Qubic Advisory Services Limited vs The Commissioners for His Majesty's Revenue and Customs

This case involved a dispute between Qubic Advisory Services Limited and the Commissioners for His Majesty's Revenue and Customs regarding VAT record keeping requirements for gold transactions.

TLDR:

• Qubic Advisory Services Limited (QASL) was assessed for penalties by HMRC for failing to comply with VAT record keeping requirements.
• The First-tier Tribunal (FTT) ruled against QASL, leading to an appeal to the Upper Tribunal.
• The Upper Tribunal found that QASL's transactions did not require compliance with the specified record keeping requirements and allowed the appeal.

Qubic Advisory Services Limited (QASL) was assessed by HMRC for penalties amounting to £14,821,380 under section 69A of the VAT Act 1994 for failing to comply with the invoicing and record keeping requirements specified in VAT Notice 701/21 (Gold Imports and Exports). QASL appealed the penalties, arguing that the requirements did not apply to their transactions.

The First-tier Tribunal (FTT) initially ruled that the record keeping requirements did apply to QASL's transactions, as the gold was considered delivered or available to be taken away by QASL's customers. QASL subsequently appealed this decision to the Upper Tribunal.

The Upper Tribunal examined the contractual framework and the terms of the agreements between QASL and its customers. It was found that the gold remained in the vaults controlled by BullionVault and was not physically delivered to QASL's customers. The Tribunal also considered the waivers signed by QASL and its customers, which indicated that the customers waived their right to take physical possession of the gold.

The Upper Tribunal concluded that the FTT had erred in its interpretation of the record keeping requirements. The Tribunal held that the gold was neither delivered nor made available to QASL's customers in a manner that required compliance with the specified record keeping requirements.

As a result, the Upper Tribunal allowed QASL's appeal and set aside the penalties imposed by HMRC. The Tribunal emphasized the importance of accurately interpreting the contractual terms and the economic reality of the transactions in determining the applicability of VAT requirements.

This decision provides significant guidance for tax practitioners dealing with VAT compliance issues related to gold transactions and highlights the need for careful consideration of the specific terms and conditions of such transactions.

Legal representatives: Denis Edwards, counsel, instructed by Qubic Advisory Services Limited; Charlotte Brown, counsel, instructed by the General Counsel and Solicitor to His Majesty's Revenue and Customs.

Judicial Panel: Judge Greg Sinfield and Judge Guy Brannan

Case Citation Reference: [2024] UKUT 106 (TCC)