UK Supreme Court dismisses taxpayer’s appeal in Airtours

In a 3:2 decision, the UK Supreme Court has dismissed the taxpayer’s appeal in Airtours Holidays Transport Ltd v Revenue & Customs [2016] UKSC 21. The issue in the appeal was whether Airtours was entitled to recover, by way of input tax, VAT charged by PwC in respect for services provided by PwC to various financial institutions which were paid for by Airtours.

The majority reviewed previous domestic and Court of Justice judgments, including Redrow and Loyalty Management. In doing so, the majority agreed with the majority in Loyalty Management that Lord Millet’s observations in Redrow went too far, when he said that the question to be asked was whether the taxpayer obtained “anything- anything at all”. Rather, the question to be asked was as follows (at [50]):

…where the person who pays the supplier is not entitled under the contractual documentation to receive any services from the supplier, then, unless the documentation does not reflect the economic reality, the payer has no right to reclaim by way of input tax the VAT in respect of the payment to the supplier.

Applying this analysis, Airtours appeal failed for the following reasons:

  • it was not entitled under the contract (expressly or by implication) to receive any services from PwC; and
  • the Contract did reflect economic reality and was not in any way an artificial arrangement.

The dissenting judgements considered that the “narrow legalistic approach” of the majority was too narrow, was inappropriate in the circumstances, and gave too little attention to the legal relationship between PwC and Airtours and to the economic realities of that relationship.

The decision illustrates the difficulties that can arise in the context of VAT/GST and “tripartite agreements”. The decision also illustrates how minds may readily differ on the characterisation of a transaction for the purposes of VAT/GST, with strong dissenting judgments in both the Supreme Court and the Court of Appeal.

My analysis of the decision can be accessed here. A more detailed analysis of the issue of tripartite agreements can be found in a paper that I presented earlier this year at the Television Education Network GST Symposium in Brisbane – my paper can be accessed here and also under the “My Articles” menu.

Federal Court dismisses taxpayer’s appeal in Crown Estates decision

In Crown Estates (Sales) Pty Ltd v Commissioner of Taxation [2016] FCA 335 the Federal Court dismissed the taxpayer’s appeal of the decision of the Tribunal in Crown Estates (Sales) Pty Ltd and Commissioner of Taxation [2015] AATA 94. The Tribunal found that the taxpayer was not entitled to claim input tax credits in respect of acquisitions made in providing property management services to owner-clients because the taxpayer was acting as the agent of those owner-clients. My post on that decision can be accessed here.

The Court upheld the Commissioner’s objection to the appeal on the ground that the notice of appeal did not specify any question of law. The Court noted that an appeal can be made from a decision of the Tribunal only on a question of law and that the question of law must be specified in the notice of appeal.

The decision illustrates the difficulties in properly framing an appeal from a decision of the Tribunal.

The amended questions of law were stated to be as follows:

(1) Whether the Tribunal erred in properly construing and applying s 11.5 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) in concluding that the Applicants did not make creditable acquisitions in the course of their dealings with suppliers of goods and services to properties owned by the clients of the Applicants.
(2) Whether the Tribunal erred in construing and applying the law of agency in determining that the Applicants acted as agents in the course of all their dealings with suppliers of goods and services to properties owned by the clients of the Applicants.

The Court considered that the questions of law did nothing more than solicit a broad and hypothetical enquiry as to the construction and operation of statutory provisions. They did not identify a question of law.

The Court observed that an additional reason why the Commissioner submitted that question 2 (expressly) and also 1 (by necessary implication) in the notice of appeal raised no question of law was that a conclusion that the taxpayer was an agent of the property owners was one of fact. The Court considered that questions as to the existence of agency are usually questions of fact and that those questions of fact emerge from settled legal principles. However, the Court considered that it was not impossible to conceive of a case where a question of law might be found in posing as a question that, having found particular facts, was the Tribunal obliged in law to conclude that an agency relationship existed? The Court noted that neither question of law was pleaded in this way.

The Court also observed that another way putting such a proposition would be to pose as a question whether, on the facts found, the Tribunal was obliged in law to conclude that it was the taxpayer which had made the creditable acquisition? Once again, that is not the way in which either question was pleaded.

