedule 9 is the provision which enacts the prima facie exemption of and transactions from VAT.  The key concepts are the “election” and the time at which that election “has effect in relation to any land”.  Any grant during that time is taken out of the exemption and thus becomes subject to the VAT regime.
8.	Paragraph 3 of schedule 10 provides for how and from when the election is to have effect.  It contains two elements – the election itself, which takes effect from the beginning of the day on which it is made, or any subsequent date specified in the election, and a notification of the election which has to be made to HMCE within 30 days or a longer period if allowed.  Until the notification is made, then the election is of no effect.  The paragraph reads as follows:
“3(1)  An election under paragraph 2 above shall have effect – (a)  subject to the following provisions of this paragraph, from the beginning of the day on which the election is made or of any later day specified in the election;…. 
…..
(6)	An election under paragraph 2 above shall have effect after 1st March 1995 only if – 
….  
(b)  in the case of an election made on or after that date – (i) written notification of the election is given to the Commissioners not later than the end of the period of 30 days beginning with the day on which the election is made, or not later than the end of such longer period beginning with that day, as the Commissioners may in any particular case allow, together with such information as the Commissioners may require;…”
9.	That is the statutory regime which Net Support and HMRC claim has been deployed in the present case.
The decision of the Tribunal
10.	In paragraph 7 of the decision, the Tribunal records that two issues arise.  The first is whether the seller ever made an election to tax the property, and the second is whether assuming that there has been an election to tax it, the notification made on 20th February 2004 was effective.  It then starts with the second issue, which it describes as being:  “Can an election be effective when the person who makes the election while owning the land notifies it when no longer the owner?”  Paragraph 8 observes that nothing in UK law prevents this and records the appellant’s case that to the extent that schedule 10 paragraph 3(6) allows it, it is “ultra vires” the authority given to the UK by article 13C of the Sixth Directive.  Having set out the relevant provisions of article 13B and 13C, it concludes (in paragraph 11) that the UK provisions in paragraph 3(6) are within the scope of what is permitted to the UK by way of restricting the scope of the election and fixing the details of its use.  In paragraph 12 the Tribunal rejects the submission of the appellants that Net Support was not the taxable person when it purported to exercise its right.  That paragraph says:
“12.  The Trustees’ interpretation of Article 13C is, we think, wrong in saying that Net Support was not the taxable person when it purported to exercise its ‘right of option to tax’.  Net Support exercised that right in 1998 when it owned the land.  The subsequent notification is required by the UK rules, which are themselves authorised by Article 13C.  We therefore decide the issue against the Trustees.”
This overall finding is challenged on the appeal before me.
11.	Next the Tribunal goes on to consider the following question:  “On the facts, did Net Support elect to tax the Property in or by 31 October 1998?”  In paragraph 14, it records certain key facts in relation to the question of an election, as recorded in a letter from Net Support dated 20th February 2004 (the letter which includes the notification).  The facts can be summarised as follows:
(i)   The property had been purchased by the company for £195,000 plus VAT on 6th September 1998.  The company makes standard rated supplies and recovered the input VAT in full.
(ii)	On 31 October 1998 the company let part of the building (less than 10%) to an associated company.  A decision was made by the company to charge VAT on the rent of the premises from the outset.
(iii)	VAT on the rent had been accounted for on quarterly VAT returns.
(iv)	In the year ended 31 March 2000 an extension had been built and the input VAT on the cost had been recovered in full. 
(v)	The Property had been sold in January 2004 and a sales invoice with VAT charged at the standard rate had been raised for the sale.
12.	Paragraphs 15 and 16 summarised certain other facts which obviously formed part of the basis of the Tribunal’s decision.  I can summarise those facts as follows:
i)	In September HMCE wrote to Net Support asking for copies of invoices.  In October 2004 it was supplied with invoices for the rent which, as it appeared, cannot have been copies of the originals (they were apparently rendered by Net Support using that name, whereas at the time it was known by a different name).  Nonetheless, it seems to have been accepted that invoices had been rendered which charged VAT.
ii)	No professional advice had been taken as to the charging of VAT, no minutes or agreements showed when the decision to charge VAT had taken place, and the decision to charge VAT had been taken by the finance director of Net Support.
iii)	Its VAT account showed output tax on the rental income from the Property during the period of Net Support’s ownership.
