Case: Place of supply of goods the UK

[2018] UKUT 0203 (TCC)

Mr Justice Roth and Judge Roger Berner

Decision released 27 June 2018

VAT – Place of supply – Whether the place of supply by appellant of vehicles purchased by appellant from other Member States of the EU was in the UK or outside the UK – Whether intra-community transport ascribed to appellant’s supply – No – Held, place of acquisition and supply by appellant was in the UK - Principle VAT Directive arts 31, 32 and 40 – EMAG, Euro Tyre and VSTR (CJEU) – VATA 1994 s7(2), 7 and 13(3).

I C Wholesale Ltd [2018] BVC 514


IC Wholesale Ltd (“ICW”) purchased a number of cars from suppliers in Malta and Cyprus which were delivered to the UK. ICW made an onward sale of the cars to two companies in Ireland on which it did not charge UK VAT. HMRC issued assessments for underdeclared output tax on the basis that ICW was unable to show that the cars had been removed from the UK.

The case was first heard by the FFT which ruled that the cars were in the UK when they were supplied but, even if they were not, the effect of s7(7) of VAT Act 1994 is that the place of supply is the UK. The FFT also found that ICW had not produced evidence to demonstrate that the cars had been removed from the UK and that it had taken reasonable car to ensure that the supply did not participate in tax evasion. ICW only appealed to the UT on the first two points, it did not challenge the FFT’s conclusion that it could not evidence the cars removal from the UK or that it had not taken reasonable care to avoid tax evasion.

ICW’s argument was that although the cars were shipped from Malta and Cyprus to the UK, it had sold the cars onto its customers before they reached the UK. Therefore its supplies were made outside the UK and were, as a result, outside the scope of UK VAT.

The UT considered case law from the ECJ which found that when goods are sold through an intermediary supplier but are only moved once (from the initial supplier to the end customer), only one of the transactions can be treated as an intra-Community movement of goods. Following this, the UT ruled that the sales from the Maltese and Cypriot suppliers to ICW were an intra-Community supply of goods and that the place of supply was the UK. ICW had therefore acquired the goods in the UK and, as it could not evidence the removal of the goods from the UK, its onward supply took place in the UK and was subject to UK VAT.

In support of this interpretation the UT noted that ICW had provided the Maltese and Cypriot suppliers with its UK VAT number in order that their supplies could be treated as intra-Community supplies and had not advised them of the onward sale.


The UT’s conclusion will not come as a surprise to many. This case underlines the importance of proper record keeping when goods are moved between Member States. ICW’s record keeping was clearly deficient in a number of respects, had it been able to demonstrate where the cars were when they were bought and sold the conclusion might have been different.

For commentary on the place of supply rules, see the Indirect Tax Reporter at ¶13-470.

Be the first to vote