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| VAT Hamiltax http://taxi-driver.co.uk/phpBB2/viewtopic.php?f=5&t=6640 |
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| Author: | JD [ Mon Aug 06, 2007 2:34 am ] |
| Post subject: | VAT Hamiltax |
8948: HAMILTAX PRINCIPAL AND AGENT - taxi and car hire - drivers self-employed - appellant made supplies of car hire services to account customers - nether supplies to cash customers were by appellant as principal with drivers as agents or whether supplies by drivers as principals - appeal dismissed TRIBUNAL CENTRE: LONDON DECISION NUMBER: 8948 APPELLANT: HAMILTAX CASE REFERENCE NUMBER: (LON/91/1420X) RESPONDENTS: THE COMMISSIONERS OF CUSTOMS AND EXCISE TRIBUNAL CHAIRMAN: THEODORE WALLACE LOCATION: SITTING IN PUBLIC AT 15 - 19 BEDFORD AVENUE, LONDON WC1B 3AS DATE: WEDNESDAY 24 JUNE, WEDNESDAY 1 JULY AND TUESDAY 11 AUGUST 1992 FOR THE APPELLANT: MS KATRINA JACK OF MAINPRICE & CO FOR THE RESPONDENTS: MISS CATHERINE TOMPKINSON RESULT OF APPEAL: DISMISSED Decision This appeal is against an assessment for output tax from 1 July 1989 to 30 September 1990 in the sum of £9977. Hamiltax is a partnership licensed to operate taxis and. under a different licence, private hire vehicles. The partners are Mr & Mrs Bryan World, Hamiltax provides a car hire service to account customers and accounts for VAT on the gross takings as the supplier. The dispute arises out of the non-account or cash operations. Customs was that Hamiltax supplies the cash services to customers and should account for tax on the full takings. Hamiltax says that for cash services the cars are hired to drivers who provide the services to customers on their own account and that it is only accountable for tax on the 70 per cent of fares for which the drivers are accountable to it. Hamiltax contends that the drivers are self-employed, whether working for cash or account customers, and relies on the fact that they are treated as self-employed for income tax and national insurance. Customs say that if the drivers are self-employed their contracts are with Hamiltax for both cash and account work and not with the customers and as an alternative submit that the drivers are in reality employed persons. Much of the hearing proceeded on the basis that the cash work is all taxi work. While 80 per cent of cash work arises from traditional taxi work, with the driver either plying for hire or waiting on a cab rank, 20 per cent is through telephone calls received at Hamiltax s office. No argument was addressed as to when a car is operating under a private hire contract within section 67 of the Local Government (Miscellaneous Provisions) Act 1976 and when it is operating as a taxi. Evidence was given by Tony Malcolm World, the son of the partners and their accountant, Kenneth Turner, taxi driver, John Whitehead, the assessing officer, Mrs. Susan Hovey, licensing officer of Fareham Borough Council, and Brian Dale, Senior Officer of Portsmouth VAT office. The documentary evidence consisted of a photograph of a car, a photocopy of the taxi tariff notice inside a car. the accounts of Hamiltax to March 1991, and two bundles put in by the Appellants; these bundles included material relating to car hire agreements with IBM and Marconi, daily job reports, drivers' daily sheets. a weekly summary report of commissions paid to drivers on car hire work, a card given out in cars and a Yellow Pages advertisement: all of these were put in by the Appellants. Customs put in a bundle of formal documents and correspondence, a newspaper cutting and a card (C 26). I find the following facts. Hamiltax started trading in June 1978 as a licensed taxi firm. At a later date it acquired a private hire licence. The same cars are used for taxi and car hire; all are Vauxhall Carltons. some being Estates and some Saloons. There are 22 cars. The cars are in fact owned by one of the partners and taxed, insured and maintained by Hamiltax. Hamiltax has a Hackney Carriage operator's licence from Fareham Borough Council: all cars have a taxi licence number on the back and a standard form tariff of fares inside. All cars carry a taxi sign on the roof which can be removed. The individual drivers do not have operator's licences; the owner is required to hold a Hackney Carriage operators licence even for long-term hiring of taxis. The drivers hold Hackney Carriage drivers' licences. The agreements between Hamiltax and the drivers are purely oral. Shifts of 8 hours are agreed and drivers are expected either to cover these themselves or to arrange for other licensed drivers to do so. There are 42 drivers. Specific cars are not allocated to drivers. so that a driver may use a different car on each shift. Drivers can accept or refuse account work or telephone requests for cash work. They are told that Hamiltax provides the car insurance and fuel but that the risk in respect of cash work rests with the driver. Drivers are required to record all jobs whether cash or account on drivers' daily sheets and to inform the office by radio of all jobs whether cash or account These are also recorded in the office. The driver pays 70 per cent of the total amount shown on the meter to Hamiltax for cash work at the end of the shift; the driver is liable whether or not he actually receives the cash. All cheques for cash work are made out to the driver and if a cheque is dishonoured, the loss is the drivers Mr. Turner told me that in the last few years he had suffered three bounced cheques, one non-paying customer and the loss of his change bag; Hamiltax declined to reimburse him or to waive its 70 per cent share. In the event of an accident during cash work giving rise to an insurance claim, the driver had to pay the £100 excess. Mr. Turner was told that for cash work the car was hired to him in return for a rental of 70 per cent of takings. He could not use the car for private purposes and drives his own car to Hamiltax's office to pick up the car. He tried to get No. 57 when available. He preferred cash work because he could get tips and earned more. He did not encourage account work but accepted some. When he did account work he received commission of 30 per cent and carried no risk whether for non-payment, accidents or loss of work through breakdown.