Commissioners Of Customs & Excise v Plantiflor Limited

For VAT purposes, the court must identify each supply, its supplier, its recipient and the consideration received for it. Delivery arranged through a carrier may be a separate supply to the customer rather than part of the supplier’s sale of goods. Whether supplies are separate depends on all the circumstances and is a question of fact and degree. A separate price or optional delivery is not conclusive. The amount paid for the carrier’s delivery cannot also constitute consideration for the supplier’s own arranging service. A payment received as a customer’s disbursement, paid in the customer’s name and account and recorded in a suspense account, is excluded under Article 11 A 3(c) of the Sixth Directive. Article 11 A 2(b) quantifies the taxable amount after the supply has been identified; it does not determine the identity of the supply.

Plantiflor sold plants by mail order and arranged delivery through Parcelforce. Customers paid £2.50 described as postage and packing. Of that sum, £1.63 represented the ascertainable Parcelforce charge, while 87p represented packing and handling. Parcelforce’s postal service was exempt from VAT.

The London Value Added Tax Tribunal held that delivery was a separate supply by Parcelforce to the customer and that Plantiflor acted as an intermediary. The High Court, on appeal, held that Plantiflor was not acting as the customer’s agent and that the postal charge formed part of the taxable amount. Plantiflor appealed. The central questions were who supplied what goods or services to whom and what consideration was obtained for each supply.

Appeal allowed with costs. The Tribunal’s decision was restored.

1. The respondents could not reopen the characterisation of the transaction as involving separate supplies. That issue had been conceded below, was not raised in the Respondents’ Notice and, in any event, failed on the merits.
2. Whether goods and delivery constitute one supply or separate supplies is a question of fact and degree, taking account of all the circumstances. The court should generally ask whether one element is ancillary or incidental to the other. Physical and economic dissociability is not a sole criterion. Here, property in the plants passed at the latest when they were packed, delivery was optional, and the catalogue made clear that Plantiflor would arrange delivery through Parcelforce on the customer’s behalf. Delivery was therefore a separate supply by Parcelforce to the customer.
3. The facility agreement between Plantiflor and Parcelforce supplied no separate service to Plantiflor for consideration. Parcelforce’s delivery service was performed for the customer in return for the £1.63 postal charge. There was no fourth supply to Plantiflor. The benefit Plantiflor obtained from satisfied customers did not itself establish a supply for which Plantiflor paid consideration.
4. The £1.63 was consideration for Parcelforce’s delivery and could not also be consideration for Plantiflor’s arranging service. Plantiflor’s taxable arranging service was remunerated by 87p for packing and handling, together with 25p for transport insurance. The customer’s lack of knowledge of the precise postal charge did not alter the ascertainable consideration.
5. Plantiflor acted for its customers in arranging delivery. The £1.63 was a repayment of an expense paid in the customer’s name and for the customer’s account and recorded separately in a suspense account. It therefore fell within Article 11 A 3(c) of the Sixth Directive. Article 11 A 2(b) did not assist the Commissioners because it concerns incidental expenses after the supply has been identified.

• Court of Appeal (Civil Division): Plantiflor’s appeal allowed and the Tribunal’s decision restored.
• High Court, Queen’s Bench Division (Crown Office): Laws J allowed the Commissioners’ appeal from the Tribunal: [1999] STC 51.
• London Value Added Tax Tribunal: VAT was held not payable on the £1.63 postage charge: [1997] V & D R 301.