VAT — application for registration by company dealing in mobile telephones — refusal of respondents to register applicant under future turnover rule in para 1(1)(b) Schedule 1 VATA 1994 — appellant effectively prevented from trading by respondents — alternatively respondents refused registration under para 9 Schedule 1 — refusal based on alleged absence of evidence of trading and objective intention to trade — finding that objective evidence provided — appeal allowed

MANCHESTER TRIBUNAL CENTRE

 
 	
ACE TELECOM LIMITED	Appellant

- and -

HER MAJESTY’S REVENUE AND THE RESPONDENTS	Respondents

			Tribunal:	David Demack (Chairman)
					Carole A Roberts	

Sitting in public in Manchester on 27 July 2005

Michael Patchett-Joyce, counsel, instructed by Messrs Hassan Khan & Co, Solicitors, London, for the Appellant 

Nigel Poole, counsel, instructed by the Acting Solicitor for HM Revenue and the Respondents for the Respondents 

© CROWN COPYRIGHT 2005

DECISION

1.	The Appellant company, Ace Telecom Limited (“ATL”), appeals against the refusal of Her Majesty’s Revenue and Customs, the Respondents, by letter of 9 June 2004 to register it for VAT.  The Respondents gave two reasons for their decision, namely:
(1)	that they had seen no evidence of trading; and
(2)	that ATL was “unable” to provide them with satisfactory evidence of an intention to trade.
2.	To put the matter into perspective, we should explain that in its application to register, Form VAT 1, ATL indicated that its trade would be that of a wholesaler of “cellular products”, i.e. mobile telephone handsets.  Trade in such items has, in recent years, frequently given rise to what is characterised as “carousel fraud”, the principal feature of which is that, in a circular chain of supply, there is a trader who has had his VAT registration number ‘hijacked’, or a trader has failed to account for VAT for which he is liable and has disappeared.  In those circumstances, we do not find it surprising that the Respondents take more than usual interest in and care in dealing with such applications.  Indeed, we fully understand why they might consider that such a trader does not satisfy the statutory requirements for registration. (Those requirements are set out later in our decision).
3.	The case for ATL was presented by Michael Patchett-Joyce of counsel, and that for the Respondents by Nigel Poole, also of counsel.  The latter presented us with various documents, and we took parol evidence from Mrs Linda Margaret Tarr, a member of the Respondents’ Missing Trader Intra-Community (“MTIC”) fraud team at Cheadle, and Mr Neil Arthur Pursell, a director and the company secretary of ATL.  From that evidence, we make the findings of fact which follow.
4.	In the Form VAT 1, which, although dated 21 January 2004, was submitted to the Respondents on 27 January 2004, ATL estimated the value of taxable supplies it would make in the following 12 months as £20 million, and its EC trade, ie the value of goods it was likely to buy from other EC Member States in the same period, as £5 million.  It disclosed details of the incorporation of the company, its business address, telephone and fax numbers, and revealed that some of its directors were directors of other companies registered for VAT.  It gave full details of the companies concerned, including their VAT registration numbers.  ATL indicated that it did not expect to be a repayment trader and that its accounts were computerised; it named its bankers and disclosed its bank account number.  As the company had not traded in mobile telephones or any other items, it answered questions about whether it had previously made any taxable supplies in the negative.  Full personal details of Mr James Reed, the director signing the form on behalf of ATL, were provided, and he made a declaration that the information supplied was true and complete.
5.	The Form VAT 1 was submitted to the Respondents by ATL’s chartered accountants and auditors, Messrs Barringtons of Newcastle-under-Lyme, with the following letter:
