International Cases Update – August 2013 – focus on single/multiple supplies

In August 2013 a number of decisions dealing with VAT and GST were handed down in the UK and also one in Canada. From my research, no decisions were handed down in New Zealand.

This month I focus on yet another decision in the UK dealing with the vexing issue of whether a transaction involves a single supply or multiple supplies. In Zoorpark Limited v Revenue & Customs [2013] UKFTT 440 the issue was whether the provision of birthday parties by a creche (which also ran a cafe)  involved a single  taxable supply of a birthday party, or the separate supply of food (taxable) and children’s play (exempt). My analysis of the decision can be accessed here.

It is expected that some guidance on the approach in Australia will be given by the Full Federal Court in the appeal in ATS Pacific Pty Ltd v Commissioner of Taxation [2013] FCA 341. One of the findings of the trial judge (see [144]-[152]) was that the contract between the taxpayer and a non-resident travel agent was for the taxable supply of the travel products but a separate (GST-free) supply of a booking service. In coming to this finding, the Court appeared to adopt the UK approach and asked the following questions:

  • was the booking service “merely ancillary or incidental” to the supply of the travel products?
  • was the booking service sought for its own sake, rather than “a means of better enjoying the principal service”?

The appeal has been scheduled for November this year.

United Kingdom

Upper Tribunal

HMRC v Arkeley Limited (in liquidation) [2013] UKUT 393

  • VAT – zero-rating – evidence of export of goods – whether First-tier Tribunal erred in law in finding that the conditions for zero-rating were met in respect of certain invoices – Principal VAT Directive, articles 131 and 146 – VATA 1994, s 30 – VAT Regulations 1995, reg 129 – VAT Notice 703 – appeal dismissed

London College of Computing Ltd v HMRC [2013] UKUT 404

  • VAT – Exempt supplies – education – whether provided by “eligible body” – whether college of a university – tests to be applied – appeal dismissed

First Tier Tribunal

Chelham Ltd v Revenue and Customs [2013] UKFTT 418

  • VALUE ADDED TAX – input tax claimed by a company in relation to a supply of services to it by a subsidiary – the company making only exempt supplies to which the services were attributable – whether input tax deductible – held, no – whether decision to deregister the company ought to be upheld – held, yes – whether refusal of the company’s application for backdated VAT group treatment unreasonable – held, no – whether penalties chargeable – held, yes – appeal dismissed

Christadolou v Revenue & Customs [2013] UKFTT 425 

  • VAT – Whether the turnover of two separate businesses had to be aggregated – Whether one of the businesses was conducted by a sole trader and the other by joint proprietors – In the particular circumstances of this case, yes – Appeal allowed

General Motors UK Ltd v Revenue & Customs [2013[ UKFTT 443

  • VAT – self supply of cars used by car manufacturer in its business-Art 5(7) Sixth directive – value of supply: purchase price or cost- meaning of cost and purchase price – effect of UK provisions – determination of purchase price and cost – use of macroeconomic data to estimate cost in periods in which no direct evidence available.

Noble International Exchange Ltd v Revenue & Customs [2013] UKFTT 428

  • VAT – whether business made taxable supplies – no  – whether input tax allowable – no – appeal dismissed

Rapid Sequence Ltd v Revenue & Customs [2013] UKFTT 432

  • VAT – exemption for medical care – whether applies to services provided by company acting as a principal in providing medical doctors on a locum basis to hospitals – no – Article 132(1)(c) Principal VAT Directive – Schedule 9 Group 7 Item 5 Value Added Tax Act 1994 – appeal dismissed

Sunnyside Property Company Ltd v Revenue & Customs [2013 UKFTT 447

  • VALUE ADDED TAX – refurbishment of nursing home premises – lease of premises by company to subsidiary – services provided under separate agreement – whether single exempt supply of property together with services or independent supplies of property and services – held, single composite exempt supply of property and services – similar conclusion on basis of manner in which arrangements implemented in practice – deductibility of input tax – held none of input tax on construction costs attributable to taxable supplies – appeal dismissed

University of Cambridge v Revenue & Customs [2013] UKFTT 444 

  • Value added tax – whether input tax recoverable – tax incurred on non-business investment activity raising income used by University to facilitate and support its other activities both taxable and exempt – whether fees incurred on management of fund an overhead for input tax to be treated as residual – yes – tax  recoverable under Appellant’s partial special exemption

Wildfowl and Wetland Trust v Revenue & Customs [2013] UKFTT 423

  • VAT– Exempt Supplies – Cultural services – preliminary issue as to  whether certain sites of the Wildfowl and Wetland Trust comprising  captive collections of animals and nature reserves were  “zoos” within the meaning of Item 2 of Group 13 of Schedule 9 VATA 1994 – each site was a “zoo” – preliminary issue determined in appellant’s favour

Zoorpark Limited v Revenue & Customs [2013] UKFTT 440

  • VAT – whether birthday income constituted a single composite or separate supplier for VAT – appeal allowed in part – adjustment to best judgment assessment

Canada

Yevzeroff v The Queen 2013 TCC 268

  • whether taxpayer is entitled to input tax credits – whether taxpayer carried on any commercial activity – whether acquisitions substantiated – whether acquisitions incurred for the purpose of making taxable supplies

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