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United Kingdom VAT & Duties Tribunals Decisions

You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> Calibre Tas Ltd v Revenue & Customs [2007] UKVAT V20508 (14 December 2007)
URL: http://www.bailii.org/uk/cases/UKVAT/2007/V20508.html
Cite as: [2007] UKVAT V20508

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Calibre Tas Ltd v Revenue & Customs [2007] UKVAT V20508 (14 December 2007)
    VAT Flat Rate Scheme Whether Expert Witness and Employment Consultant Management Consultant? No Appeal allowed


    CALIBRE TAS LTD Appellant

    - and -



    Tribunal: ADRIAN SHIPWRIGHT (Chairman)


    Sitting in public in London on 27 September 2007

    Mr John Rollings, Director, for the Appellant

    Mrs Gloria Orimoloye for HM Revenue and Customs, for the Respondents


  1. This is an appeal against a decision on review by the Respondents ("HMRC") to charge the Appellant's business category for the purposes of the Flat Rate Scheme from "Business Services not listed elsewhere to Management Consultancy. The rate is then 12.5% rather than 11%.
  2. The Issue
  3. The issue in this case is whether the Appellant's supplies are supplies of Management Consultancy services for the purpose of the Flat Rate Scheme.
  4. The Law
  5. The law is found in Regulation 55A to 55V of the VAT Regulations 1995.
  6. The Categories are set out in Regulation 55K(4). This provides:
  7. "Table
    Post offices
    Retailing food, confectionery, tobacco, newspapers or children's clothing
    Membership organisation
    Wholesaling food
    Farming or agriculture that is not listed elsewhere
    Retailing that is not listed elsewhere
    Wholesaling agricultural products
    Retailing pharmaceuticals, medical goods, cosmetics or toiletries
    Retailing vehicles or fuel
    Sport or recreation
    Wholesaling that is not listed elsewhere
    Agricultural services
    Library, archive, museum or other cultural activity
    Manufacturing food
    Repairing vehicles
    General building or construction services*
    Hiring or renting goods
    Manufacturing that is not listed elsewhere. Manufacturing yarn, textiles or clothing
    Repairing personal or household goods
    Social work
    Forestry or fishing. Mining or quarrying
    Transport of storage, including couriers, freight, removals and taxis
    Travel agency
    Dealing in waste or scrap
    Hotel or accommodation
    Photography. Publishing. Veterinary medicine
    Any other activity not listed elsewhere
    Investigation or security
    Manufacturing fabricated metal products
    Boarding or care of animals
    Film, radio, television or video production
    Business services that are not listed elsewhere
    Computer repair services. Entertainment or journalism
    Estate agency or property management services. Laundry or dry-cleaning services. Secretarial services
    Financial services 11.5
    Catering services, including restaurants and takeaways
    Hairdressing or other beauty treatment services
    Real estate activity not listed elsewhere
    Architect, civil and structural engineer or surveyor
    Management consultancy
    Accountancy or book keeping
    Computer and IT consultancy or data processing
    Lawyer or legal services
    Labour-only building or construction services* 13.5
    * "Labour-only building or construction services" means building or construction services where the value of materials supplied is less than 10 per cent of relevant turnover from such services; any other building or construction services are "general building or construction services".
  8. We were referred to no useful authorities.
  9. Evidence
  10. Both sides produced bundles of documents. No objection was taken to any of the documents and they were all admitted in evidence.
  11. We heard oral evidence from:
  12. (a) David Kelly; and
    (b) Andrew Coulson
    No witness statements were provided
    Findings of Fact
  13. From the evidence we make the following findings of fact:
  14. (a) The Appellant is a limited company. It carries on business providing the services of a Forensic Employment Consultant and Expert Witness.
    (b) The Appellant was accepted into the Flat Rate Scheme by HMRC as from 1 April 2004. This was confirmed by letter dated 11 May 2004. This was on the basis that the services were "Business Services not listed elsewhere."
    (c) HMRC contacted the Appellant in November 2006 by telephone. The officer concluded that the proper category was legal services at 13%
    (d) The Appellant wrote to HMRC and this was treated as in effect a request for a review.
    (e) By letter dated 12 January HMRC advised the Appellant that it should apply the rate of 12.5% under the Flat Rate Scheme as being within the Management Consultancy Sector.
    (f) Further correspondence took place and the decision appealed against is in a letter from HMRC dated 9 March 2007.