The Court nevertheless addressed the issue raised in the appeal, which was whether the taxpayer had made “creditable acquisitions” for the purposes of the GST Act – i.e., whether the taxpayer was acting as a principal that acquired goods and services from third parties which it resupplied to its owner-clients, or was it dealing with the contractors et al. as the agent of the owners in each case.

The Court observed that the taxpayer chose not to give detailed evidence as to the circumstances appertaining to each and every creditable acquisition for each and every period in question to establish that the taxpayer was the entity that made the acquisition. Further, the Tribunal was not shown any evidence that suggested that the finding of agency was wrong – for example invoices or other documents evidencing or describing transactions in a way that suggested the third party and the taxpayer intended that goods or services would be supplied to the taxpayer as principal, rather than to a property-owning client.

The Court concluded that the relationship of principal and agent between the taxpayer and its client was the correct conclusion in law.





Tribunal finds applicant out of time to claim input tax credits

In The Trustee for SBM Trust and Commissioner of Taxation [2015] AATA 174 the Tribunal found that the effect of s 93-5 of the GST Act was that the applicant was not entitled to amend its BAS to claim input tax credits that related to acquisitions made more than four years ago. The Tribunal also found that it did not matter that the acquisitions were made before the commencement date of s 93-5.

The Tribunal accepted the Commissioner’s argument that the effect of s 93-5(a) was that the applicant “ceased to be entitled” to the input tax credits as soon as Division 93 became law – this was because the taxpayer had not taken those credits into account in the tax period in which the acquisitions were made or any other tax period during the subsequent four years from the tax period in which the acquisitions were made.

The Tribunal rejected the applicant’s submission that s 93-5 applies only to acquisitions made after 12 May 2009 (the date of its application). This is because the provision does not fix on the date of the acquisition, but on the timing of the lodgement of the GST return.


Tribunal finds trustee liable to pay GST of trust

In Anderson and Commissioner of Taxation [2015] AATA 167 the Tribunal found that the trustee of a family trust, was liable for GST in respect of the sale of property by the trust where the trust was in financial trouble and the proceeds of the sale were paid directly to the mortgagee. The contract of sale was entered into by the applicant, in his capacity as trustee, and the mortgagee did not formally enter into possession.

The Tribunal rejected the applicant’s contention that the trustee was an “incapacitated entity” for the purposes of the GST Act, principally because the applicant was a natural person and could not be placed into liquidation or receivership, and was not a bankrupt. Also, the evidence did not establish that the mortgagee sold the property as mortgagee in possession. Rather, the properties were sold by the trustee with the mortgagee’s consent (and also by reason of the pressure of the mortgagee), but that was not enough to engage the provisions of Division 105.

An interesting contention of the applicant was that he had retired as trustee on 9 December 2009 (the contract of sale was entered into on 26 March 2009 and the sale completed on 18 November 2009) and therefore the trustee was not liable for the GST. The Commissioner questioned whether the applicant had actually retired as trustee, but contended that it did not matter because the Tribunal only needed to decide whether “the trustee” is liable and that the question whether a particular individual was liable to pay any amount was not squarely before the Tribunal. The applicant was unable to point to any reason why the trustee was not liable for GST.

The Tribunal observed that if the Commissioner were to commence recovery proceedings in a Court against a particular individual, such as the applicant, in his personal capacity, the following questions would arise:

  • first, if an individual incurs a liability in one capacity – as trustee, say – which is distinct from his personal capacity, why can the Commissioner extract payment from the individual in his personal capacity in respect of the other entity’s debts?
  • second, if Mr Anderson can satisfy a court he had actually resigned in December 2009 before the end of the relevant quarter, he may escape any liability because it is accepted GST liability only crystallises at the end of a quarterly period

In considering the above questions, it is relevant to note PSLA 2012/2 ‘Change of Trustee’ outlining the approach to be taken by the Commissioner in recovering income tax and GST liabilities of a trust where there is a change of trustee following a income tax year or a tax period. My post discussing the PSLA can be accessed here.