13.	The decision then records a confirmation by a review officer that a notification of the election had been effective, and goes on to record that the present appellant challenged HMCE’s decision that there had been an effective election.  It goes on to record certain facts which clearly demonstrated a degree of equivocation as to the VAT treatment of the property, those facts arising out of the conveyancing transaction between Net Support and the appellant.  The facts demonstrated the following:
i)	The preliminary enquiries stated that the sale would be standard rated.
ii)	An inquiry from the appellant asking whether an election to waive the exemption for VAT had been made was answered by “N/A”.
iii)	In correspondence it was stated that VAT would be charged on the purchase price, and one letter stated that VAT had been paid on the purchase price so there was no need to make an election.
iv)	Net Support’s solicitors wrote to say they were checking whether there had been an election since their initial instructions were to charge VAT, but in replies to enquiries they saw that their clients had not elected.
v)	Net Support’s solicitors then wrote that it had transpired that VAT had been charged on rent and that would appear in their view, and that of their client’s accountant “to result in a deemed election, authority for which is attached”.  In the light of that, VAT was to be paid on completion and that was not negotiable.  The enclosed matter was a copy of the decision in Fencing Supplies Limited [1993] VATTR 302.
Then the decision went on to describe completion.
14.	Having briefly set out the arguments of the Trustees, the Tribunal considered the question of whether an election had been made.  It noted that no formality was required in the making of an election, and that in the Fencing Supplies case the Tribunal accepted as evidence of the election the fact that tax had been charged on rents.  In paragraph 30 the Tribunal recorded its impression of the pre-contract correspondence to the effect that the solicitors to Net Support were sure throughout that VAT was chargeable but were confused as to the reasons.  In paragraph 31 the Tribunal comes to the conclusion that Net Support had charged VAT on the rent since 31st October 1998 and had accounted for it, VAT could only have lawfully been charged if a decision had been taken that the grant of a tenancy by Net Support to its tenant “should be taxed”, and it stated that the presumption must be that Net Support acted lawfully and elected to tax the property though it failed to take the step of notifying HMCE within 30 days.  It concluded that it was satisfied that the necessary election was made.  The subsequent notification was nearly six years later, but there was no challenge to HMCE’s discretion to accept it as a belated notification.  In the circumstances, the election was effective for VAT purposes and VAT was properly charged and accounted for on the sale by Net Support to the appellant.
The basis of the appeal
15.	The basis on which the appellant challenges the decision of the Tribunal can be put under two heads.  First, it says there was, on the facts, no valid election and the Tribunal erred in holding that there was.  Second, if there was a valid election, then the Tribunal erred in holding that the notification of the election on 22nd February 2004 was capable of operating retrospectively so as to make the sale to the appellant one which was subject to VAT.  I shall take each of those in turn.
Was there a valid election?
16.	This was a finding of fact by the Tribunal.  An appeal to this court relies only on a question of law.  However, Mr Mc Nicholas for the appellant maintained that the error made by the Tribunal was indeed an error of law, because the Tribunal relied on an authority (Fencing Supplies) that was wrongly decided, and the evidence did not justify finding that there had been an election.  Paragraph 31 of the decision makes it clear that the Tribunal relied on the fact that Net Support had charged VAT on the rent, and that its accounts accounted properly for the VAT.  Although it does not refer to the fact that input tax was claimed as well, it seems to me that that plainly must have been in the minds of the Tribunal – it is referred to earlier in the decision.  
17.	It is apparent from the English legislation that there is a two stage process.  The first stage is an election under schedule 10 paragraph 2 of the 1994 Act.  There is no provision as to how that election is to be made.  It is not apparent that there is required to be any formality.  What must be required, in accordance with the normal principles of acts said to be an election, is a sufficiently clear indication of intention which is sufficiently manifested or (so far as required) communicated.  The second phase is notification.  Notification takes place under paragraph 3(6).  This two stage process means that an election can take place without its being communicated to the Revenue.
