Litigation Recent Decisions 28/01/97

Challenge to alteration in VAT assessment arrangements

R v Customs and Excise Commissioners ex parte Littlewoods Group (1997)

QBD (Tucker J) 14/1/97

Summary: Unsuccessful challenge to Customs and Excise changes in the assessment of VAT on suppliers which accept payment for their goods by instalments.

Application for judicial review of the commissioners' decision contained in letters of 17 October 1995 to rescind all agreements not to tax outstanding balances where goods have been supplied by the applicant by means of self financed credit sales and by amendment, a decision of Customs of 26 November 199to withdraw the standard method of calculating daily gross takings from 1 March 1997 contained in the Budget Press Release C & E2. The applicant group of companies supplies a wide range of consumer goods to individuals by mail order as advertised in catalogues which it distributes. Some customers pay for those goods in full immediately but many take advantage of the credit terms offered by the applicant and pay for the goods purchased by it in instalments. Accordingly, the applicant received no payment for many goods supplied by it until some weeks after the date of supply. The applicant has been assessed to VAT by reference to a scheme first described in a Press notice on 21 March 1973 and in respect of which a derogation from EU legislation was obtained. The scheme permits the trader to pay tax calculated by reference to actual receipts during an accounting period, treating those as the consideration for taxable supplies made during that period. The applicant contended that the new "windfall tax" will result in it accounting for too much and in it being charged tax by more than "a negligible extent" as stated in art.27 of the Sixth Directive.