The Commissioner takes the view that any liability to GST is a personal liability of the trustee and remains a personal liability of a retiring trustee (although the retiring trustee may have rights to seek indemnity from the assets of the trust – to the extent that there are such assets). However, if the applicant did resign as trustee on 9 December 2009, the approach of the PSLA appears to be that it is the new trustee (in this case the applicant’s mother) who is personally liable for the GST as she was trustee at the time the debt crystallised (i.e., at the end of the quarterly tax period).

Tribunal finds taxpayer was not carrying on enterprise of land development

In Bryxl Pty Ltd as Trustee for the Kypu Trust and Commissioner of Taxation [2015] AATA 89 the Tribunal found that the taxpayer did not establish that it was carrying on an enterprise of land development and was entitled to input tax credits in respect of certain acquisitions.

The Tribunal observed that the documents provided by the taxpayer were unsatisfactory, some were incomplete, some simply absent and some appeared to be inconsistent with statements made to the ATO in the course of discussions following assessment. Given that the onus falls to the taxpayer to show that an enterprise was being carried on, in light of these observations the taxpayer faced a difficult task.

In particular, a critical issue appeared to be the circumstances in which the taxpayer purportedly purchased the land which was to be subdivided and sold. The taxpayer only put parts of the contract of sale into evidence, and those parts were did not support what was said in oral evidence before the Tribunal. Further, there was no objective evidence of any deposit being paid or that settlement ever took place. The title search produced by the Commissioner showed that the land remained in the name of the vendor. The Tribunal also found that the taxpayer could not raise the purchase price.

The Tribunal concluded that until such time that the land was conveyed to the taxpayer, it could not have commenced an enterprise involving the subdivision of that land. The Tribunal’s conclusion was as follows (at [59]):

The evidence in this case regarding Bryxl conducting a business or enterprise involving the subdivision and sale of land discloses that while Bryxl may have had the intention to carry out such a business or enterprise, the steps it undertook in obtaining a planning permit and a market valuation cannot properly be described as being steps taken in the course of commencement of an enterprise. Until such time as it acquired the right to deal with the land in such a way that subdivision and sale could occur, it is artificial to suggest it was conducting the enterprise involving the subdivision and sale of land. The steps taken were clearly precursors or preparatory to the possible commencement of business, whether that be subdivision of the land or a quick sale to a syndicate of buyers.

The Tribunal also found that the Commissioner had properly cancelled the GST registration of the taxpayer and affirmed the Commissioner’s imposition of penalties on the basis that the taxpayer was reckless.

Federal Court finds taxpayer is not entitled to input tax credits for remote housing acquisitions

In Rio Tinto Services Ltd v Commissioner of Taxation [2015] FCA 94 the Federal Court dismissed an application by the taxpayer for a declaration that it was entitled to input tax credits in respect of acquisitions made in the course of providing remote housing accommodation to its workforce in the Pilbara mining region of Western Australia.*

The taxpayer claimed input tax credits for acquisitions made by members of its GST group in “providing and maintaining residential accommodation for its workforce in the Pilbara region”. The accommodation was leased to workers and there was no dispute that the leases were input taxed supplies under s 40-35 of the GST Act. The acquisitions included construction, refurbishment and maintenance costs. The taxpayer subsidised the rent payable by the workers and made a loss from providing the accommodation and the unchallenged evidence was to the effect that the cost of accommodation in the towns would be very high without the subsidy, and it would not be economically viable for most people to pay the full cost of the accommodation, making it difficult to attract, and retain, people to work in the Pilbara region.

The case concerned the construction of s 11-15 and the expression “creditable purpose”. The Court observed (at [2]) that “creditable purpose” has the statutory meaning given by s 11-5 and that:

  • section 11-15(1) provides that an entity makes an acquisition for a creditable purpose “to the extent” the entity makes the acquisition “in carrying on” its enterprise
  • section 11-15(2) provides that “however” an entity does not make an acquisition for a creditable purpose “to the extent that” the acquisition relates to making supplies that would be “input taxed”, or the acquisition is of a private or domestic nature

The Commissioner accepted that the acquisitions fell within s 11-15(1) (i.e., they were made in the course of the taxpayer’s enterprise) but contended that s 11-15(2)(a) operated to deny the claims because the acquisitions related to supplies that would be input taxed – namely the leases. The Commissioner contended that there was a direct and immediate connection between the acquisitions and the leases.