18.	The Fencing Supplies case was decided in 1993, based on events on 1991.  As a matter of legislative history, at that time the notification step was not required for transactions of that nature.  All that was required was an election.  The additional requirement of notification of an election was not added until 1995.  In the case itself, the only act which was said to amount to an election was the charging of VAT on rent.  There was evidence that that was done because the taxpayer thought it had to do it.  There was apparently no evidence that it was actually done with the conscious intention of electing into the VAT regime.  Notwithstanding that, the VAT Tribunal (Mr AW Simpson TD) held that there had been an election.  The Tribunal observed that there was nothing in the Act which laid down the manner in which an election was to be made.  The taxpayer was actually arguing that no election had been made.  The Tribunal decided that point against the taxpayer.  The Tribunal observed:
“Since the appellant had no right to charge VAT on the rent except by making an election under paragraph 2, in my judgment by demanding and receiving VAT on the rent the appellant was clearly indicating its decision that henceforth its supplies in relation to the property were no longer to be exempt from tax, with the consequence, whether intended or not, that paragraph 2 and its associated paragraphs applied thereafter.”
19.	Mr Mc Nicholas’ first submission was that this case was wrongly decided.  He said that the mere charging of VAT, apparently not with the purpose of electing but with some other undefined objective in mind, which in that case was apparently some perception that VAT had to be charged, was not sufficient to elect.  Neither he nor Mr Kellar placed before me any authorities on election (or allied concepts) operating outside the context of VAT.  I therefore did not have any real argument on the question of what matters going to the underlying subjective intention might be relevant to the issue of election.  In the light of that, I am not prepared to say that Fencing Supplies was indeed wrongly decided.  So far as it proceeds on the principle that whether one has elected depends ultimately on objectively perceived acts, it is unobjectionable.
20.	It was, of course, a case which turned on its own facts.  Each case in this area will turn on its own facts.  What is really necessary in the present case is to consider whether there was evidence on which the Tribunal was entitled to come to the conclusion that there was an election.  It can be said that there was evidence pointing both ways.  In favour of there having been an election, there was the positive decision to charge VAT on rent, and the charging of that VAT and accounting to HMCE for it.  This was apparently done on the basis of a decision of the finance director.  The subjective reasoning behind it is not apparent.  In addition, there is the claiming of input tax as referred to in the decision.  All those acts are consistent with a desire to bring the property within the VAT regime and to claim to take it out of the exemption.  Against that is the equivocation recorded in the conveyancing correspondence.  It is apparent that at the time of the conveyancing the basis on which VAT had been charged on rent was not clear.  I have already referred to the degree of equivocation introduced by that correspondence.  It was for the Tribunal to weigh that evidence.  Since an appeal to this court lies only on questions of law, it must be demonstrated that the evidence was not sufficient to justify the finding made.  I do not consider that that case has been made out.  There was material on which the Tribunal was entitled to reach the conclusion that it did, namely that there had been an election.  It did not manifestly err in reaching that conclusion; it did not omit any relevant consideration; and it did not manifestly err in failing to find that Fencing Supplies was wrongly decided.  Even if it were wrongly decided, there was different material in the present case.  First, there was no equivalent evidence in the present case to the evidence in Fencing Supplies that the VAT was charged because the company thought it had to charge it without giving any thought as to why.  There is also the additional claiming of input tax.  While the subsequent correspondence does indicate some uncertainty as to what was going on, the ultimate decision to seek to impose VAT on the sale is consistent with an election.  
21.	In the circumstances, this particular attack on the decision fails.
Is notification of any election possible once the taxpayer has parted with the land in question?
22.	This point is put in a number of different ways.  Mr Mc Nicholas says that the character of the sale (in VAT terms) is fixed as at the date of the sale, and cannot be changed by subsequent events.  Since, as at the date of the sale, there was no notification, the process of trying to take the land out of the VAT exemption was not complete.  The character of the transaction was therefore fixed as at the date of the sale and cannot be changed subsequently.  Another way of looking at the matter is to say that (contrary to the finding of the Tribunal in paragraph 12 of its decision) Net Support was not the (or a) taxable person at the date of the notification, so the notification failed.  He also said that the Tribunal erred in finding that there could be any retrospective effect in the process of election and notification, where that would involve what Mr Mc Nicholas referred to as rewriting the tax status of a supply of land after the event.
23.	In support of his submissions, Mr Mc Nicholas relied on various authorities and principles.  None of them actually concern the provisions in question in this case.  In Optigen Ltd v Customs and Excise Commissioners [2006] STC 419, the ECJ observed (at paragraph 47):
“As the Advocate General observed in paragraph 27 of his opinion, each transaction must therefore be regarded on its own merits and the character of a particular transaction in the chain cannot be altered by earlier or subsequent events.”
