In Peter Tomlinson v HMRC [2007] UKVAT V20059 the VAT tribunal agreed with HMRC that an internet salesman was carrying on a business of buying and performance enhancing pills was not acting as disclosed agent for a Doctor.
- The taxpayer registered for VAT on 1 April 2000 and advertised pills on the internet.
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On completion of questionnaires, the order was passed to a Doctor.
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The Doctor prescribed pills to the customers and arranged for a pharmacist to send them to the customers.
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From 1 March 2001, the Doctor began to supply the pills direct to the customers.
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The taxpayer paid the Doctor for the pills.
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The taxpayer issued the customer an invoice with a mark-up.
HMRC conducted a review in October 2004:
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HMRC agreed to treat the supplies until 1 March 2001 as zero-rated.
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The supplies by the Doctor were disbursements until 1 March 2001 and he was acting as agent for the taxpayer.
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This meant that the taxpayer could not recover VAT on the purchases and did not need to charge VAT to its customers.
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From 1 March 2001, the supplies were standard rated:
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There was no registered pharmacist involved
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The taxpayer could recover VAT on the purchases of pills from the Doctor who was now supplying the pills directly and so incapable of acting as agent for the taxpayer.
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The taxpayer appealed on the basis that he did not have a business for VAT:
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He was acting as agent for the Doctor and was not employed by the Doctor.
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He never handled the pills.
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His supplies should be outside scope.
Neither the taxpayer, nor a representative attended the tribunal, leaving HMRC to argue the case unopposed. The VAT Tribunal agreed with HMRC:
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The taxpayer was clearly operating a business.
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He was acting as undisclosed agent for the Doctor.
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For VAT purposes, undisclosed agents are treated as receiving and making the supplies personally.
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The supplies were standard rated from 1 March 2001.
As the taxpayer did not have a sufficient explanation for failing to attend, the Tribunal also awarded costs to HMRC.
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