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Ampleaward Ltd v Revenue and Customs – Place of supply – whether s18(3) limited to goods warehoused in the UK

VAT is not payable on acquisitions into a bonded warehouse

3. The proceedings concern the correct VAT analysis of a series of transactions in
alcohol involving multiple jurisdictions. The FTT reached its determination of the
preliminary issues by reference to an assumed factual background. We will base our
analysis on the same assumed factual background which can be summarised as follows:

(1) The Appellant is an alcohol wholesaler that has at all material times been
registered for UK VAT and approved to own excise duty suspended
alcoholic goods in tax warehouses in the UK.

(2) During the period in question, the Appellant purchased alcohol from a
supplier (the “Supplier”) established in a member state of the EU other than
the UK (the “Supplier Jurisdiction”).

(3) The Appellant did not, however, take delivery of the alcohol in the UK.
Instead, the Supplier delivered the alcohol to a bonded warehouse (with
which the Appellant had an account) located in a third EU member state1
(the “Delivery Jurisdiction”).

(4) The Supplier included the Appellant’s UK VAT registration number in
its domestic VAT returns. That enabled the Supplier to treat the sale of the
alcohol as an exempt movement of goods across an EU border for the
purposes of VAT in the Supplier Jurisdiction.

(5) The Appellant was not registered for VAT in the Delivery Jurisdiction.
It did not itself account for VAT in respect of the acquisition of the alcohol
in the Delivery Jurisdiction. (The reason why the Appellant did not account
for VAT in the Delivery Jurisdiction, and the steps it took to comply with
VAT law in the Delivery Jurisdiction are not material to our decision and
we will not, therefore set them out.)

(6) The Appellant would then on-sell the alcohol to a customer (the
“Customer”) established in a fourth member state2
(the “Customer
Jurisdiction”). The alcohol would be physically located in the Delivery
Jurisdiction at the time of this sale and the Customer was not registered for
VAT in the Delivery Jurisdiction.

(7) All of the above transactions took place at a time when the alcohol was
held in duty suspense, so delivery of the alcohol pursuant to those
transactions resulted in the alcohol moving from one bonded warehouse to

4. These proceedings concern the correct analysis, for UK VAT purposes, of the
transaction set out at [3(2)]. The Appellant argues as follows:
(1) Its purchase of the alcohol from the Supplier was not subject to
acquisition VAT in the UK since, by virtue of s18(3) of the Value Added
Tax Act 1994 (“VATA”), that acquisition was treated as taking place
outside the UK.
(2) Alternatively, if its acquisition of the alcohol was subject to UK VAT,
it was entitled to an equal and opposite credit for input VAT with the result
that it has no actual obligation to account for acquisition VAT that is the
subject of HMRC’s assessments.

5. HMRC’s position is the diametric opposite. It argues first that s18(3) of VATA is
not engaged with the result that the Appellant’s acquisition of the alcohol from the
Supplier is subject to acquisition VAT in the UK. Moreover, in HMRC’s submission,
the Appellant is not entitled to credit for input VAT and so is liable for the amount as
shown in the assessments HMRC made.