“On behalf of our above client, I enclose a form VAT 1, duly completed, to register the company for VAT with effect from 21 January 2004.
The company will wholesale cellular and related products.  Due to the high expected turnover, the company anticipates that the taxable sales achieved in the 30 days from the date of registration will exceed the threshold, necessitating registration under the provisions of paragraph 1 (1)(b) of Schedule 1 to the VAT Act 1994.
The director, James Reed, is also director and majority shareholder of the established Ace Telecom Trading Limited (VAT registration 771 0012 76), having taken control of that company during June 2003.  Since that time, Mr Reed has implemented strict controls and procedures essential for a company operating in the telecommunications industry.  He has now decided, however, that it would be sensible to concentrate future trading in a newly VAT registered company, which will have the benefit of such controls and procedures from the outset.
Finally, in considering this application, I should draw your attention to the VAT compliance of Ace Telecom Trading Limited, which you should find to be exemplary.
Your earliest attention to this application is requested.  If you require any further information or have any questions, please do not hesitate to contact me.”
6.	Ace Telecom Trading Limited (“Trading”) is a wholly owned subsidiary of ATL, and also trades in mobile telephone handsets.  The Respondents accept that Trading’s VAT record is exemplary.  
7.	Due to the nature of ATL’s intended trade, the Respondents passed the Form VAT 1 to their central co-ordination team in Cardiff for attention, that team being responsible for dealing with applications for VAT registration made by traders in mobile telephones.  The team in turn passed it to Mrs Tarr at Cheadle for processing, she having previously had dealings with Trading.  
8.	On 6 April 2004, a meeting was held between the directors of ATL and representatives of the Respondents, including Mrs Tarr, at which the latter were given the reasons for the application.  The following minutes of the meeting, as prepared by ATL and accepted by the Respondents as a true and correct record of what occurred, were produced to us: 
“1.	Background Information
a.	Ace Telecom Ltd informed HMCE [the Respondents] that it was the 100% holding company for Ace Telecom Trading Limited, (VAT registration number 771001276).
b.	In June 2003 James Reed became the sole director of Ace Telecom Trading Limited.  Prior to that date Mr Reed has no control or knowledge of Ace Telecom Trading Supply chains or customer chains.
2.	On the 10th December 2003 Furzefield Telecom wrote to Ace Telecom Trading Limited to notified [sic] that in respect of its supply of product [mobile telephones] to Furzefield in March 2003, HMCE had notified Furzefield that it proposed to disallow the input vat charged on Ace Telecom Trading Invoice.  [Although the letter was not produced to us, it is plain from the evidence that Furzefield indicated that in the event of its being unable to recover the input tax from the Respondents, it would seek recovery from Trading].  Copy letter provided to HMCE.  Ace has notified Furzefield that it disputes Furzefield legal claim, copy of reply given to HMCE.
3.	As a result of receiving the letter from Furzefield, Ace has sought legal advice from its lawyers and accountants.
4.	The legal advisors recommended that the trade for Ace Telecom Trading Limited be transferred to its holding company Ace Telecom Limited.  This advice was based on the assumption that in the event that Furzefield and or other past customers of Ace Telecom Trading Limited were to succeed in a legal claim set out in 2 above the liabilities may crystallise on Ace Telecom Limited, if its suppliers did not have sufficient funds to pay the corresponding liability to Ace.
