International cases update – September 2012 – single vs multiple supplies and possible impact of Qantas

In September 2012 the following cases dealing with VAT issues were published in the UK.  From my research there were no significant cases published in New Zealand or Canada.

It is notable that two of the decisions of the Tribunal involved the perennial question of whether a transaction involved a single supply or multiple supplies for VAT purposes.  My analysis of these decisions can be found here.  Also, as discussed in my analysis, one wonders whether the recent decision of the High Court in Qantas will impact on how Australian Courts will approach this question going forward.

United Kingdom

First Tier Tribunal

  • Chipping Sodbury Golf Club v Revenue & Customs [2012] UKFTT 557 – VAT – sporting exemption for golf clubs – Article 13A(1)(m) Sixth Directive – members’ subscriptions – single supply or multiple supplies – Card Protection Plan considered – held single supply – profit making proprietary clubs – whether entitled to exemption – no – appeals dismissed
  • Colin Summers & Christopher Summers v Revenue & Customs [2012] UKFTT 590 – VALUE ADDED TAX — registration — whether appellants trading as single partnership or as two differently constituted partnerships — on the evidence, two separate partnerships — appeal allowed
  • Goals Soccer Centres plc v Revenue & Customs [2012] UKFTT 576 – VAT – Single or multiple supplies; five-a-side football; Pitch hire agreements and management services of sports leagues; whether single supply or multiple supplies, whether artificial to split or artificial to combine; tests to be applied and factors to be taken into account; relevance of the principle of fiscal neutrality
  • Goodman Equine Ltd v Revenue & Customs [2012] UKFTT 565 – VAT – input tax claim refused – horse trading – is business test satisfied – no
  • JIB Group Ltd v Revenue & Customs [2012] UKFTT 547 – VAT – INPUT TAX – was professional independent trustee of pension schemes entitled to deduct VAT on services of third party advisers relating to schemes? – held yes – are amounts paid by schemes in relation to advisers’ services consideration for supplies of services by trustee? – held yes – do principles of legitimate expectation, fiscal neutrality and equal treatment lead to different result? – held no – appeal allowed
  • Lakeside Collector Cards v The Commissioners Revenue & Customs [2012] UKFTT 563 – VALUE ADDED TAX – Input tax – Change from cash accounting – Return submitted 2½ years late – Capping provisions – Whether input tax capped as from time return due or from time received by Respondents – Status of Respondents’ manual published on Internet considered
  • Lok’nstore Group Plc v Revenue & Customs [2012[ UKFTT 589 – VAT – INPUT TAX – partial exemption – whether standard method and special method produce fair and reasonable attribution of input tax – held yes – whether special method proposed by Appellant produces fairer and more reasonable result than standard method – held yes – appeal allowed
  • Nathaniel David Roden and Rebecca Catherine Roden v Revenue & Customs [2012] UKFTT 586 – VAT –  let of hotel accommodation by undisclosed agent – deemed supply by and to agent under s47(3) VATA – whether deemed supply to agent necessarily has same VAT status as deemed  supply by agent – no – whether Item 1(d) of Group 1 to Schedule 9 VATA only exempts supplies to physical user of accommodation – no – appeal allowed in principle
  • Westminster College of Computing Ltd v Revenue & Customs [2012] UKFTT 579 – VAT – EXEMPT SUPPLIES – education – whether appellant school – held no – whether appellant college of institution of UK university– held no – appeal dismissed

International cases update – August 2012; NZ decision on enterprise; decision of South Africa’s highest court

In August 2012, the following decisions relating to GST and VAT were handed down in New Zealand, the UK and Canada.

A decision of note is XXX and the Commissioner of Inland Revenue [2012] NZTRA 07 where the NZ Tribunal found that the taxpayer was entitled to be registered for GST as a property developer and to claim an input tax credit for the cost of acquiring land and associated costs with respect to a property development which did not proceed.  The decision provides a helpful insight into the approach of the NZ Courts on the difficult question of when an entity will be conducting a “taxable activity” in the context of the subdivision and sale of land. My analysis of the case can be accessed here.

Also, at the end of this post I briefly discuss a decision of the Supreme Court of Appeal of South Africa in Commissioner for South African Revenue Services v De Beers Consolidated Mines Ltd [2012] ZASCA 103 which touched on the difficult issue of the “attribution” of input tax credits in the context of acquisitions directly used for non-taxable purposes but used indirectly for making taxable supplies.  The approach of the Court may have some relevance to the construction of s 11-15 of the GST Act and the meaning of “creditable purpose”.

