Taxation

Value added tax - supply of goods to ferry passengers outside territorial waters - chargeable as if made at first point of passenger embarkationPeninsular and Oriental Steam Navigation Co v Customs and Excise Commissioners: ChD (Lightman J): 11 May 2000

The taxpayer company operated ferries between Portsmouth and Bilbao.

The voyage was partly through United Kingdom, French and Spanish territorial waters and partly in international waters.

Throughout the voyage non-consumable goods were sold to passengers.

The taxpayer company contended that supplies of goods made on the high seas, and thus outside the territory of any EC member state, fell outside the scope of the Sixth Directive on the harmonisation of the laws of member states relating to turnover taxes (Council Directive 77/388/EEC).

A Value Added Tax and duties tribunal rejected the claim, determining that the tax was payable at the UK rate on goods sold at any time - other than for consumption - during ferry sailings.

The taxpayer company appealed.Greg Sinfield, solicitor advocate (of Lovells) for the taxpayer company.

Kenneth Parker QC (instructed by Solicitor, Customs and Excise) for the commissioners.Held, dismissing the appeal, that the clear import of the legislation and the language used in art.8.1(c) of the Sixth Directive was that in the case of goods supplied between the first point of passenger embarkation within the EC and the last point of disembarkation within the EC and in the absence of a stop in a third territory, the place of supply of goods was deemed to be the first point of passenger embarkation; and that the provisions located all sales during intra-community sailings as made at the first point of passenger embarkation.