5.	Only if such checks are made, and the Respondents confirm that traders with whom the enquirers proposes to contract are registered for VAT and have a satisfactory accounting record will the Respondents allow their input tax claims.  In addition to the legal advice received in 4 above Ace legal advisors have stated that the trade of Ace Telecom Trading Limited should be transferred to Ace Telecom Limited over a period of 18 months.  The reason is that if all the trade was transferred immediately without significant consideration being paid to Ace Telecom Trading Limited then if in the future Ace Telecom Trading Limited was put into liquidation by a customer as set out in 2 above then the liability could ultimately be payable by Ace Telecom Limited.
6.	As a direct result of the legal advice received Ace Telecom Limited has applied to register for VAT.
7.	Ace notified HMCE that once Ace Telecom Limited has received its vat registration number it will commence to trade in the same trading markets as its 100% subsidiary company.  Ace Telecom Limited will utilise the premises, staff and resources of its subsidiary company.  It will pay a monthly service charge fee for this service.  Ace Telecom Limited has banking facilities with Nat West.
8.	HMCE requested details of all pending sales of Ace Telecom Limited.  HMCE were informed that Ace Telecom Limited would only commence trading once it received the vat number.  As soon as the vat number is received Ace Telecom Limited will then notify its proposed trading suppliers and customers of its intentions.  HMCE were informed that any current trade of Ace Telecom Trading Limited will be that of Ace Telecom Limited and thereby the intention to trade has clearly been established.
9.	HMCE notified Ace that the decision whether or not to VAT register Ace Telecom Limited would be taken by a department head as the decision could impact on the entire mobile phone trading industry.”
[We recognise that the minutes include a number of grammatical and other errors, but they convey the essence of ATL’s case for registration and we have therefore included them in full].
9.	In relation to the second sentence in paragraph 8 of the note, we should explain that the Respondents have a special office at Redhill with which all traders in mobile phones and CPUs (computer chips) should check to ensure that those with whom they intend to contract are registered for VAT and are not classified as missing traders or associated with such traders, or are not believed to be using a ‘hijacked’ VAT registration number.  Only if such checks are made and the Respondents’ responses confirm that traders with whom the enquirer proposes to contract are registered for VAT will the Respondents allow their input tax claims.
10.	On 6 April Mrs Tarr completed an internal departmental Questionnaire.  Under the various headings noted below, she provided the following information:
Printed Question	Answer	
Business Activity
Main business activity
Date trading commenced
Any previous history in trade
Source of ‘start up’ capital	
Wholesaling of mobile phones
Not yet started
Yes – Ace Telecom Trading Limited
Not really required but any capital needed will come in the way of a loan from Ace Telecom Trading	
Principal place of business
Name and Address of owner 
   of PPOB
Length of Lease [if applicable]
Rental value and due date
Other premises 
Details of associated business, 
   including VAT numbers	
33 Lawton St, Congleton owned by assoc. company NJJ property
TBA [to be advised]
TBA
None
771 601276 Ace Telecom Trading Ltd
787 480771 NJJ Homes Ltd
824 341940 NJJ Property Development Ltd
Other cos as per Co[mpanies] Hse at same address are either de-reg[istered] or just holding companies and not trading	
Principal customers / suppliers
Pricing policy / mark up	
Depends on deal - £1 to £6 per phone approx depends on quantities etc.*	
Is trade viable?
Delivery terms	Yes
Will not do deliveries – expect goods to be ‘in situ’ at FF [freight forwarder]	

