19511
Value added tax- whether a metal holder designed to prevent a 'blue badge' from being stolen is equipment designed solely for the handicapped – Schedule 8 Group 12 item 2(g) – No - appeal dismissed
MANCHESTER TRIBUNAL CENTRE
ARTHUR ARNOLD Appellant
- and -
THE COMMISSIONERS FOR
HER MAJESTY'S REVENUE AND CUSTOMS Respondents
Tribunal: DAVID S PORTER (Chairman)
Sitting in public in Manchester on 6 March 2006
The Appellant in person
James Puzey, counsel, instructed by the Acting Solicitor for HM Revenue and Customs for the Respondents
© CROWN COPYRIGHT 2006
DECISION
- Arthur Arnold ("the Appellant") appeals against the decision contained in the Commissioners letter dated 15 July 2005, that the "Blue Badge Protector" ("the "holder") designed by the Appellant to hold a handicapped persons "Blue Badge", which allows that person to park under advantageous circumstances, did not qualify to be zero-rated.
- The Appellant appeared in person and called Mrs Julie Hollingsworth to give evidence. Mr James Puzey of counsel appeared for HM Revenue and Customs and produced a bundle for the tribunal. He also referred the tribunal to the case of Posturite (UK) Limited VTD 7848
The Facts.
- I find the following facts; The Appellant had seen an article in the Times which indicated that the handicapped parking badges (now the "Blue Badge" which replaced the Orange handicapped parking badge) were being stolen from the vehicles of handicapped people. This caused a great deal of inconvenience and expense until the badge was replaced. In many cases the badge would be stolen repeatedly. He therefore designed the holder for the badges. He produced the holder to the tribunal and there is a picture of it in the bundle at page 18. The holder is a substantial metal plate about 6 inches long, 4 inches wide and half an inch deep with a removable plastic face. The badge is inserted into the holder and the plastic face slides in over it. A restraining cord (not unlike a bicycle lock) is threaded through a hole at the end of the metal frame and beyond the plastic cover so that the badge and plastic cover cannot be removed. The restraining cord can then be fastened round the steering wheel and locked. It is unlocked with a key. The holder is very substantial and I am told is left in the car when not in use. The simple 'Blue Badge' holder costs £15.99.
The Appellant has found that charities will not purchase the holder if VAT is added.
- Mrs Hollinsworth (the Sales and Marketing Manager) gave evidence under oath and confirmed that 'Blue Badges' are frequently stolen since they have a 'black-market' value of up to £1000. The Metropolitan Police confirmed that the theft of the badges is up 700% this last year. Some local authorities in London had issued separate companion 'Blue Badges', these bore the registration number of the vehicle to which they applied and could only be used in that Local Authority's district. As a result the Appellant has manufactured a double holder so that a 'Blue Badge' for general use could be inserted to allow travel out of the Local Authority District. The general 'Blue Badge' does not carry a registration number, therefore it is negotiable and frequently stolen.
- She confirmed that several charitable organisations had asked the Appellant to appeal to the tribunal to see if the holder could be zero-rated. The imposition of VAT would add a further £ 2.80 to the price, which could be a considerable sum for a handicapped person or charity
The Law.
- Group 12 of Schedule 8 of the Value Added Tax Act 1994. provides at item 2:
(2) The supply to a handicapped person for domestic or personal use ……of –
(g) equipment and appliances not included in paragraphs (a) to (f) above designed solely for use by a handicapped person;
(h) parts and accessories designed solely for use in or with goods described in paragraphs (a) to (g)
Mr Puzey confirmed that it was agreed that the users of the holder are handicapped as required by the act that is ;
Notes: (3) "Handicapped" means chronically sick or handicapped.
- Mr Puzey submitted that group 12 of Schedule 8 items (b) to (f) in the main were concerned with the mobility of the handicapped person. They concern adjustable beds, commode chairs, chair lifts, hoists etc. As a result item (g) must be construed strictly within the framework of the earlier items. He did not accept, as put to him by the tribunal, that the 'Blue Badge' is either "equipment" or an "appliance" to which the holder could be a "part" or "accessory" under item 2(h). He doubted that the badge was either 'equipment' or 'an appliance'. Further that the 'equipment' and 'the appliance' had to be of like character to the earlier objects referred to in item 2. The 'Blue Badge' can be used without a holder and even with the holder, could be used by a fit person to drive a handicapped person. The holder is designed to prevent a 'Blue Badge' from being stolen. There is no link or nexus between that use and a person's disability. The Schedule is designed to assist the mobility of handicapped people or to relieve them from discomfort.
- In Posturite (UK) Limited which concerned an angled writing board which could be used by the able and handicapped alike the Chairman said ;
" In my judgement the word 'designed' in the particular context of sub-paragraph (g) is not used in the sense of 'destined'or 'intended' but in the sense of something being planned and fashioned in such away as to have the quality that it is used solely for handicapped people"
Mr Puzey submitted that the holder is no more than a security device to protect the 'Blue Badge'.
- The Appellant confirmed that he was not concerned with regard to the payment of VAT for himself, but for all the handicapped people who frequently were impecunious. An additional £2.80 would be prohibitive. He had been approached by several charities, the police and other authorities who were concerned that the holder should not be subject to VAT not least because no VAT was payable for the 'Blue Badge'.
- In my judgement the holder is no more than a security device to protect the 'Blue Badge'. I was attracted by the proposition that the 'Blue Badge' could be either "equipment" or an "appliance" and that the holder could therefore be an accessory and therefore zero-rated. However, during the hearing I was informed that no VAT is payable on the price of the 'Blue Badge' because it is treated as a non-business item by the distributing authorities and not because it was made available to the handicapped. Whilst the holder is undoubtedly valuable to a handicapped person, in that it will dissuade a thief from breaking into the car and stealing the "Blue Badge" it is difficult to see how it can fit into the provisions of item (g) to be "equipment" or an "appliance" designed solely for the use of the handicapped. Whilst I do not accept that 'equipment' and 'an appliance' need necessarily be the same as the earlier objects in item 2 , as suggested by Mr Puzey, in my judgment the terms imply some tangible object designed for and used directly by a handicapped person to assist their general mobility and comfort. As Mr Puzey pointed out there needs to be some linkage or 'nexus' between the object and the handicapped person. The holder is not essential to the use of the 'Blue Badge' but is there to protect the 'Blue Badge' not the handicapped person.
- I have considerable sympathy for the Appellant but that sympathy cannot allow me to decide that the holder should therefore be entitled to be zero-rated. The holder must fit in to the structure of the legislation and unfortunately it does not. I therefore dismiss the appeal. The Commissioners have not asked for any costs in relation to this hearing and I award none.
David S Porter
CHAIRMAN
RELEASE DATE: 27 March 2006
MAN/05/0581
