In Albion Taxis Ltd v HMRC (TC00671 – 27 September), a company owned several taxis, which it hired to drivers. The company accounted for VAT in respect of its accounts customers, but failed to account to VAT in respect of cash customers. HMRC issued an assessment charging tax on supplies to cash customers, and the company appealed, contending that the supplies to cash customers were made by the drivers as independent principals.
The Tribunal rejected this contention and dismissed the appeal, distinguishing the decision in the 2004 case of Gibbs Travel (VTD 18472), and finding that in relation to cash fares, the company exercised ‘an implicit, if not an express, control’. Accordingly the company was acting as a principal ‘for both account and cash work’ so that ‘VAT is due on 100% of the income generated from all fares’.
Why it matters: There have been conflicting decisions on this issue. HMRC dislikes the 2004 decision in Gibbs Travel, which was out of line with the majority of previous decisions, and persuaded the Tribunal to distinguish it and not to follow it.
In Albion Taxis Ltd v HMRC (TC00671 – 27 September), a company owned several taxis, which it hired to drivers. The company accounted for VAT in respect of its accounts customers, but failed to account to VAT in respect of cash customers. HMRC issued an assessment charging tax on supplies to cash customers, and the company appealed, contending that the supplies to cash customers were made by the drivers as independent principals.
The Tribunal rejected this contention and dismissed the appeal, distinguishing the decision in the 2004 case of Gibbs Travel (VTD 18472), and finding that in relation to cash fares, the company exercised ‘an implicit, if not an express, control’. Accordingly the company was acting as a principal ‘for both account and cash work’ so that ‘VAT is due on 100% of the income generated from all fares’.
Why it matters: There have been conflicting decisions on this issue. HMRC dislikes the 2004 decision in Gibbs Travel, which was out of line with the majority of previous decisions, and persuaded the Tribunal to distinguish it and not to follow it.
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