The taxpayer put two contentions:

  • the acquisitions were made wholly for a creditable purpose because the leasing of accommodation to workers was not an end commercial objective, but was wholly incidental to the mining operations and a necessary and essential part of the operation.
  • in the alternative, the acquisitions related to the leasing and to the end commercial objective, requiring apportionment – adopting a revenue based apportionment methodology gave an entitlement to credits of 99.88.

The Court observed that the taxpayer accepted that there was a connection between the acquisitions and the leases, but contended that this was not the “relevant connection”. For the relevant connection to be established, the making of the input taxed supply needed to be the “moving cause” or “purpose” of the acquisition. The acquisitions at issue did not not “relevantly relate” to the leases but to the ultimate mining operations of the taxpayer.

The taxpayer sought to support its contention that one must look to the “purpose” of the acquisition by referring to New Zealand authority. The New Zealand provisions involved the statutory test of whether the acquisitions were acquired for “the principle purpose” of making services that were taxable supplies or exempt supplies. The Court stated as follows (at [21]):

Rio Tinto accepted that the statutory test in New Zealand is expressed in different language but submitted that the scheme under the GST Act is not relevantly different in that the criteria embodied in the words “relates to” in s 11-15(2)(a) is the identification of a purpose of making a taxable supply which would be input axed, as distinct from a purpose of making taxable supplies. Rio Tinto argued that this construction of s 11-15 is supported textually, and by the scheme and policy of the legislation. It was argued that as, in this case, the provision of housing was merely a means to Hamersley carrying on its business, there was not a sufficient and material connection between the acquisitions in question and the making of input taxed supplies for the purposes of s 11-15(2)(a). I am unable to agree.

The Court (at [23]) observed that unlike the New Zealand legislation, s 11-15 does not use the language of, or require, or even direct, an inquiry into purpose. Further, whilst the entitlement to an input tax credit depends on an entity having a “creditable purpose” in making the acquisition, “creditable purpose” is a statutory construct and has a specific statutory meaning.

The Court (at [25]) considered that the language of s 11-15(2)(a) directs an enquiry into whether the acquisition has a nexus with input taxed supplies that an entity makes in carrying on its enterprise. Further, (at [26]) the Court considered that relationship must be “sufficient” or “material” and concluded as follows:

If an entity makes input taxed supplies, s 11-15(2)(a) operates to deny input taxed credits on those acquisitions. It is the objective relationship between an acquisition and making supplies that would be input taxed with which s 11-15(2)(a) is concerned, not the moving cause or principal purpose behind the acquisition. The purpose for which an acquisition was made may in some cases bear upon whether the acquisition has a relevant relationship with the making of supplies that would be input taxed, but it is the existence of a connection or relationship between the acquisitions and supplies that would be input taxed that is the statutory criterion directed by s 11-15(2)(a).

The taxpayer also contended that the legislative policy of the GST Act and Division 11 would be defeated by the Commissioner’s construction of s 11-15 because the taxpayer’s business is to profit from the making of taxable and GST-free supplies of iron ore, not the provision of accommodation. Also, the Commissioner’s construction would result in a cascading of tax on taxable supplies and unrecoverable GST being embedded in GST-free exports because the taxpayer’s leasing activities operated as a loss and the taxpayer could only recover the GST cost in the acquisitions through those taxable and GST-free supplies. The Court (at [30]-[34]) outlined the following responses to that submission:

  • the task of statutory construction does not seek to identify or assume the underlying policy of a provision and then seek to construe that policy – that is what the taxpayer sought to do here.
  • that it may be necessary for the taxpayer to subsidise the rent on the accommodation in order to attract and retain its workforce, with the consequence that the leasing activity is loss making, does not gainsay the application of s 11-15(2)(a).
  • it is the transaction that determines the GST outcome. In this case, the taxpayer has chosen to lease accommodation to its workforce with the consequence that s 40-35 applies and the provision of accommodation is an input taxed supply.
  • s 11-15(2)(a) should be construed consistently with the scheme of the GST Act under which GST is not payable on input taxed supplies that an entity makes and correlatively there is no entitlement to input tax credits on acquisitions that relate to such input taxed supplies. The acquisitions in question have a direct and immediate connection with the provision of leased accommodation and that direct and immediate connection constitutes a sufficient and material relationship  for the purposes of s 11-15(2)(a).

