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Online sale
The taxpayer, a retailer, sold goods over the Internet. The customer paid by recording his credit or debit card details on the website. When the goods were sent to the customer, the taxpayer prepared an invoice either at the date of dispatch or at a date within seven days of the date of delivery. The tax point for VAT was the earlier of the date of the invoice or the date seven days from the date of delivery.
Online sale
The taxpayer, a retailer, sold goods over the Internet. The customer paid by recording his credit or debit card details on the website. When the goods were sent to the customer, the taxpayer prepared an invoice either at the date of dispatch or at a date within seven days of the date of delivery. The tax point for VAT was the earlier of the date of the invoice or the date seven days from the date of delivery.
Customs assessed the respondent on the basis that the company accounted for VAT as soon as the goods were delivered. The respondent appealed. The VAT tribunal allowed the appeal, saying that under reg 10 of the Consumer Protection (Distance Selling) Regulations 2000, the consumer was entitled to decline to accept the goods. Thus, until the relevant time had passed, the supplier did not know whether the goods would be retained or not.
Customs appealed, saying that the relevant date was the that of payment.
In the Court of Session, the judge said that in taking its view, the tribunal effectively changed the nature of the contract, making all contracts sale on approval. This was to misunderstand the regulations. Regulation 10 gave the purchaser an unqualified right of cancellation, but the provisions relating to payment, ordering and returns all pointed to the nature of the online sale being an outright sale. The taxable supply took place on the making of the online payment, under VATA 1994, s 64(4).
Customs' appeal was allowed.
CCE v Robertson's Electrical Ltd, Court of Sessions, 11 November 2005
