18840

Application:  Interlocutory Hearing – Jurisdiction – whether appeal raised in Edinburgh should be transmitted to London in respect that there was another connected appeal there – whether Appellants with potentially conflicting interests could or should be joined together at the instance of the Respondents – practical difficulties – whether appeal should be transferred so that the London Tribunal could consider joining it – application refused.

EDINBURGH TRIBUNAL CENTRE

	RBS DEUTSCHLAND HOLDINGS GMBH	Appellants

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	       Respondents

			Tribunal:	 (Chairman):  T Gordon Coutts, QC

Sitting in Edinburgh on Thursday 11 November 2004

for the Appellants		Mr Roderick Cordara, QC

for the Respondents	Mr Andrew Young, Counsel

© CROWN COPYRIGHT 2004.

DECISION

These Appellants lodged an appeal against an assessment for input tax made upon them and also the refusal of the Respondents to meet claims for input tax in relation to transactions between the Appellants, a German company, and the company then known as Norwest Holst Ltd now Vinci Plc.  The Tribunal was informed that assessments had also been levied against Vinci Plc in respect of the same leasing transactions.

The present appeal was lodged on 12 July 2004.  An appeal was lodged at the London Tribunal Centre by Vinci Plc on 7 July 2004.  The proceedings in Edinburgh have overtaken by some margin those in London in respect that there has been received a Statement of Case and List of Documents dated 25 October 2004 in this case.  No Statement of Case had at the date of the hearing been lodged at the London Centre in the Vinci appeal.

The matter came before the Tribunal in respect of an application by the Respondents dated 15 September 2004 seeking that the present appeal be transferred to the London Centre and joined with the appeal of Vinci Plc.  The Respondents notice reads:

Both appeals are concerned with the same facts and matters.  The two Appellants, Vinci Plc and RBS Deutschland GmbH, are both parties to the same transaction, which is the subject matter of both appeals.  The assessments raised have been raised in the alternative and it is in the interests of justice for the same tribunal to consider both appeals to ensure legal certainty and also to reduce the cost to the public purse and to both Appellants.

The London Tribunal Centre is the preferred venue as all parties have a greater connection with London.  The Appellant’s representative, Roderick Cordara QC, is based in London (the Appellant being registered in Germany), the disputed decision was made by an officer based in Redhill and the relevant policy units for the Commissioners are situated in London.

The application was opposed with detailed objections by the Appellants on 27 September 2004.  Accordingly the Respondents requested that the matter be listed for Interlocutory Hearing.  The matter was listed on 20 October 2004 for a Hearing on 11 November 2004.  Somewhat surprisingly in view of that the Respondents intimated to this Tribunal Centre on 10 November that they had applied on 8 November to the London Tribunal seeking that the appeal of Vinci and RBS be heard together at the London Tribunal Centre.  The letter continued “please note that in view of the application in Edinburgh on 11 November 2004 the Commissioners have asked that their application be placed before a London Chairman today”.  That somewhat astonishing discourtesy was compounded by the fact that the present Appellant was not told of the London application and only became aware of it when it was intimated by this office on 10 November. 

Vinci Plc did however intimate to this Tribunal Centre that they objected to the London request on the basis of lack of information and lack of intimation, pointing out that a conflict of interest could arise.  It was in these circumstances that the London Tribunal Centre refrained from dealing with the above noted application pending the outcome of the Interlocutory Hearing before this Tribunal.

Mr Young who appeared for the Commissioners was unable to provide any explanation of the above manoeuvrings and made a submission that this appeal should be transferred to the London Tribunal Centre so that that Centre could consider whether it could be conjoined with the appeal in Vinci Plc.

It is unnecessary fully to explore the factual matters in the RBS case.  It is sufficient to note that the factual matters set out in paragraphs 1 and 2 of the Commissioners Statement of Case are not said to be in dispute, nor was it in dispute that as a result of the transactions under scrutiny the Appellant claimed credit for input tax on the purchase of vehicles but made no charge to output tax when leasing them to a UK customer.  It should be noted that they did charge output tax when the leased vehicles were ultimately sold.

Differing views are taken about the tax treatment of leased vehicles in Germany and the UK.  In Germany the matter is regarded as one of supply of services in the UK as one of supply of goods.  That meant that the tax treatment might be different.

