Inevitable conclusion?
Inevitable conclusion?
Plantiflor Ltd sold bulbs directly to the public. It entered into a contract with the Post Office whereby it agreed to send a certain number of items, and Parcelforce agreed to deliver them for a preferential bulk rate of postage, paid by Plantiflor by direct debit. Plantiflor then charged its customers £1.63 postage if they chose to have the parcels delivered by Parcelforce. No contract existed between the customer and Parcelforce.
Plantiflor considered that no VAT was chargeable on the postage by virtue of Article 11A(A)(3)(c) of the Sixth Directive, as it made no supply to the customer in return for the price of the postage. It was rather acting as agent in relation to the delivery of goods, and no consideration was made between the customer and Plantiflor.
Customs disagreed, but on appeal, the VAT tribunal ruled that no VAT was payable. Customs went to the High Court, which found for them, but the Appeal Court later reversed the decision. Customs therefore appealed to the House of Lords.
The law lords said that it was necessary to identify the particular supply for which payment was made. In the instant case there were three distinct supplies. These were the supply by Parcelforce to Plantiflor of the service of delivering the goods, the supply by Parcelforce to the customer of delivering the goods when the customer had incurred no liability to pay Parcelforce a consideration, and the supply by Plantiflor to the customer of an arrangement service for which Plantiflor was charged £1.63. Plantiflor made the supply of the arrangement service for a consideration, i.e., the direct debit mechanism. It was not shown that the amount paid by the customer for postage became on payment to Plantiflor the property of Parcelforce, therefore it was part of Plantiflor's receipts, and were taxable supplies.
Customs' appeal was allowed.
(Commissioners of Customs and Excise v Plantiflor Ltd, House of Lords, 25 July 2002.)
