The wide range of uses to which multi-function hi-tech devices can be put can create very modern difficulties in defining exactly what they are. That was certainly so in one case in which a tax tribunal had to consider whether a fun device targeted at children was a watch or an import duty free camera.
The device was designed to be worn on a child’s wrist and was capable of telling the time at the touch of a button. However, it also incorporated a digital camera on which both still and moving images could be captured. Children could also play games on the device, which also had a sound recording function.
The company which imported the device argued that its primary function was that of a digital camera, on which no duty was payable. However, HM Revenue and Customs was equally adamant that it was, in effect, a ‘watch with benefits’ and that duty should be paid at a rate of 4.5 per cent.
In upholding the company’s appeal, the First-tier Tribunal (FTT) noted that the device clearly had features of both a camera and a watch. However, it ruled that the camera function predominated as the feature which would be viewed by children as the most fun and engaging. In those circumstances, the essential character of the device was that of a camera.