An Organisation for all
Accountants in Practice

An "Antique" Mystery

By Gabelle LLP

Gabelle Logo

Language is a blunt tool.  In one context a word means one thing, and in another another.  In tax, however, you might expect some consistency in the use of terms.

A recent case shows how wrong you would be.

The case

In G Music And Sons Ltd v Revenue and Customs Commissioners ([2015] UKFTT 0430 (TC), published on 3 September 2015) the issue was whether the goods were antiques, qualifying for reduced Import VAT and relief from Import Duty.  For both VAT and Import Duty, antiques are defined as goods over 100 years old.

In an extraordinary decision, the First-Tier Tribunal found that the goods did qualify for a reduction in Import VAT, but not for relief from Import Duty.

To justify this difference, HMRC contended that “the evidence of age provided by the importer ‘these items are over 100 years old’ is not of the same quality as ‘I declare that, to the best of my knowledge and belief the articles in the form as imported were wholly manufactured or produced more than 100 years before the date of importation’.”

Not only is it questionable whether the omitted words “I declare … to the best of my knowledge and belief” are implicit in any statement in the indicative mood such as “these items are over 100 years old”, but on a wider view we are left with the result that the same test (for determining antique status) is applied differently in different taxes.


It is difficult to understand how either HMRC or the Tribunal can consider this decision a reasonable outcome.

The taxpayer was not a tax specialist, but an experienced jeweller.  His approach was that of a jeweller, amassing a significant weight of evidence that the items were over 100 years old, including written confirmation by the vendors.  The Tribunal accepted the evidence, saying, “We are satisfied that the items in question were over 100 years old at the time of importation.”

If VAT is to be the simple tax it was predicted to be at the outset, a reasonable taxpayer, having determined that the goods were over 100 years old, should expect to apply both the Import VAT and the Import Duty concessions for antiques.  How can it be reasonable to require a taxpayer to conclude that the antiques should qualify for Import VAT at the antiques rate, but should still be subject to Import Duty at the non-antiques rate?

Not the only example

This case is not the only instance of confusion in terms between taxes.  As a VAT specialist, I often find terms being used differently in my field from the direct tax approach of my colleagues.

To take one example: the term “business”.  Consider the proposal to transfer to a new company an office building which is rented out.  For VAT, I might propose opting to tax the property and registering for VAT as a taxable business.  For direct tax, Incorporation Relief applies when a person transfers a business as a going concern to a company ; but it would be very difficult to convince HMRC that the ownership of one building with one tenant constituted a business for these purposes, despite it being a business for VAT purposes.  In short, if you have determined that an activity is a business for one tax and think you can treat it as a business for another tax, confusion will arise and errors will result.

The list of examples goes on.  A business might qualify as an agent for direct tax purposes (ignoring the sales or purchases made for its principal), but not for VAT purposes (ignoring the commission earned from its principal).  An invoice evidencing transactions for direct tax purposes might not be an invoice for VAT purposes even if it shows the VAT charged.  Common sense cannot be applied, despite the Tribunal’s attempt to do so earlier this year (reported here) and there are a variety of pitfalls.


There are many obstacles to understanding tax, without inconsistency in the use of terms.  It is difficult for practitioners to identify these inconsistencies and avoid the resulting pitfalls, and it is unreasonable to expect the average businessman to appreciate such fine distinctions when they simply want to run their business (which is not tax).

Published September 2015