* Mr Patchett-Joyce claimed that answer to be incorrect and possibly to have been the result of information interpreted wrongly by Mrs Tarr: he maintained that the proper figure was between one per cent and six per cent per transaction.
11.	Also in the Questionnaire, Mrs Tarr noted the name and address of ATL’s accountants and details of two bank accounts.  And in the section headed “Recommendations as a result of visits made”, again in flawed form, she said:
“AS THE COMPANY HASN’T STARTED TRADING & HAS NO EVIDENCE OF INTENTION TO TRADE REFUSAL IS RECOMMENDED.
However, I think this case should be referred to Policy for advice as the ultimate decision could have a knock on effect with other vat applications in similar circumstances.  The background to the case is as follows:
It is the intention to gradually transfer the business activities and assets [approx £40k - £50k] from Ace Telecom Trading Ltd 771.6012.76 to Ace Telecom Ltd over a period of approx 18 months and then close down Ace Telecom Trading Ltd. [“ATT LTD”]
The reason for this is that ATT Ltd received a letter from one of their customers, Furzefield Ltd 669.4506.95 advising that as Furzefield have been disallowed I/Tax [input tax] by Customs on the grounds of Non Economic Activity they would be seeking to recover the VAT charged by ATT Ltd.  Furzefield have appealed against the Commissioners decision so their action is subject to them losing the appeal.  ATT Ltd took advise & will fight any claim to recoup the monies but are concerned that others may seek to recoup monies in the same way.  They have been advised that any transfer of the business activities must be seen to be a gradual process to be successful in the event of legal action.  They also are concerned that their existing customers/suppliers will still retain ‘trust’ in the new company.  Neil Purcell, Co sec[retary] advised that they will easily go over the VAT limit on their first deal (this is backed up by the deals that “ATT Ltd” are presently doing) but they don’t want to do any deals until they get a VAT number as their ‘normal’ customers would be reluctant to deal with them.
In conclusion, there has been no trading or actual evidence of intention to trade.  Barringtons, their accountants have quoted Schedule 1 para 1[b] of VATA 1994 – ‘anticipation that taxable supplies will exceed the threshold within 30 days’ – there is no evidence of this but I believe it is based on the trading of “ATT Ltd”.
Note – Ace Telecomm Ltd was formed 9/7/01 as the holding company but has never traded.”
In evidence, Mrs Tarr accepted that ATL’s reason for transferring trading activities in mobile phones from Trading to ATL itself was a perfectly genuine and commercial one.  She indicated that she had been able to examine the books and records of both ATL and Trading on 6 April, and that they were in order.
12.	The Respondents followed the April meeting by giving ATL notice in Form VAT 6 that its application form had failed “pre-registration checks”, and suggesting that it contact the VAT Registration Unit at Wolverhampton for further information.  ATL did so, and on 9 June 2004 was told by letter: 
“For the time being you will not be registered.  This decision was taken on the advice of our officer Mrs Tarr.  The decision was taken for 2 reasons.  Firstly H M Customs & Excise, the Respondents and Excise have seen no evidence of trading and secondly you were unable to provide us with satisfactory evidence of your intent to trade.”
The Form contains no information as to who took the decision not to register ATL.
13.	The market in which Trading trades, and ATL claims it intends to trade, is the “secondary market” described in the following way by Moses J in R (Teleos plc and others) v the Respondents and Excise Commissioners [2004] EWHC 1035 at [80] to [83]:
“[80]. In order to place the decision of the Commissioners to assess the claimants in context it is necessary to outline a description of the trade in mobile telephones. The global market for mobile telephone handsets in 2003 is said to be approximately 500 million pieces a year. This number is increasing. Products are designed to operate in any country. The trade in mobile phones has become similar to that in other commodities such as oil, coffee beans and pork bellies. There is a primary market in which mobile phones are supplied directly by manufacturers to distributors, which service for example retail chains.