The Court found that the taxpayer’s alternative argument on apportionment did not arise for determination because the acquisitions related wholly to the provision of accommodation.

* As I appeared for the Commissioner, in this post I have endeavoured to not provide any analysis or comment on the decision, but rather to summarise the reasons for decision of the Court.

Tribunal finds applicant discharged onus of showing default GST assessments were excessive

In Raschta Coatings Pty Ltd as trustee for the Raschta Coatings Trust and Commissioner of Taxation [2015] AATA 34 the Tribunal has found that the applicant discharged its onus of showing that default GST assessments were excessive.

During the audit, the Commissioner treated all deposits into the applicant’s bank accounts as taxable supplies unless it was plain that they were not. After some adjustments at the objection stage, the Commissioner concluded that the applicant’s taxable supplies totalled an additional $2,151,231 over the amounts returned in the BAS.

The decision illustrates the difficulties that are faced by taxpayers in discharging their onus of showing that an assessment is excessive. This is reflected in the following observation of the Tribunal (at [16]):

The Company presented a case which, at first blush, appears unpromising. It does not produce original documents and advances its case by relying on the evidence of Mr Thomas, a person whose reliability was the subject of considerable challenge by the Commissioner. The essence of that challenge was that Mr Thomas had failed to produce relevant documents and that he could not, and should not, be believed when he asserted that all the documents of the Company had been lost in the floods in 2010/2011. Additionally, the Commissioner points to unrelated historical matters that he says cast doubt on Mr Thomas’ credibility.

The Tribunal observed that there was considerable force in the Commissioner’s submissions, but nevertheless found for the applicant, principally it appears because the applicant was able to produce a complete printout of its general ledger plus some bank statements. Using those documents, the applicant produced a document that sought to demonstrate that none of the amounts recorded as credits on the bank accounts (and included by the Commissioner) were not taxable supplies. The Tribunal was satisfied that this evidence showed that the amounts were not taxable supplies, but were payments such as loans, transfers from related entities, non-taxable deposits, reversal entries. This decision illustrates the value of contemporaneous documents.

The Tribunal found that the applicant had substantiated exclusions of $1,878,462, leaving a difference of about $273,000. The Tribunal then considered the question whether the applicant had done enough to entitle it to the setting aside of the assessments and replace them with the amounts in the BAS originally lodged. The Tribunal found that it had, noting that it was a pity that the Commissioner did not use the general ledger to reconstruct the accounts, preferring to require the applicant to produce source documents.

Commissioner issues Decision Impact Statement for MBI Properties

Today the Commissioner issued his Decision Impact Statement for the recent decision of the High Court in Commissioner of Taxation v MBI Properties Pty Ltd [2014] HCA 49 where the Court unanimously allowed the appeal brought by the Commissioner.

As discussed in my earlier post, the fundamental issue put by the Commissioner in the appeal is that the decision of the Full Federal Court in South Steyne that there is no supply by the purchaser of a reversion made to the tenant sitting at the time of purchase was wrong and that the Court below was wrong to follow it. The High Court agreed.

The Commissioner considers that the decision gives rise to the following GST outcomes:

  • A purchaser of leased residential premises as a GST-free going concern, with the intention of continuing to observe and act in accordance with the covenants of the existing lease, is liable for an increasing adjustment under section 135-5.
  • A purchaser of leased residential premises makes an input taxed supply by way of lease, and paragraph 11-15(2)(a) operates so that there is no entitlement to an input tax credit for anything acquired that relates to making that supply.
  • Where leased premises acquired by a purchaser are not residential premises, the purchaser makes a supply of the premises to the tenant and that supply will be a taxable supply when the other requirements of section 9-5 are met. Therefore, after the sale:
    • the purchaser is required to pay GST on the rent paid by the tenant;
    • where the other requirements of section 11-5 are met, the tenant is entitled to input tax credits with respect to rent paid to the purchaser after the sale
    • the vendor is not liable for GST on rent paid to the purchaser after the sale
    • where the purchaser or tenant account for GST on a basis other than cash, their respective supply or acquisition of the premises by way of lease will be treated as being made on a progressive or periodic basis for the purposes of Division 156 of the GST Act.
  •  an entity granting a lease or acquiring a reversion makes a supply of the use and occupation of the leases premises in the course of carrying on an enterprise: see paragraph 9-20(1)(c). It remains a question of fact and degree whether the entity may also be engaged in some other or broader enterprise.