- Some 20 per cent of cash work originates from telephone calls to Hamiltax; 80 per cent is from plying for hire. A casual customer will not know who owns the car. Cash customers sometimes telephone Hamiltax to complain about the driver having got his name from the badge which the council requires him to wear; the main complaint is speeding. Drivers give receipts if requested; these contain Hamiltax's telephone number. Two different cards were produced both with Hamiltax's telephone number: one with Hamiltax's name and one without. Although Mr. World said that since 1988 Hamiltax had no Taxi signs for the cars with the logo Hamiltax, both Mrs Hovey and Mr Whitehead gave evidence which I accept that the taxis seen by them recently had signs with the word Hamiltax Mrs. Hovey both used the taxis as a customer and in her official capacity examined them to check (among other things) that they had taxi signs. I reject Mr. World's evidence as to this. Hamiltax placed advertisements both in Yellow Pages and in the press. The Yellow Pages advertisement was headed 'Hamiltax' and carried the words 24 hour service Radio Controlled Taxis & Private Hire: it carried telephone numbers and said The largest company fleet in the area. This advertisement was presumably directed at cash customers An advertisement was placed in the local paper in late November 1991 again headed 'Hamiltax'. It carried the words 'Let HAMILTAX take care of your travel arrangements while you enjoy a night out. Saloon and Estate travel Employed reliable drivers.' I do not accept Mr. World's suggestion that the wording was chosen by the newspaper rather than Hamiltax. None of the other six advertisements in the feature referred to drivers. So far I have concentrated on cash work. Account work however represented rather over half of the work in 1992. There are important differences in account work. All the work is at an agreed rate per mile which is substantially less than taxi rates. Hamiltax guarantees to provide a car even if no notice is given and if necessary sub-contracts to another firm. Hamiltax does a substantial amount of work for IBM and Marconi. IBM in particular requires a high standard of driving with users filling in Job reports. IBM provides half of all Hamiltax's account work and expects cars to be clean and drivers to wear a collar, tie and slacks. Drivers are paid 30 per cent of the hire fees weekly. If there is an accident during account work Hamiltax bears the excess. The drivers bear no risk on account work. Customs submitted that Hamiltax acts as a principal for all work whether cash or account, whether taxi or car hire, and is accountable as supplier for value added tax on the full fares for cash work. Customs say that for all work the drivers contracts are with Hamiltax rather than with the customers and that the supply is by Hamiltax in all cases. Miss Tompkinson relied on the decision of Brooke J in Cronin v Customs and Excise [1991] STC 333, dismissing an appeal against the decision of the Tribunal in a case concerning a driving school. Brooke J said that at page 337; ''. The Tribunal was correctly addressing the question whether there was one driving school business. Mr. Cronin supplying services to the public through the agencies of the four self-employed instructors or four such businesses, each drawing back-up help, as a true franchisee often does from its franchiser.'' Brooke J said that the Tribunal's decision that the tuition was supplied by. Mr Cronin and that instructors were not really a business in their own account was not inconsistent with the finding that the instructors are self-employed. Another case where the question of agency arose was Potter v Customs and Excise [1985] STC 45, a decision of the Court of Appeal. Robert Goff LJ said at page 53 that the question which the Tribunal had to determine was whether the relationship between distributors and dealers of tupperware was that of principal and agent, under which the dealers acted as agents for the distributors in selling tupperware to the customer; or whether the relationship between them was that of vendor and purchaser, under which the dealers bought the tupperware from the distributors and then themselves sold it to the customers as principals, Applying that to the present case I ask myself whether in relation to cash transactions the relationship between Hamiltax and the drivers is (as Customs say) one of principal and agent under which the drivers act as agents for Hamiltax which makes the supply, or whether (as Hamiltax says) the relationship is one of hire under which Hamiltax hires the cars to the drivers for cash work providing back-up services and the drivers themselves contract with customers. Miss Jack relied on the decision of McCullough J in Customs and Excise v Music and Video Exchange Ltd [1992] STC 221. In that case the court upheld the Tribunal's decision that the terms of the written agreement were unambiguous and could only mean that the original owner had accepted that the taxpaying