It was in order to try and secure payment of some tax to Customs and Excise that the present matters arose.  The Commissioners contended in what they describe as a “preferred analysis” that the Appellant was not entitled to claim credit for input tax on the vehicles purchased because they could not be said to have been purchased with the intention of using them for the purpose of a business carried on by the Appellant since the vehicles were not being used for a transaction on which VAT was to be charged.  Mr Cordara who appeared for the Appellants not surprisingly stated that he was unable to make sense of that contention, however, that is a matter for another day.  At all events as far as the Tribunal is presently concerned that is the Customs preferred analysis.  It will be seen that that effects the Appellants only.

There were two alternative analyses provided the first of which would involve Vinci Plc if but only if a reverse charge mechanism applied.

In the third analysis it is asserted that the Appellant and Vinci had created conditions to obtain a tax advantage, i.e. an abuse of rights.  Because of that, it was said, the Appellant should be denied input tax recovery on the purchase of the vehicles.  It can be seen that that analysis also has no effect on Vinci Plc.  

It was contended for the Respondents that the second analysis was the one principally in issue in this and in the London appeal that it affects both and logically comes first in the argument.  The two Hearings it is said would be interlinked with common argument and evidence and there would be a disadvantage in that evidence might be required to be led before two different Tribunals who might come to different views; there could be duplication of witnesses.  Most of the witnesses are in England or in Germany and that would be productive of expense and inconvenience.

Mr Cordara in resisting the application pointed out that geographically the appeal was properly brought in Edinburgh in respect that each of the decisions appealed against, the assessment and the refusal of a reconsideration of the original determination, (which had been intimated to an address in England), were decisions addressed to the taxpayer in Scotland.  That meant that there was no jurisdictional reason why the Appellants should have the case they have brought and in which Scots Law and appeals may be involved transferred to London.

He suggested that this application was not “fact heavy” and indeed that there may not require to be any witnesses at all.  If there were, witnesses can travel to Edinburgh from Frankfurt as easily as to London.

He also argued that there were however two formidable procedural and evidential difficulties in the matter.  The first was that Vinci Plc were not represented at this Hearing and so all that could be deduced about their attitude was contained in their correspondence.  It was plain that their preferred course was not to have the cases heard together and that they wanted their appeal stayed pending the result of that of RBS.  The appeals he contended should not stand side by side.  They were not identical or even substantially identical; there was no material point in the contention about expenses but most important is the question of the propriety of linking together two parties who do not wish to have their cases joined at the instance of the Respondents.  Practical difficulties could well arise.  What rights if any would RBS have to cross-examine witnesses led by Vinci?  Would RBS be entitled to view confidential material passing between Vinci and the Respondents and vice versa?  The practical difficulties are virtually insurmountable in default of agreement.

In the whole circumstances I did not consider that this was an appropriate application to grant.  One possible result of granting it might be that the Tribunal sitting in London might hold that two cases should not be conjoined, since both parties do not wish it, and accordingly RBS would have a case which should have been heard in Edinburgh heard in London.  The position of the Tribunal diary in Edinburgh would mean that the appeal could be heard fairly quickly and indeed it has advanced with the Statement of Case being available.  It can and should be dealt with in a matter of weeks rather than months.

I agree entirely with the contention that in default of agreement two separate tax payers should not be linked together at the instance of the Commissioners against their wishes.  RBS did not lodge their appeal with a view to participating in any way with the appeal of Vinci.  Only one of the two analyses, and that is not even the analysis described by the Respondents as “preferred”, effects Vinci Plc.

There is nothing in the matter of practicality or expense which weighs the scales one way or the other on the question of holding the Hearing in Edinburgh and no practical disadvantage would occur if the application by Vinci to stay their appeal until the RBS appeal is heard were granted.

It is in my view contrary to principle, contrary to the obligation to provide a fair Hearing and could be productive of much inconvenience in the present circumstances to grant the Respondent’s application.

The application is refused and the Appellants are entitled to the expenses of and occasioned by the application which failing agreement will require to be taxed by the Auditor of the Court of Session in terms of the rules.

T GORDON COUTTS, QC

CHAIRMAN

RELEASE:  16 NOVEMBER 2004

EDN/04/77