The Commissioner also states that entities that self-assessed on the basis of the decision of the Full Federal Court may need to review their prior lodgements to determine whether they have incorrectly reported a net amount – and may have a tax shortfall. Further, the Commissioner states that he will, where appropriate, address non-compliance and seek to recover excess refunds or underpaid net amounts from entities.


High Court allows appeal in MBI Properties

Today the High Court handed down its decision in Commissioner of Taxation v MBI Properties Pty Ltd [2014] HCA 49 where the Court unanimously allowed the appeal brought by the Commissioner.

The fundamental issue put by the Commissioner in the appeal is that the decision of the Full Federal Court in South Steyne that there is no supply by the purchaser of a reversion made to the tenant sitting at the time of purchase was wrong and that the Court below was wrong to follow it.

The High Court found that the Full Court in MBI Properties was wrong to reason that the only “relevant supply” was on the grant of the lease by the lessor to the lessee, and that the Full Court in South Steyne was wrong to conclude that MBI (as the purchaser of the reversionary interest) made no supply to the lessee.

The High Court observed that a transaction which involves a supplier entering into and performing an executory contract will in general involve the supplier making at least two supplies: a supply which occurs at the time of entering into the contract, in the form of both the creation of a contractual right to performance and the corresponding entering into of a contractual obligation to perform; and a supply which occurs at the time of contractual performance, even if contractual performance involves nothing more than the supplier observing a contractual obligation to refrain from taking some action or to tolerate some situation during a contractually defined period.

That observation applies to leases and there will in general be a supply which occurs at the time of entering into the lease. That supply will involve a grant within the scope of s 9-10(2)(d) combined (as contemplated by s 9-10(2)(h)) with the creation of contractual rights within the scope of s 9-10(2)(e) and with the entry into contractual obligations within the scope of s 9-10(2)(g). There will then be at least one further supply which occurs progressively throughout the term of the lease. That supply will occur by means of the lessor observing and continuing to observe the express or implied covenant of quiet enjoyment under the lease. The thing of value which the lessee thereby receives is continuing use and occupation of the leased premises. 

International Cases Update: August – October 2014

In the period August to October 2014 the following decisions relating to VAT and GST were handed down in the United Kingdom and New Zealand.

Of interest is the decision of the New Zealand Taxation Review Authority in Disputant and Commissioner of Inland Revenue [2014] NZTRA 13 where the Authority considered whether the supply of “advisory services” to overseas tour operators in respect of inbound tourism products was taxable or GST-free. This is the third case this year dealing with the GST treatment of supplies of travel arrangements for inbound tourism, with the Full Federal Court here considering the issue in ATS Pacific Pty Ltd v Commissioner of Taxation [2014] FCAFC 33 (my analysis of the decision can be accessed here) (the High Court recently dismissed the taxpayer’s application for special leave – transcript here) and the UK Supreme Court in Revenue & Customs v Secret Hotels2 Ltd [2014] UKSC 16 (my analysis of this decision can be accessed here).

United Kingdom

Upper Tax Tribunal

  • Revenue and Customs v IFX Investment Company Ltd [2014] 398 – VAT – Exemption in Group 4 of Schedule 5 to Finance Act 1972 – Playing games of chance – Whether “Spot the Ball” competition is a “game” – Whether entrants are “playing” a game” Appeal Allowed
  • Taylor Clark Leisure Plc v Revenue and Customs [2014] UKUT 396 – VAT – Fleming claims – Preliminary Issues – Time-bar: construction of VATA 1994, s. 80 – Entitlement: whether right to repayment assigned; whether right capable of assignation; VATA 1994, s. 43.
  • Revenue and Customs v University of Huddersfield [2014] UKUT 438 – VALUE ADDED TAX – University making exempt supplies of education services – refurbishment of leasehold property – lease of property to trust and underlease to University of property by trust – exercise of option to treat lease and underlease as taxable – whether input tax deductible as related to taxable supply of immovable property – purpose of EU and domestic legislation – whether scheme constitutes abuse of right – appeal allowed
  • Westinsure Group Limited v Revenue and Customs [2014] UKUT 452 – VAT – exemption for provision of services of an insurance broker or agent – whether exemption applies to services to facilitate insurance brokers obtaining better terms and related benefits from insurance companies and other insurance related services

