THE LECHT SKI CO Ltdappellant

20886

Value Added Tax – zero-rating – whether skiers using a “travelator” come within Item 4(a) of Group 8 of Schedule 8 VATA 1994 – no – appeal dismissed.

EDINBURGH TRIBUNAL CENTRE

THE LECHT SKI CO LTDAppellant

- and -

THE COMMISSIONERS FOR

HER MAJESTY’S REVENUE & CUSTOMS Respondents

Tribunal: (Chairman): Mr Kenneth Mure, QC

(Members): Mrs Charlotte Barbour, CA., ATII

Ian M P Condie, CA

Sitting in Edinburgh on Monday 10 November 2008

for the AppellantMr Nigel Gibbon, VAT Planning Group Ltd

for the RespondentsMr Richard Shaw, Solicitors’ Office HMRC

© CROWN COPYRIGHT 2008.

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DECISION

Introduction

The Appellant is in business providing ski support services at Strathdon, Aberdeenshire. It has a shop, café and hires ski equipment. It provides skiers with a means to reach the top of the ski slopes by way of chairlifts and in particular for this appeal a “travelator”. It charges skiers for this service. In an earlier appeal in 2003 it was decided that patrons using chairlifts were not travelling in a vehicle for purposes of zero-rating. The issue for this Tribunal is whether payment for use of the travelator falls to be zero-rated in the context of the same legislation.

The Law

By virtue of Section 30 and Schedule 8, Group 8, of VATA 1994 certain transport supplies are zero-rated. In particular Item 4 provides for zero-rating for the “… Transport of passengers – (a) in any vehicle, ship or aircraft designed or adapted to carry not less than 10 passengers; …”.

Reference was made also to the following decisions:-

Lecht Ski Company Ltd (EDN/02/162)

Needles Chairlift Company Ltd (LON S/73/168)

Heights of Abraham (Matlock Bath) Ltd (MAN/85/51)

Narogauge Ltd (LON/95/1687)

The Facts

The factual aspects were not disputed and, indeed, parties did not lead any oral evidence. We were referred helpfully to the bundles of productions. Mechanically the travelator is one continuous moving belt. At its extremes it turns round, going around the cogs which are the running mechanisms. It is shown in the photographs (nos 1-3 of the Appellant’s Bundle). The black surface is a moving belt which ascends to the top of the nursery slopes. There is on one side a hand-rail which is fixed. It travels about one-third of the distance up the slope and is just over a hundred yards in length. It takes skiers to the top of the nursery slopes. Technically if there were the available finance it could be extended to the top of the ski slopes. The Appellant has a varying scale of charges for the use of the chairlifts and travelator according to the extent of the access required to the ski slopes and the duration. The travelator can transport more than 10 persons at a time.

Included in the Appellant’s Bundle are articles about similar travelator installations elsewhere in the world and considerations as to the use of such installations for London’s 2012 Olympic Games. In a sense these are not strictly relevant to the legal issue involved here but they are helpful in showing the technical nature and potential of such devices in moving large numbers of the public safely and efficiently.

In the course of the Hearing we were provided with a coloured diagram showing the Lecht Ski Area and which sets out the routes of the ski slopes and the varying means of ascent including the travelator (indicated as “8 Magic Carpet”).

Appellant’s Submissions

Mr Gibbon prepared for us a helpful Skeletal Argument (now lodged in process) to which he referred in conjunction with the various productions. In essence he submitted that for the purposes of the zero-rating provision of Item 4(a) the travelator represented a vehicle and, furthermore, the skiers travelled in it. While the dictionary definition of vehicle has relevance, it is the common sense interpretation which should prevail, and that, he argued, could change over an extended period.

The possible classification of a travelator as a vehicle was a novel one, Mr Gibbon suggested. While such installations have become common place, they are usually used free of charge and thus tax considerations have not arisen. He referred us to the technical nature and the potential of the travelator as a means of mass transport. It can operate at moderate speeds (up to 7mph). It can cover significant distances. It can cope with gradients, using chain rather than belt technology. The “ordinary” man’s view of technology must change, he argued, and why would he not now view a travelator as a vehicle?

Accordingly the interpretation of vehicle as not including a travelator expressed over 30 years ago in Needles Chairlift Company Ltd should no longer be considered reliable. In the Appellant’s previous appeal in 2003 reference had been made to the dictionary definition and common sense interpretation of the term. A travelator was a conveyance and thus, Mr Gibbon argued, could and should be viewed as a vehicle too. According to Mr Gibbon’s interpretation of Narogauge Ltd it seemed that the miniature trains were considered to be vehicles.

Respondents’ Submissions

In reply Mr Shaw submitted that the travelator was not a vehicle and that its users did not travel in it. In the present case the travelator had to be viewed as a totality and it could not be considered to be a vehicle.

Mr Shaw accepted that travelators were now much more common than at the date of the Needles case but their form as a means of transport remained essentially the same. For instance they cannot go round corners. (It was accepted that the apparent curve shown at page 26 of the Appellant’s bundle was illusory having regard to the position of the shadows!).

He urged us to follow the reasoning in the decision in the Appellant’s 2003 appeal. There, chair lifts and tows were not viewed as vehicles. Not all means of transport e.g. skis, would be viewed in an ordinary sense as vehicles. He referred to the approach to interpretation favoured by the House of Lords in Brutus v Cozens [1973] AC834, noted towards the conclusion of the decision in Heights of Abraham Ltd. In the present appeal the travelator was not in any ordinary sense a vehicle. Nor did passengers travel in it.

Mr Shaw argued that Narogauge was of questionable relevance to the present case. There was no concession or agreement as to the interpretation of vehicle. Some of the carriages were closed and others open, but it would have been impracticable to distinguish these for tax purposes.

Finally, he argued that the documentation produced about other travelator systems, while of technical interest, did not alter the nature of such an installation. It is not a vehicle.

Decision

Parties indicated that we did not have to consider issues relating to the assessment of tax here. We were invited simply to indicate whether we considered that skiers using the travelator were in a vehicle capable of carrying no less than 10 persons in the context of Item 4(a).

In our view the travelator does not come within the definition of a vehicle. Its function is to take the skiers in one direction over a fixed route from one extremity of the device to the other, and not beyond. Its location is fixed where it has been installed. It is not capable of independent or relatively independent movement (see Needles Chairlift Co Ltd – pre-penultimate paragraph). We consider that vehicle falls to be read in conjunction or ejusdem generis with the categories of ship or aircraft also included in Item 4(a). These are, of course, capable of independent movement and are not physically limited to one pre-determined route. They are not installed as such.

We find the reasoning of the Tribunal which heard the Appellant’s appeal in 2003 cogent and convincing and helpful in the present case. There is no special or esoteric definition of vehicle in the context of this provision (see Heights of Abraham – pre-penultimate paragraph). On any reasonable – and contemporary – interpretation we do not consider that the travelator can be categorised as a vehicle.

Moreover, we do not consider it apt to describe the skiers as being transported in the travelator. They are not enclosed to any extent. They are travelling on it. This is a secondary argument taking the travelator outwith the scope of Item 4(a).

For these reasons we refuse the Appeal.

Costs

Mr Shaw indicated that the Respondents did not seek costs in the event of success. Accordingly we make no award.

MR KENNETH MURE, QC

CHAIRMAN

RELEASE: 28 NOVEMBER 2008

EDN/08/96

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