[81]. There is also a secondary market described by Mr Hewetson, director of Rapid Marketing Services Ltd, in his second statement as a “grey wholesale market”. It is on that market that the claimants trade. In the primary market there may be delivery delays for up to six months for new models. This results in much speculative ordering, by retailers, distributors and networks. Retailers, distributors and networks may be left with either too few or too many mobile phones of a particular model. The grey market has developed in order to deal with over or under supply and to redistribute products wherever there is an actual retail demand. Manufacturers might also produce, as a matter of speculation, excess stock which, if another model is launched which is more attractive to consumers, will leave that manufacturer with an excess of telephones. The grey market is used also to clear older products. Those retailers or distributors who have ordered too many telephones may sell those, which are excess to their requirements, onto the grey market for immediate cash. If retailers or distributors have under-ordered, because of the delay in production it will be necessary for them to buy from the grey market. 
Supply and retail demand and accordingly price, fluctuate daily. A trader may buy a batch of telephones one day, for cash, and discover that the price of telephones has fallen by as much as 20% the next day. 
[82]. The market dictates that transactions have to be completed on the same day. Purchases are usually for cash on delivery and it is uneconomic to purchase for volumes of less than 1000 units. If a trader holds onto a product for more than 24 hours it risks losing substantially. Profit margins are low, in the region of 2 to 4 percent. Success is based on turnover. Traders only hold stock for very short periods and, usually, turn over their working capital between four to six times a week. Thus it is important that transactions are completed within the course of one working day. 
[83]. Some warehouses are sufficiently secure for goods of small size and value. Stock is often bought and sold by telephone a number of times a day without moving from the secure warehouse. Such secured warehouses are shared by many companies which pay in proportion to their use of that warehouse.”
14.	In evidence, Mrs Tarr claimed that the Respondents required documentary evidence of an intention to trade from an applicant for registration and, since ATL had provided no such evidence, its application had to be refused.  (In that regard, we observe that the only requirement for evidence of an intention to carry out an economic activity by a person applying for VAT registration is to be found in the case law of the Court of Justice of the European Communities (“the ECJ”) relating to article 4 of the Sixth VAT Directive (77/388/EEC).  That article provides that “taxable person” shall mean any person who independently carries out in any place any economic activity specified in paragraph 2, whatever the purpose or results of that activity.  So far as relevant, paragraph 2 provides:
“The economic activities referred to in paragraph 1 shall comprise all activities of producers, traders and persons supplying services …”
In Rompelman v Minister van Financiēn [1985] ECR 655, the ECJ held that the carrying out of preparatory acts attributable to an activity constitute economic activities provided the trader’s declared intention to carry out the activity is supported by objective evidence).  But, Mrs Tarr added, there was no suggestion that there was anything wrong with ATL’s application.  She admitted that she had not checked that the accountants whose name she had been given were in fact ATL’s accountants, but could have done so had she wished.  Having been given a perfectly good and commercial reason for the effective transfer of Trading’s business to ATL, as we understood her, Mrs Tarr accepted that she would have recommended approval of the application had she been presented with confirmatory documentary evidence.  When asked what documentary evidence she was seeking, her reply covered stationery, invoices, contracts between the two companies for the use of equipment and premises, agreements for the transfer of assets and  minutes of directors’ meetings.  We observe that Mrs Tarr gave ATL no indication whatever of what she sought, but confined herself to examining only those records and documents ordinarily produced during a control visit.
15.	There is little point in the Respondents considering stationery as evidence of an intention to trade: with modern computers it can be produced at a moment’s notice and is thus evidentially worthless.  (In any event, in a market as fast moving as that described at paragraph 82 of the judgment of Moses J in the Teleos case, ATL would have little use for stationery).  We find it unsurprising that ATL had no invoices available for inspection: without a VAT number they were useless to the company.  Mr Pursell claimed that the minutes of ATL directors’ meetings contained confirmation of its intention to trade in mobile phones.  His evidence in that behalf went unchallenged, and we find as a fact that the minutes do contain such confirmation.  There is nothing in law to prevent a company from using the premises, equipment and staff of its subsidiary company for making supplies and, where such arrangements exist, they need not be made in writing.  In our judgment, the fact that ATL’s arrangements were not in writing cannot be construed as a failure by ATL to provide evidence of an intention to trade.
