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Action Day Planner – not a book!

24th Apr 2020
VAT Consultant vatadvice.org
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I was surprised that the FTT found for the taxpayer in this appeal. So I was not surprised when it was overturned at Upper Tier, and then remitted to the FTT.

At its heart there was a straightforward issue. Action Day sell planners and notebooks. They thought they were zero rated under Group 3. HMRC ruled that the products fell outside of Group 3 and therefore must be standard rated.

The business is based in Iceland, so the consequential question was whether it was required to be registered for VAT in UK under Sch 1A. (There is no registration threshold for non-established taxable persons.)

The taxpayer represented himself at both First Tier and Upper Tier. He relied largely on the wording of HMRC Notice 701/10. The FTT commented that he had meticulously considered and analysed it. He highlighted that crossword and sudoku books are zero-rated, even though they require completion. (His planners and notebooks required completion.) Para 32 of the FTT suggests the Tribunal was misled by its own consideration of the Notice. Coincidently, para 32 of the Upper Tier decision exposes this error of thinking. Although the FTT had started with the statute and the High Court decision in Colour Offset Ltd, it misled itself by giving too much weight to the HMRC Notice.

When the Upper Tier allows an appeal against a FTT decision if can either re-make that decision, or remit it to the FTT for re-hearing. In this case, it remitted the decision for re-hearing.

The Upper Tier decision is here: http://www.bailii.org/uk/cases/UKUT/TCC/2020/99.html 

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