International cases update – June 2013

In June 2013 a number of decisions dealing with VAT and GST issues were handed down in the UK and Canada. From my research there were no decisions in New Zealand dealing with GST.

This month I focus on the decision from the Federal Court of Appeal in Canada in Tele-Mobile Company Partnership and The Queen 2013 FCA 149. The Court dismissed the taxpayer’s appeal against the decision of the Tax Court of Canada (2012 TCC 256) which agreed with the decision of the Revenue to deny input tax credits in respect of various billing credits given to subscribers to phone service contracts. The decision illustrates that the Courts in Canada adopt a similar approach to statutory interpretation in the context of GST (indeed generally). While the words of the statute are the starting point (indeed the end point as well in many cases), it is necessary to also apply a contextual and purposive interpretation, particularly where the words can support more than one reasonable meaning. My analysis of the decision can be accessed here.

I also note some other matters of interest arising in the UK:

  • In my international cases summary for March 2013 I analysed a decision of the UK Supreme Court in Her Majesty’s Revenue and Customs v Aimia Coalition Loyalty UK Limited (formerly known as Loyalty Management UK Limited) [2013] UKSC 15 the Supreme Court considered the question of whether the taxpayer (as the operator of a loyalty scheme) was entitled to input tax in respect of payments it made to participants in the scheme who provided goods to members of the scheme in return for the redemption of points. My analysis of the decision can be accessed here. The Court had previously referred questions to the European Court of Justice and in the appeal the majority of the Supreme Court found that reference should not have been made, essentially disregarded the findings of the ECJ because the facts had not been fully disclosed and upheld the decision of the Court of Appeal in favour of the taxpayer. The Court allowed the parties to make submissions on the form of orders to be made. In the course of those submissions, the Revenue invited the Court to make a further reference to the European Court of Justice. In Revenue and Customs v Aimia Coalition Loyalty UK Limited [2013] UKSC 42 the Supreme Court unanimously said no. In doing so, the Court observed that it would have been unfortunate if the position was otherwise, bearing in mind that the litigation had already lasted since 2003.
  • I also note the decision in Colaingrove Limited (Verandas) v Revenue & Customs [2013] UKFTT 343 where the First Tier Tribunal considered the issue of whether the supply of a caravan with a verandah involved a single supply or two supplies. The decision illustrates that the issue of single/multiple supplies continues to be hotly disputed in the UK. Last month I discussed a decision of the Upper Tribunal involving the question of whether the supply of cold water to barristers’ chambers was a separate supply. In the same month a decision was handed down on whether the supply of disposable BBQs involved a separate supply of charcoal.

United Kingdom

First Tier Tribunal

Alexandra Countryside Investments Ltd v Revenue & Customs [2013] UKFTT 348

  • VAT – property – zero-rating of residential conversion – s 30 and sch 8 VATA 1994 – conversion of pub to two residential units – pub containing manager’s flat that was incorporated into both units – whether note 9 to sch 8 denied zero-rating – HMRC v Jacobs considered – Appeal allowed

Colaingrove Limited (Verandas) v Revenue & Customs [2013] UKFTT 343

  • VAT – zero rating of caravans – supply of caravan with a verandah – whether a single supply or two supplies – test to be applied in context of zero rating

Deborah Lisbth La Roche v Revenue & Customs [2013] UKFTT 343

  • VALUE ADDED TAX – Cancellation of registration – whether an application stating a deregistration date of 20 December 2008 was received before that date – held it was – whether the appellant not liable to be registered with effect from that deregistration date – held she was not so liable – appellant’s appeal against decision not to deregister her with effect from that deregistration date allowed – paragraph 13, Schedule 1, VAT Act 1994 applied

Prescription Eyewear Ltd v Revenue & Customs [2013] UKFTT 357

  • VAT – exemption for medical care – whether applies to services provided by dispensing opticians in circumstances where spectacles are bought online – yes – whether single supply of spectacles subject to standard rate – no – or separate supplies of goods on the one hand and services amounting to medical care on the other – yes – Article 132(1)(c) Principal VAT Directive – Schedule 9 Group 7 item 1(b) Value Added Tax 1994 – appeals allowed

Canada

Tax Court

D-Win Computer Systems Inc v The Queen 2013 TCC 187

  • claim by joint venture partner for input tax credits in respect of money spent by joint venture partner for acquisitions made by joint venture operator – effect of joint venture rules and deeming provisions

Federal Court of Appeal

Tele-Mobile Company Partnership and The Queen 2013 FCA 149

  • entitlement to input tax credits as a result of Billing Credits and mail-in rebates provided to customers – whether credits and rebates a “coupon” or vouchers or simply a discount on the contract

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