Mr Mc Nicholas relied on this as authority for his proposition that the character of the sale to the appellant was fixed as at the date of the sale and could not be changed thereafter.  However, that case concerned a very different situation.  It concerned a chain of sales in a missing trader fraud.  The question in that case was whether a later transaction in the chain, not itself vitiated by fraud, could be affected by fraud perpetrated in the earlier parts of the chain.  The court held that it could not.  It was in that context that the court made its observations cited above.  It is a very different point from that arising in the present case.  The present case turns on the interpretation and effect of very different provisions.  The observations of the ECJ cannot be taken to have universal effect so as to determine the result in the present case.
24.	The Tribunal decided this question, in its various guises, in a manner contrary to the appellant’s case.  It also decided that the UK provisions were authorised by article 13C, which dealt with another point taken by Mr Mc Nicholas, which was that they were not.  Whether or not it was right to take this view depends on a proper analysis of the English provisions.  I shall consider the effect of those provisions first before considering Mr Mc Nicholas’ case that they contravene the European Directive.
25.	The UK legislation clearly supposes a two stage process.  There is first an election, and secondly a notification within 30 days.  Under schedule 10 paragraph 3(1) an election “shall have effect” from the beginning of the day on which it is made (or any later date specified in the election).  Under paragraph 2(1) it then governs any grant made “at a time when the election has effect”.  These provisions are quite clear.  A grant made after an election has had effect falls within the VAT regime.  Paragraph 3(6) provides a qualification – an election can only have effect once notification is given.  It is quite clear from that paragraph that notification can be given after the election. Paragraph 3(6)(ii) allows for a period of 30 days to give the notification.  If one reads the provisions together, they operate so as to effect a form of retrospection.  If one has an election on day 1, a chargeable output on day 3 and the incurring of a chargeable input on day 5, and stops the clock at that point, the election to take the property out of the exemption has not yet had any effect for fiscal purposes.  However, if notification occurs on day 8 then the effect of the notification is to complete the effect of the election, with effect from the beginning of day 1.  Accordingly, at that point, the events of days 3 and 5 become events which are subject to the VAT regime.  
26.	No particular problem arises if the supply on day 3 is one which does not involve disposing of the land – for example a charge to rent.  I am not sure that the appellant would necessarily dispute that.  However, Mr Mc Nicholas certainly claims that there is nothing in the legislation which permits retrospectivity to operate so as to allow an ex-landowner to “rewrite” the tax status of the supply if, by that supply, the land was parted with at a date prior to a notification (thus making the taxpayer an ex-landowner at the date of the notification).  I do not accept this submission.  The mechanism provided by the UK legislation is clear enough.  It inevitably builds in an element of retrospection (if that is the right word).  There is no reason why that element should be different, depending on the nature of the taxable supply on day 3.  Mr Mc Nicholas would emphasis the words “to the extent that any grant made in relation to it at a time when the election has effect” in paragraph 2(1), and would say that at the time the supply is made on day 3 (in my example) the election does indeed have no effect and that state of play persists.  That submission ignores the totality of the legislation.  It is true that as at day 3 the election has not taken effect, but when one gets to test the situation after day 8 (at a point of time when notification has been made) one can see that the notification has occurred which allows the election to take effect, and paragraph 3(1) provides that the date from which the election has effect is (in my example) the date of the election itself.  So at that point in time the supply on day 3 becomes a taxable supply.  Nothing in that wording requires a different conclusion depending on whether the supply has the effect that the landowner parts with all interest in the land or not.
27.	Principles of certainty figured large in Mr Mc Nicholas’ submissions.  He submitted that to allow a subsequent notification to effect a transaction that was already complete would infringe principles of certainty that he says are demonstrated by, for example, Luxembourg v VOK [2005] STC 1345 at paragraph 29:
“The lack of retroactivity of the approval process does not make it disproportionate.  On the contrary, it may be regarded as useful in order to encourage lessors to submit their declaration of option in advance.  It cannot be excluded, indeed, that a retroactive approval process is likely to produce the opposite effect by leading lessors to submit their declaration of option late and that I would therefore be less appropriate for the purpose of ensuring the proper implementation of the exercise of the right of option and attaining the objective of legal certainty mentioned in paragraph 25 of this judgment.”
