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Home > Publications > Selected cases — Parliamentary > Selected Cases and Summaries of Completed Investigations - November 1997 - April 1998 > C.828/95
Summary of Selected Cases
CUSTOMS AND EXCISE
Delay in issuing a value added tax certificate
Matters considered:
A complaint that Customs delayed sending a man a value added tax (VAT) certificate for over two years in respect of a boat he wished to import to France. He was forced to pay additional expenses to keep the boat in the Channel Islands until the VAT certificate was issued.
Summary of case
In February 1988 a boat was imported to the United Kingdom (UK) and VAT of £19,500 was paid by the importing company. In March a Jersey-based company agreed to buy it from the importing company for £172,000, including £22,434 VAT, for which the importing company duly accounted to Customs. The Jersey company, as a non-EC based company, was not eligible to recover the VAT as input tax. The importing company was later asked to act as broker in re-selling the boat and they arranged a sale to Mr A for £130,000, which he completed in August 1989. He wanted to move the boat to France and was advised that under EC law the unrecovered VAT on the previous sale could be offset against his liability to French VAT. On 12 July 1990 the importing company, on behalf of Mr A, asked a Customs local VAT office (the LVO) to provide a certificate that the VAT had been paid and not reclaimed. On 19 September the LVO refused, saying that it was not Customs' responsibility to provide such certification for commercial agreements. French customs authorities endorsed UK Customs' letter of refusal on 18 April 1991 with a note explaining that they needed confirmation from UK Customs that the VAT had not been recovered before they allowed Mr A credit for it. That note was forwarded to the LVO and on 15 June Mr A sent the LVO documentary evidence that the VAT on the previous transaction had not been recovered. In 1992 Mr A visited the LVO (on a date not recorded) and was asked to obtain an affidavit from the importing company swearing to the details of the transactions. The affidavit was signed on 1 December 1992. On 12 January 1993 the LVO provided a handwritten note addressed ‘to whom it may concern' and mistakenly dated 12 January 1992, confirming that VAT of £19,500 had been paid within the UK and that no corresponding input tax had been claimed. (In fact the VAT amount should have read £22,434.) On 2 July Mr A's solicitors complained to Customs that while waiting for the confirmation Mr A had lost the amenity of the boat, had been unable to sell it, its value had fallen and he had incurred expenses keeping it moored in the Channel Islands. The LVO replied on 23 July that the delay was Mr A's responsibility because he had not provided the affidavit sooner. Correspondence continued until 10 March 1994 with the LVO insisting that they had had no obligation to provide a certificate but had done so in a spirit of co-operation.
Findings
Customs were far too inflexible in their response to the importing company's request for a certificate in July 1990. They should have met that request, particularly when it was endorsed by French customs authorities in April 1991. Customs' request in 1992 for an affidavit from the importing company swearing to the details of the transaction seems to me to have been an unnecessarily severe test to impose but in any case, if it was to be made at all, it should have been made much sooner.
Remedy
The Chairman of Customs offered her apologies for Customs' mishandling of the case and agreed that he should be recompensed for his losses. After protracted negotiations Customs offered Mr A a total of £50,044.30 in compensation, made up of £20,625 for depreciation (the boat had been offered for sale during the period while the certificate was refused); £16,250 for interest; £4,588 for mooring fees in France; £2,721 for insurance; £3,010.30 for legal fees; £850 for cleaning and maintenance and an additional payment of £2,000 for the inconvenience that Mr A had suffered.
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