Qubic Advisory Services Limited v The Commissioners for HMRC

Record-keeping obligations imposed for supplies of investment gold must remain within the scope of the enabling provision. Where the relevant supply neither transfers physical possession of the gold nor gives the recipient a right to obtain physical possession, the condition for those obligations is not met.

A contractual waiver of the recipient’s right to withdraw the gold was effective and material. It followed that gold held by a third-party vault operator was not delivered or available to be taken away by the recipient. The tribunal therefore set aside penalties founded on non-compliance with the notice requirements.

Qubic Advisory Services Limited appealed against a First-tier Tribunal decision of 4 April 2023 which had upheld penalties of £14,821,380 for alleged failures to comply with invoicing and record-keeping requirements for investment-gold transactions.

The gold was bought through BullionVault, remained in its vaults, and title was transferred to designated employees. The central issue was whether the gold had been delivered, made available, or made available to be taken away within the relevant provisions of VAT Notice 701/21 when read with regulation 31A(1) of the Value Added Tax Regulations 1995.

The appeal principally turned on the effect of a waiver, signed by QASL as agent for the designated employee, of the right to withdraw physical bullion.

1. Appeal allowed. The First-tier Tribunal had made a material error of law. Its decision was set aside, remade in QASL’s favour, and the penalties were set aside.
2. It was common ground that the supplies fell within item 2 of Group 15 of Schedule 9 to the Value Added Tax Act 1994. Regulation 31A(1)(b) of the Value Added Tax Regulations 1995 was the statutory authority for the notice obligations and required a supply which subsequently resulted in a transfer of possession of investment gold.
3. The designated employees never acquired physical possession. More importantly, the Second Waiver, signed by QASL as their agent, waived their right to obtain delivery or physical possession. The contractual framework therefore did not give them a right to obtain possession of the bullion held by the third-party vault operator.
4. Accordingly, the bullion was not delivered or available to be taken away for the purposes of the notice. The tribunal did not need to decide whether a mere right to obtain physical possession would itself suffice under regulation 31A(1)(b) or the notice.
5. There was no reason to remit. Under section 12 of the Tribunals, Courts and Enforcement Act 2007, the Upper Tribunal remade the preliminary decision because the waiver’s effect was self-contained and apparent from the documents.

• Upper Tribunal (Tax and Chancery Chamber): Allowed QASL’s appeal, set aside the First-tier Tribunal decision, remade it, and set aside the penalties: [2024] UKUT 106 (TCC).
• First-tier Tribunal (Tax Chamber): On 4 April 2023, held that the gold bullion was delivered or available to be taken away and dismissed QASL’s appeal against the penalties.