company would act as his agent. Miss Jack relied strongly on the agreements between Hamiltax and the drivers There is however an important distinction in the present case in that here there are no written agreements the arrangements are purely oral. In Music and Video Exchange the contract provided that the taxpayer "trades and acts at all times as agent of the seller". McCullough J said that at page 223 'The fewer the express terms the more the attention which will have to be paid to the way the parties conducted their relations after the Contract had been made. Potter is an example of such a case" While I am satisfied that Hamiltax and the drivers agreed that the driver should be self-employed in relation to both types of work, and that the arrangements for cash and account work should differ, there was no evidence that they agreed in terms that in relation to cash work the drivers should act as agents for Hamiltax The Appellant's case must rest on the basis that the proper inference from the terms agreed is that the drivers are agents Ms Jack pointed to a series of differences between cash and account work. In my judgment however while some of the differences are factors to be considered, what I have to consider is not whether there are differences between the two types of work, but whether the drivers act as agents for Hamiltax when doing cash work, The strongest pointer in favour of the Appellant is the financial risk The driver has to account for the work shown on the meter even if he is not paid or a cheque is dishonoured he receives nothing if the car breaks down when on a cash job and he bears the insurance excess in the event of an accident Miss Tompkinson observed that the liability to part on the basis of the meter could be regarded as a control to prevent carelessness or pilfering by drivers Such an arrangement is sometimes even imposed in a contract of service and is not inconsistent with a relationship of principal and agent. Another pointer for the Appellant is the fact that cheques for cash work are made out to the driver and not to Hamiltax and that Hamiltax's credit card facilities cannot be used. Drivers have to pay Hamiltax daily although any cheque would not be cleared for some days. Miss Jack stressed that 80 per cent of cash work is obtained by drivers plying for trade and not through Hamiltax. On the other hand 20 per cent comes from telephone calls to Hamiltax. The telephone customer will be unlikely to know of the arrangements between Hamiltax and the drivers. If he considers the matter at all, presumably he thinks he is dealing with Hamiltax unless the question of payment be cheque arises. Miss Tompkinson's submissions were primarily concentrated on the long established factors for determining whether a contract is for service or services. These are not the same as those for determining whether a person providing services does so as principal or agent. In fairness to Miss Tompkinson I must point out that her fall-back argument was that the drivers are employed for all kinds of work. I consider that the following factors point to Hamiltax being the principal in the cash work: (1) The press advertisement, Yellow Pages and one of the cards all bear the name Hamiltax. I consider that a customer who makes a telephone booking in response to such advertising would be surprised to be told that his contract is not with Hamiltax. This impression would be strengthened by the fact that a number (at least) of the cars carry the word 'Hamiltax' on the taxi sign on the roof. Even the card without the heading 'Hamiltax' carries the word 'The Big Fleet' which does not suggest that the drivers are independent. The press advertisement exhibited actually refers to 'Employed reliable drivers'. (2) The advertising is placed by Hamiltax and Hamiltax bears the cost. As to this it is to be remembered that the primary purpose of advertising is to attract telephone bookings which, of necessity, are made via Hamiltax. There was however no suggestion that individual drivers advertise on their own account. (3) The driver provides virtually nothing except his services. I say virtually because there was evidence that if a car needs a wash when not on account work the driver pays. The driver does not even pay for fuel used on cash work. (4) The driver undertakes to be available for eight hour shifts although he can refuse work If Miss Jack is correct in contending that the car is hired for individual cash contracts the question arises what is the position when the car is sitting in a rank waiting for work? On the material before the Tribunal there is at any time a considerable possibility that the next job will be an account job although this varies as to the time of day or the day of the week. In my judgment when analysed the distinction which the Appellant seeks to draw between cash and account work is unreal Whereas there are differences they are not substantial and most arise from the type of customer While I accept that the drivers are self-employed, I hold that for all work the supply is by Hamiltax and that the drivers' contracts are with Hamiltax rather than with the customers. I consider that each driver has a single contract with Hamiltax albeit with different incidents for different types of work. For both types of work the drivers drive as agents for Hamiltax and the supplies are by Hamiltax The appeal is therefore dismissed ________________________ |
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| Author: | echo15 [ Mon Aug 06, 2007 9:26 pm ] |
| Post subject: | |
They are out of the taxi business now. |
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