He also relied on Customs & Excise v Mirror Group & Cantor Fitzgerald International [2001] STC 1453 at paragraph 33, where there is a reference to the need to ensure legal certainty.  I do not consider that it would infringe the principle to hold that the process of notification is capable of completing the effect of the election in respect of previous transactions.  So far as the taxpayer is concerned, it has a fortiori made an election, which is a matter of choice, has entered into the transaction in question on the terms which it has agreed, which is again a matter of choice, and then (in my example) decides to notify – again a matter of choice.  It knows at all times the terms of the transaction and the fiscal consequences of its acts.  The consequences are certain.  The same is true when looked at from the position of the tax authorities.  Mr Mc Nicholas would emphasise the position of the person supplied (in the present case his clients).  I think his complaint is that the possibility of a subsequent notification makes the fiscal position uncertain so far as that person is concerned.  Again, I do not think that that is correct.  The position of that person would be fixed by the terms of the bargain pursuant to which the supply on day 3 is made.  If the bargain includes the payment of VAT on top of a specified consideration, then that is the bargain and it is certain.  If the consideration does not expressly include VAT, then s.19(2) of the 1994 Act prevents the recovery of any additional sums in respect of VAT once the notification is made: 
“19(2)  If the supply is for a consideration in money, its value shall be taken to be such amount as, with the addition of the VAT chargeable, is equal to the consideration.”
None of this infringes any principle of certainty.  I suppose that there may be a theoretical residual uncertainty if VAT is charged and paid on the assumption that a notification will be made and it is not in due course made after all.  I suppose that that might in theory lead to the purchasers being unable to deduct VAT as its own input tax in due course, but it would have taken that risk.  I do not consider that this potential difficulty means that the UK regime for election and notification somehow leads to uncertainty which affects its construction or even its validity.
28.	The appellant claimed to be able to glean support from the wording of the Sixth Directive.  As refined in the debate before me, the point became as follows.  Article 13B has direct effect (which may be true – see Becker v Finanz.Münster-Innenstadt [1982] ECR 53).  The exemption therefore operates to bind the UK (and its citizens).  Article 13C contains an opportunity for member states to put in place a system for opting into taxation in respect of land transactions, but on its true construction it does not permit the introduction of mechanisms which have the retrospective effect relied on in the present transaction.  That is because the right or opportunity can only be given to “taxpayers” and once the property had been sold in this case, Net Support was no longer a taxpayer.  Accordingly, so far as the UK legislation purports to widen the right of election beyond that which is permitted by article 13C, it contravenes the direct effect of article 13B, and the appellant is entitled to utilise the direct effect of the latter to resist the contravening effect of the UK legislation.  I assume for the moment, without deciding it, that article 13B does indeed have direct effect.  However, even given that, I do not consider that the appellant can succeed on this point.  Article 13C gives a discretion to allow “taxpayers” a right to elect for taxation.  The expression “taxpayers” is not defined, and there is nothing in the wording of article 13C which suggests that that person must be an actual landowner at any particular moment.  All that he, she or it has to be is a “taxpayer”, and that is not an inapt description of someone in the position of Net Support before, at the moment of and after the sale of the land.  Mr Kellar points out that while “taxpayer” is not defined, “taxable person” is defined in article 4.  There “taxable person” is defined as being:
“Any person who independently carries out in any place any economic activity specified in paragraph 2…”
Again, that is an expression which is apt to describe Net Support at all three points of time referred to above.  Accordingly, the short answer to the point of Mr Mc Nicholas is that there is nothing in the opening words of 13C which circumscribes the person with the right of option in the manner referred to by Mr Mc Nicholas.  The point gains no support from the authorities referred to by him in this respect – Finanzamt Goslar v Breitshol [2001] STC 355 at paragraph 52, and Customs & Excise v Mirror & Cantor Fitzgerald International (supra).
29.	Accordingly, there is nothing in any of all this which renders ineffective a notification of election made after the disposal of the land in question.
Conclusion
30.	Accordingly, I find that the Tribunal was entitled to conclude that there had been a relevant election in this case, and was correct in concluding that the notification relied on was a valid notification for the purposes of schedule 10 article 3 of the VATA 1994.  I therefore dismiss this appeal.