VAT on a plate?

Posted: 22nd November 2012

Arguments that a Saudi Arabian businessman should not have been charged VAT on a car number plate for which he paid £170,000 on the basis that he is not a UK resident and that the Driver and Vehicle Licensing Agency (DVLA) is not engaged in economic activity have been rejected by the Upper Tribunal.HMRC

The businessman bought the number plate ‘1O’ from the DVLA at auction in 2009 and VAT was added at the then rate of 15% to the purchase price and to the buyer’s premium of £12,750. The Upper Tribunal dismissed arguments that, under the terms of paragraph 1 of schedule 5 of the Value Added Tax Act 1994, VAT should not have been levied as the buyer was a foreign national not resident in the UK.

Also rejected was an argument that the DVLA is not a ‘taxable person’ as it is not engaged in economic activity within the meaning of article 9 of the Principal VAT Directive. Although unable to demonstrate any error of law in the approach of Her Majesty’s Revenue and Customs, the businessman also claims that he had a legitimate expectation that VAT would not be charged on the transaction. That issue, on which the ultimate disposal of his appeal depends, has yet to be resolved by the tribunal.