17.	ATL made application for registration on the basis of the future turnover rule contained in paragraph 1(1)(b) of Schedule 1 to the Value Added Tax Act 1994.  Paragraph 1(1)(b) provides as follows:
“1(1)	Subject to sub-paragraphs (3) to (7) below, a person who makes taxable supplies but is not registered under this Act becomes liable to be registered under this Schedule —
(a)		…
(b)	at any time, if there are reasonable grounds for believing that the value of his taxable supplies in the period of 30 days then beginning will exceed £58,000.
We are satisfied that sub-paragraphs (3) to (7) are irrelevant in the instant case.
18.	In our judgment, in paragraph 1(1)(b) the expression “person who makes taxable supplies” is merely descriptive of the trader, and intended to distinguish him from one who makes exempt supplies; it is not intended to, and does not, restrict registration to a person who has already made taxable supplies.  Paragraph 1(1)(b) must be read with paragraph 6 of the same Schedule, which provides:
“6 (1)	A person who becomes liable to be registered by virtue of paragraph 1(1)(b) above shall notify the Commissioners of the liability before the end of the period by reference to which the liability arises. 
(2)	The Commissioners shall register any such person (whether or not he so notifies them) with effect from the beginning of the period by reference to which the liability arises.”  
Thus, the Commissioners, the Respondents, must register a person who becomes liable to registration by virtue of paragraph 1(1)(b) and notifies them of that liability: they have no discretion in the matter.
19.	ATL does not entirely rely on paragraph 1(1)(b) of Schedule 1 to the 1994 Act to support its claim to be entitled to registration.  It also claims entitlement under paragraph 9(b) of the said Schedule 1, which provides that a person is eligible for registration if he “satisfies the Commissioners [the Respondents] that he … is carrying on a business, and intends to make [taxable] supplies in the course or furtherance of that business”.
20.	Before us, it was argued for the Respondents by their counsel, Mr Poole, that the tribunal’s jurisdiction under section 83(a) of the 1994 Act in relation to an application under the said paragraph 9(b), subsection 83(a) conferring the right to appeal with respect to the registration of any person under the Act, was supervisory, and not appellate.  We do not agree.  If ATL could meet the requirements of paragraph 9(b), it was entitled to ask for registration and be registered.  Paragraph 9 provides that the Respondents “shall if he so requests, register him …”.  There is no discretion to be exercised; a taxpayer has a statutory right to be registered if he meets the requirements.
21.	Mr Patchett-Joyce, counsel for ATL, claimed that the wholesale purchase and sale of mobile telephones was a genuine business activity: the existence of the “grey” market in such telephones and other cellular products had been recognised by the courts as an economic activity in e.g. the Teleos case and by Advocate-General Maduro in his opinion in the case of Optigen Limited, Fulcrum Electronics Limited and Bond House Systems Limited v Customs and Excise Commissioners (Joined Cases C-354/03, C-355/03 and C-484/03) a case to which he made reference but which, apart from the reference in paragraph 24 below, plays no part in our decision..  He submitted that freedom to carry on a genuine trade or business was a fundamental right under EC law; a right of which ATL was entitled to take advantage.  As we understood him, Mr Poole accepted those submissions but maintained that ATL, as a holding company, was not intending to make taxable supplies in the course of that business, and there were no reasonable grounds for the Respondents to believe that the value of such supplies would exceed the registration limit.  They had no objective evidence such as a business plan, or prepared or draft requirements, but merely a bare assertion that ATL intended to make taxable supplies.  That was not, in Mr Poole’s submission, a reasonable ground for the Respondents to believe that the value of ATL’s taxable supplies would exceed the registration limit.
22.	We are unable to accept Mr Poole’s submissions in that behalf.  By refusing to register ATL under the ‘future turnover rule’ in paragraph 1(1)(b) of Schedule 1 to the 1994 Act, the Respondents rendered it impossible for the company to demonstrate from actual trading that it intended to take over Trading’s business by entering into legitimate transactions.  Against that background, we entirely agree with a submission by Mr Patchett-Joyce that ATL’s inability to provide satisfactory evidence of trading, or intent to trade, is not determinative of the issue before us.  As he pointed out, it had always been made plain to the Respondents that ATL would not trade in mobile telephones until it was registered.