First Tier Tribunal

  • Bookit Ltd v Revenue and Customs [2014] UKFTT 856 – VALUE ADDED TAX – financial transactions – exemption – Article 135(1)(d) Principal VAT Directive – card handling services – nature of services – whether transactions concerning payments – scope of exemption – questions to be referred to the CJEU for a preliminary ruling – whether in any event to be excluded from exemption as debt collection – abuse of rights
  • Boxmoor Construction Ltd v Revenue and Customs [2014] UKFTT 833 – VAT –zero- rating for construction of new building – planning permission for extension and alteration – building demolished in substance save for part of facade -whether supply was of construction of new building or alteration of existing building –whether retention of facade was condition of planning permission – HELD –retention of facade not explicit or implicit condition of planning permission – not supply of new building – appeal dismissed.
  • British Credit Trust Ltd v Revenue and Customs [2014] UKFTT 744 – VALUE ADDED TAX – hire-purchase agreements –  whether input tax on repossession costs fully allowable –  subsequent adjustment to appellant’s VAT account – whether a decrease in consideration leading to an adjustment for the purposes of regulation 38 VAT Regulations 1995 – whether an entitlement to bad debt relief under section 36 VATA 1994 – whether valid claim or amendment to claim –  appeal allowed
  • HSM Law Ltd v Revenue and Customs [2014] UKFTT 830 – VAT – creation of company to wind up solicitors practice – transfer of assets of exiting practice to appellant – whether a Transfer of a Going Concern – no – appeal allowed.
  • Ing Intermediate Holdings Ltd v Revenue and Customs [2014] UKFTT 938 – VAT – claim to recover input tax incurred by bank in providing deposit accounts – deposit accounts provided ‘free of charge’ to bank’s customers – whether supply for consideration – yes – whether consideration capable of valuation – yes – appeal dismissed
  • McAllister v Revenue and Customs [2014[ UKFTT 875 – VALUE ADDED TAX – whether operating a trade of buying and selling used cars and car parts – no – whether liable to be registered for VAT – no – whether assessment made to best judgement – no – whether penalty due under VAT Section 67(1) – no – appeal allowed.
  • O’Ryan v Revenue and Customs [2014] UKFTT 838 – VAT  – Registration – whether HMRC were correct to register the Appellant – effect of Appellant being victim of alleged fraud – appeal dismissed
  • Richmond Park Maintenance Ltd v Revenue and Customs [2014] UKFTT 743 – VAT –– Service charges in respect of accommodation units at golf resort –– Some units timeshare units, others subject to 99 year leases –– Whether units are “holiday accommodation” (Group 1 of Schedule 9 VATA) –– In the circumstances of the case, yes –– Whether particular items in the service charges are disbursements –– In the circumstances of the case, no –– Appeal dismissed
  • The Serpentine Trust Ltd v Revenue and Customs [2014] UKFTT 876 – VAT – mixed bag of benefits to supporters making ‘donations’ to charity – whether benefits supplied ‘for’ the ‘donations’ – yes – whether single or multiple supplies – single – whether element of single supply could be zero rated – no – nature of single supply – standard rated – appeal dismissed
  • TJ Charters LLP v Revenue and Customs [2014] UKFTT 896 – VAT – output tax – motor yacht acquired, intended to be used for chartering business with some private use – input tax on purchase of vessel recovered in full – no material records of private use – whether appropriate to apply Lennartz method of accounting for output tax – whether input tax should instead have been apportioned – whether assessment out of time under s 73(6)(b) VATA – appeal allowed in part
  • Tyne Valley Motorhomes v Revenue and Customs [2014] UKFTT 969 – VAT – zero rating –vehicles converted for disabled persons

New Zealand

Taxation Review Authority