International cases update – March/April 2014

In March/April 2014 the following decisions dealing with VAT/GST issues were handed down in the UK and Canada. My research did not disclose any decisions in New Zealand.

I discussed the decision of the UK Supreme Court in Secret Hotels2 in my January/February update – The appeal concerned the liability for VAT of a company which markets and arranges holiday accommodation though an on-line website and the essential question was whether the appellant was acting as a principal, or as an agent, when making the supplies of hotel accommodation. My analysis of the decision of the UK Supreme Court can be accessed here.

The decision is interesting because the facts are similar to the facts considered by the Full Federal Court in ATS Pacific Pty Ltd v Commissioner of Taxation [2014] FCAFC 33. Looking at the two decisions, the Full Federal Court appeared to take a more expansive view as to what can be taken into account when characterising a supply made under a contract (including the manner of the performance of the terms of the contract and identifying the the “purpose” of the transaction and the practical or business reality of the circumstances), whereas the Supreme Court appeared to limit the scope of the investigation to the terms of the agreement – relying on traditional contract law principles. This is discussed in more detail in my case analysis of the decision of the Full Federal Court.

I note that on 23 April 2014 the taxpayer lodged an application to the High Court for Special Leave against the decision.

United Kingdom

Supreme Court

Revenue & Customs v Secret Hotels2 Ltd [2014] UKSC 16

Court of Appeal

Revenue & Customs v British Telecommunications Plc [2014] EWCA Civ 433

  • whether taxpayer entitled to compound interest on refund of VAT

Chancery Court

Littlewoods Retail Ltd v HM Revenue & Customs [2014] EWHC 868

  • whether the claimant entitled to compound interest on refund of VAT

Upper Tribunal

Revenue & Customs v Colaingrove Ltd [2014] UKUT 132

  • Value Added Tax – zero-rating – static caravans in Group 9 of Schedule 8 to Value Added Tax Act 1994 – meaning of ‘removable contents’ – Item 4 of Group 5 of Schedule 8 – meaning of ‘building materials’ – meaning of ‘fitted furniture’

First Tier Tribunal

Astral Marine Services Ltd v Revenue & Customs [2014] UKFTT 269

  • VAT – appellant licensed by ferry company  to operate gaming machines and casino on board ferries – whether separate supplies of gaming machine and casino licence or single supply of gambling provision – separate supplies – place of supply – whether ships capable of being  a “fixed establishment” for purposes of determining place of supply – yes – whether “human resources” for purposes of determining fixed establishment had to be employees of person receiving supply- no – casino areas on board ferries were fixed establishments for purpose of place of supply rules in relation to supply of casino licence – no fixed establishment on board ferries for purpose of place of supply in relation to gaming machine licence – appeal allowed in part

MG Rover Group Ltd v Revenue & Customs [2014] UKFTT 327

  • VAT – group registration – claim for overpaid output tax – company which made the sales in respect of which VAT overpaid leaving VAT group – whether claim rests with that company or with the representative member for the time being of the group – the former is correct answer for UK law – EU law does not need to be considered although is likely to give same result – appellant succeeds on preliminary issue

The Roald Dahl Museum & Story Centre v Revenue & Customs [2014] UKFTT 308

  • Value Added Tax – Input tax – Museum making both exempt and taxable supplies – Exempt supplies of admissions to museum and taxable supplies (standard rated and zero rated) of items sold in museum shop – Whether expenditure incurred in creating museum exhibits should be treated as residual input tax – Value Added Tax Regulations 1995, reg 101(2)(b) and (d) and (10) – Appeal allowed in part

Standard Chartered PLC, Standard Chartered Bank, Lloyds Banking Group PLC, Black Horse Ltd v Revenue & Customs [2014] UKFTT 316

  • VAT – claims under s 80 VATA – VAT groups – Art 4(4), Sixth Directive (Art 11, Principal VAT Directive) – s 43 VATA – entitlement to claim – effect of individual taxable member joining a VAT group on VAT overpayments arising prior to that event – effect of all the members of one VAT group joining a second VAT group on cessation of the first VAT group on VAT overpayments arising during the currency of the first VAT group – effect of company leaving the second VAT group on VAT overpayments arising during the currency of the second VAT group

Dazmonda Ltd v Revenue & Customs [2014] UKFTT 337

  • VAT- single or multiple supply – supply of land – provision by club of private booths for exotic dances

Canada

DiFlorio v The Queen 2014 TCC 67

  • whether applicant carrying on business in partnership with husband – whether applicant jointly and severally liable for GST as partner – NO

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