The Court of Appeal has dismissed an appeal by Vieira Limited over VAT assessed on sales of newly built houses at the Tyrellstown development in Dublin. It upheld the High Court’s conclusion that licences granted to the development’s estate agent were neither lettings nor surrenders of possession that created a VAT self-supply. The court also held that, even if the arrangements had created such a supply, they were abusive under the EU VAT principles in Halifax.
Vieira had paid about €4.4 million in VAT on what it treated as self-supplies under the licence arrangements, and did not account for VAT on the later house sales. Revenue assessed the company for €1,944,340 in VAT on sales during the period from September or October 2003 to 31 August 2004. The Tax Appeals Commission confirmed the assessment in 2011. Vieira appealed, arguing that the licences meant it had already accounted for the relevant VAT.
The licences were made with Joseph McPeake, the sole selling agent for the development. They generally followed a binding contract for sale and allowed him to access a house to show prospective buyers. Each licence lasted 14 days, unless extended, and ended automatically when Vieira completed a sale of that property. Vieira retained a right to enter with colleagues and others. The agreements referred to a renewal fee after two weeks, but no fee was specified or paid.
The Court of Appeal found that the agreements did not give McPeake the right to occupy the houses as an owner, exclude others, or enjoy them in exchange for ascertainable rent. His access was limited to sales activity, while Vieira retained broad access. The court also found that no possession had been surrendered: at most, Vieira and McPeake had joint possession. The licences added no material rights to the estate agent’s existing sales agency arrangement.
The court separately upheld the finding that the arrangements were abusive under the Halifax test. It said the licences produced a tax advantage contrary to the purpose of the VAT rules and that obtaining that advantage was their principal aim. The court cited their short and uncertain duration, the absence of ascertainable rent, their lack of arm’s-length negotiation and the fact that the agent’s sales work did not materially change. It said the licences had no commercial rationale beyond the tax advantage.
Vieira argued that Revenue should have used the anti-avoidance procedure in section 811 of the Taxes Consolidation Act 1997. The court rejected that argument, holding that the availability of section 811 did not prevent Revenue from relying on the EU abuse-of-rights principle. It also declined Vieira’s request for a reference to the Court of Justice of the European Union, finding a ruling unnecessary to decide the appeal.
The appeal was dismissed on all grounds. The court’s provisional view was that Revenue should receive its costs. Vieira may make written submissions on costs within 21 days of the judgment; Revenue may respond within a further 21 days. The judgment does not state a final costs order.