Align Technology UK Ltd v Customs & Excise [2003] UKVAT V18426 (19 December 2003)

VAT – JURISDICTION – VAT on importation – Appellant not a party to importation – Appeal struck out

LONDON TRIBUNAL CENTRE

	ALIGN TECHNOLOGY UK LIMITED	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

		Tribunal:	THEODORE WALLACE   (Chairman)
				PROFESSOR ROY SPECTOR MD, PhD, FRCP, FRCPath

Sitting in public in London on 24 October 2003

David Patrickson, of the Taxserver, for the Appellant

Ian Hutton, Counsel, instructed by the Solicitor for the Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2003

DECISION

1.	This decision contains our reasons for ruling that the Appellant does not have the locus standi to appeal against a ruling by Customs contained in a letter dated 21 November 2002 concerning the liability to VAT of dental aligners imported into the UK from the USA.

2.	The decision was addressed to Mr Patrickson and headed “Re Align Technology UK Ltd”.  The operative paragraph read as follows:

“Import VAT is due on the importation of dental aligners, or any other dental prostheses, that are imported into the UK from outside the EC, unless those appliances were manufactured within the UK.  Your importation of aligners that were manufactured in the USA is therefore liable to VAT at the standard rate.”

The notice of appeal said,

“… The prostheses are produced in the USA to the exact requirements of UK patients from data supplied by their orthodontists.  Such supplies are exempt under 77/388/EEC Art 14(a) and the VAT Act 1994 Sch 9 Group 7 item 2(c) …”

Article 14.1(a) of the Directive provides for a mandatory exemption on the final importation of goods of which the supply by a taxable person would in all circumstances be exempted.  Article 13.1(e) exempts dental prostheses supplied by dentists.  Item 2 of Group 7 exempts the supply of dental prostheses by a dentist or a dental technician.

3.	The Commissioners’ application arose from the fact that in a letter dated 23 September 2003, which was preceded by a telephone call, Mr Patrickson wrote,

“Supplies of aligners were from Align Technology Inc in the USA to UK orthodontists. That letter also states that future supplies may be from the Inc to Align Technology UK Ltd.  Before such an operation could be set up it was necessary to clarify the VAT liability of such importations. That was the original query and nothing has changed from our point of view.”

4.	Mr Patrickson confirmed that at present the imports are by orthodontists direct from its parent company in USA. The supplies are shipped through UPS Shippers direct to orthodontists. VAT is paid at importation on clearance because the goods come from outside the UK and the cost is passed on to the patient.

5.	He said that the Appellant company does import some aligners for training purposes and accounts for VAT because it is not an eligible training body.  This is not the type of importation to which the Notice of Appeal refers.

6.	He asked for the notice of appeal to be amended to substitute the Appellant’s US parent company, Align Technology Inc. 

7.	The Tribunal adjourned to allow the parties to read Schwarz and Others v Aeresta Ltd and Customs and Excise Commissioners [1989] STC 230 where Macpherson J said at page 234b that the Tribunal had a discretion to allow the substitution of an appellant or the addition of a party.

8.	Mr Hutton submitted that this case is different from Schwartz since there is no valid appeal in the absence of substitution because the Appellant has not made any supplies.  He said that substitution of an Appellant or addition of an Appellant is only possible when there is an existing valid appeal.  He submitted that the proper person to be appellants are the orthodontists who imported the goods.

9.	We concluded that the Appellant did not have the locus or standing to appeal under section 83(b) against a ruling as to the VAT chargeable on the importation by orthodontists of dental aligners made to their specification for supply to patients; no other head under section 83 appears to be relevant.  There is no right of appeal in respect of a ruling as to a possible future supply or importation.  We concluded that a direction to substitute the Appellant’s parent was not appropriate. The appeal was therefore struck out.

10.	The proper appellants in relation to such importations are the orthodontists themselves.

11.	We refused an application for costs by the Commissioners.  The point as to the Appellant’s locus standi was not raised in the Statement of Case and was only taken four days before the hearing.  Furthermore the circumstances do not in our view fall within the terms of the written answer by the Minister of State published in Hansard on 24 July 1986.

THEODORE WALLACE
CHAIRMAN

RELEASED:

LON/02/1109