    (g) Mr Rollings is a director of the Appellant. He gave evidence of the work he does for the Appellant which is essentially all its business.
    (h) He produced a sample report. This was an "Employment Report". He also described his work as an Expert Witness and his understanding of his obligations under the CPR. Mr Rollings was an associate of Trevor Gilbert and Associates and acted as Expert Witness for them.
    (i) The Sample Report was a very helpful indication of what Mr Rollings did. Essentially this analysed an injured person's pre-injury earning potential and post injury earning potential to make an objective estimate of loss of earnings. This was essentially an analysis of a financial nature based on knowledge of the employment market and other significant knowledge and judgment. It was an important matter in Personal Injury cases.
    (j) There was no evidence that any advice as to how a business should be run or restructured was given in the way that someone falling within the well known term of Management Consultant would do. We find this as a fact. He did travel extensively to meet people and so there might be said to be consultations. However, it was not Management Consultancy.
    (k) Mr Rollings produced an email from the Chartered Institute of Management.
    Many thanks for your enquiry regarding definitions of management consultants and consultancies.
    Please find below the definition of a management consultant from the Institute of Management Consultancy
    The sector-wide definition should be "Management consultancy is the provision to management of objective advice and assistance relating to the strategy, structure, management and operations of an organisation in pursuit of its long-tem purposes and objectives. Such assistance may include the identification of options with recommendations; the provision of an additional resource and/or the implementation of solutions."
    The definition of a management consultant should be "Management consultants are those organisations and/or individuals that participate in the process of management consultancy within a framework of appropriate and relevant professional disciplines and ethics designed of the activity of management consultancy."
    The Management Consultancies Association:
    The MCA defines management consultancy as "The creation of value for organisations, through the application of knowledge, techniques and assets to improve performance. This is achieved through the rendering of objective advice and/or the implementation of business solutions."
    Hope that this helps. Please do not hesitate to contact us again if we can be of assistance on this or any other matter.
    Robert Orton
    Information Researcher, Chartered Management Institute."
    (l) We consider that no ordinary person would consider Mr Rollings acted as a Management Consultant. We find this as a fact.
    Submissions of the Parties
    Submissions of the Appellant in outline
  15. Mr Rollings submitted on behalf of the Appellant that:
  16. (a) The activities in question were acting as a Forensic Employment Consultant and Expert Witness.
    (b) This did not fall easily within any of the specific categories in the Flat Rate Scheme and so properly fell within the category of "Business Services not listed elsewhere".
    (c) It was not Management Consultancy in the usual understanding of that phase. The referral was to the email form the Chartered Institute of Management.
    Submissions of the Respondents in outline
  17. The Appellant acts as a consultant and so falls within the Management Consultancy sector as:
  18. (a) The Appellant identified what it did as Employment Consultancy.
    (b) The Appellant does more than just injury claims services.
    (c) The Appellant's business does not fall within HMRC's list of trades falling within "Business services not listed elsewhere".
    (d) It matches "Management Consultancy" listed businesses.
    (e) Accordingly, the appeal should be dismissed.
  19. We consider the Respondent's argument to be wholly misconceived. We need to consider the words in the Statutory Instrument.
  20. We accept the Chartered Institute of Management's email as an adequate description of Management Consultancy.
  21. We have found as a fact:
  22. (a) the Appellant's activities do not fall within that description; and
    (b) no ordinary person would describe these activities as Management Consultancy.
  23. We do not understand how factually the recharacterisation as falling in categories with higher rates could be properly made on the basis of telephone calls and no detailed consideration with the Appellant of its business.
  24. We consider that the Appellant's business properly falls within the category of "Business Services no listed elsewhere". We find this as a fact. It has acted correctly throughout.
  25. Accordingly, we allow the appeal with costs.
    RELEASE DATE: 14 December 2007


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URL: http://www.bailii.org/uk/cases/UKVAT/2007/V20508.html