23.	Mr Patchett-Joyce contended that ATL was fully aware of its responsibilities as regards VAT, and had in place administrative and business recording systems that complied with the Respondents’ requirements of businesses trading in mobile phones.  He also claimed that it was plain that it had sought and obtained proper legal and accountancy advice in relation to the running of its business: it had acted with business probity throughout, and there were no contra-indications to suggest that its business was other than totally genuine.  Notwithstanding that the Respondents did not challenge any of the those contentions, Mr Poole continued to maintain that they had not been provided with objective evidence of ATL’s intention to trade, saying that the Respondents appeared to be the only party expected to take matters on trust.
24.	It is implicit in the Respondents’ case that ATL’s proposed trade in mobile telephones would not be an economic activity, such an argument having succeeded before these tribunals (see appeals by Bond House Limited (2003) Decision No. 18100, Optigen Limited (2003), Decision No 18112 and Fulcrum Trading Co (UK) Limited (2003) Decision No 18113).  By so determining, and rejecting ATL’s registration application, the Respondents not merely made it impossible for ATL to demonstrate an intention to trade, but also effectively prevented it from trading.  We so find on the basis that any genuine trader willing to contract with it would first have checked with the Respondents’ Redhill office to ensure that it was registered for VAT and, on finding that it was not, would not have dealt with it.  The Respondents action in refusing to register ATL for VAT constituted a deterrent to legitimate trade, and their interpretation of ‘economic activity’ ran counter to the Community principle of legal certainty, a general principle of Community law that must be observed by Member States when implementing the Sixth Directive.  As Advocate General Maduro observed in his opinion in Optigen Ltd etc.:
“21.	The Court has repeatedly held that the scope of the term ‘economic activity’ in Article 4(2) of the Sixth Directive is wide and that the term is objective in character.  Exemptions from the scope of VAT must be expressly provided for and precisely defined.  As the Court stated in Rompelman ‘[t]he common system of value-added tax … ensures that all economic activities, whatever their purpose or results … are taxed in a wholly neutral way’.  In its judgment of 26 March 1987 in Commission v Netherlands [Case 235/85 [1987] ECR 1471] the Court held that in order to determine whether an activity is an economic activity for the purposes of the common system of VAT, ‘the activity is considered per se and without regard to its purpose or results’.
22.		The United Kingdom relies on the rulings in Faaborg-Gelting Linien Case [C-231/94 [1996] ECR I-2395] and Stockholm Lindöpark [Case C-150/99 [2001] ECR I-493] to argue that transactions must be considered in the light of the circumstances in which they take place in order to ascertain whether they are subject to VAT.  However, those judgments are not authority for the conclusion that a supply chain must be considered as a whole in order to determine whether the transactions forming part of it qualify as an economic activity.”	
25.	Taking as a whole the information provided by ATL on 6 April 2004 to the Respondents, we are satisfied, and find, that ATL had carried out preparatory acts attributable to the economic activity of trading in mobile telephones.  We are also satisfied that the information provided to the Respondents constituted objective evidence of ATL’s declared intention to carry out that activity.  Further, based on the size of transactions carried out by Trading, and taking account of the fact that it is uneconomic to deal in small numbers of telephones (again, see paragraph 82 of the judgment of Moses J in the Teleos case), it was plain that the value of ATL’s supplies would exceed the registration limit almost immediately it commenced trading.
26.	We hold that, on making application to be registered for VAT, ATL was entitled to be registered as a person who made taxable supplies but was not registered under the 1994 Act, there being reasonable grounds for believing that the value of its taxable supplies in the period of 30 days beginning on 21 January 2004 would exceed £58,000, the then current registration limit.  It is thus entitled to be registered under paragraph 1(1)(b) of Schedule 1 to the 1994 Act.  We allow its appeal.  In case that decision should prove to be incorrect, we proceed to deal with ATL’s application for registration under paragraph 9 of the said Schedule 1.  On the evidence, we find that ATL was, in January 2004, carrying on a business, and intended to make taxable supplies in the course or furtherance of it.  Consequently, we hold that ATL was entitled to be registered as an intended trader under paragraph 9 of the said Schedule 1.  
27.	Mr Patchett-Joyce made application for ATL’s costs in the event of its appeal succeeding.  We direct that the Respondents pay those costs.

DAVID DEMACK 
CHAIRMAN
Release Date: 19 August 2005
MAN/04/0324