New Zealand

Taxation Review Authority

United Kingdom

Upper Tax Tribunal

  • HMRC v GMAC UK Plc [2012] UKUT 279 – VAT Bad debt relief – Insolvency Condition, Property Condition – whether valid under EU law – No; whether repayment claim resulted in a windfall contrary to EU law – need for reference – Yes; Time limit for making claims – whether time-barred as a result of overriding provisions of EU law

Tax Tribunal

  • Hope in the Community v Revenue & Customs [2012] UKFTT 499 – VAT – supply – whether funds received by the Appellant were grant monies outside the scope of VAT or consideration for a taxable supply of goods and services within sections 4 and 5 VATA 1994 – held taxable supplies – appeal disallowed
  • Skinner Ltd v Revenue & Customs [2012] UKFTT 525 – VAT – whether appellant’s dog food was pet food – meaning of “meal” in expression “biscuits and meal” in zero rating schedule – appeal allowed in part
  • Ward v Revenue & Customs [2012] UKFTT 499 – VAT  – exemptions – accommodation- whether the appellants supply of studio flats to the local authority was excluded from the exemptions within Group 1 of Schedule 9 of the Value Added Tax Act 1994 because they were operating a hotel or similar establishment – appeal dismissed


South Africa

In June 2012 the South African Supreme Court of Appeal handed down its decision in Commissioner for South African Revenue Services v De Beers Consolidated Mines Ltd [2012] ZASCA 103.  The question in this case was whether the acquisition of foreign advisory services (in respect of a proposed corporate restructure) were consumed by De Beers “for the purpose of making taxable supplies” so that input tax could be claimed.  The Tax Court sitting below found in favour of De Beers on the basis that the services were utilised and consumed by it for the purpose of making taxable supplies (i.e. in the course or furtherance of its enterprise of mining and selling diamonds).

The Supreme Court allowed the appeal by the Revenue.  In doing so, the Court considered the primary question to be whether the services were acquired “for the purpose of making taxable supplies”.

De Beers put its argument in the following way:

It was contended on behalf of DBCM that the provision of the services by NMR were necessarily attached to and according a concomitant of appellant’s mining or commercial enterprise as a public company.  As the appellant had chosen to conduct its business as a public company which, while conducting its operations, had certain statutory obligations, it was submitted that these services were directly linked to its making of ongoing supplies.  Thus, so it was argued, since these supplies can rightly be said to have been wholly utilised or consumed in the making of supplies, in the course or furtherance of appellant’s mining or commercial enterprise, they did not fall within the definition of imported services.  It was submitted that the Commissioner’s attitude embodied a restrictive approach in construing DBCM’s enterprise, limiting it to the nuts and bolds of the operational diamond business and excluding statutory duties imposed on the company in the interest of shareholders.  Put simply it was contended that NMR’s services were acquired in the furtherance of DBCM’s mining and diamond business.

The Revenue argued the following:

On behalf of the Commissioner it was submitted that the purpose in question is the purpose of the acquirer of the service and that, by its nature, the test is subjective.  DBCM’s reason for engaging NMR, so it was contended, was to acquire advice in relation to a take-over by parties to which it was related.  Accordingly, its board had a duty to report to the independent unit holders a to whether the offer was fair and reasonable and to obtain independent legal advice in that regard…The fact that this was the reason for DBCM’s engagement of NMR, rules out, as a relevant purpose, any of the incidental benefits which DBCM thought it might derive from the transaction.  

The Court agreed with the Revenue.  Also, the Court distinguished two tax cases (including the Australian decision in FCT v The Swan Brewery Co Ltd (1991) 22 ATR 295) where it was held that certain expenditure on services relating to corporate restructures was deductible for income tax purposes.

International Cases update – July 2012

In July 2012 the following cases dealing with GST/VAT were handed down in New Zealand, Canada, the UK and the ECJ.  The most interesting decision is that of New Zealand’s highest court in granting the taxpayer special leave to appeal in a case involving the important issue of liability of receivers to pay GST.

New Zealand 

Supreme Court

United Kingdom

First Tier Tax Tribunal

  • A Soldier v Revenue & Customs [2012] UKFTT 388 – VAT – new means of transport – private motor car supplied for removal to Germany – bought by member of UK armed forces based in Germany and taken there for two days – returned to UK because Appellant on temporary training here before six month operational deployment in Africa – car left in the UK during deployment – during deployment, Appellant notified that his German stationing was being terminated and he was being re-based in the UK – whether Appellant had sufficient intention to remove the vehicle from the UK when initially supplied to him to qualify for UK zero rating on that supply to him – X v Skatteverket (ECJ) considered – held yes – appeal allowed
  • Darragh House Ltd v Revenue & Customs [2012] UKFTT 423 – VAT – disallowance of  input tax claim – question of fact whether expenditure used or to be used for purpose of business – appeal allowed in part
  • Drumtochty Castle Ltd v Revenue & Customs [2012] UKFTT 429 – VAT; use of castle for function such as wedding; additional supplies of  overnight accommodation, afternoon tea and breakfast; single or multiple supplies; whether supplies including use of castle exempt under VATA 1994, Schedule 9 Group 1; whether exemption excluded by item 1(d)

European Court of Justice

  • Deutsche Bank [2012] EUECJ C-33/11 – Sixth Directive – Exemptions – Article 15(6) – Exemption for the supply of aircraft used by airlines operating for reward chiefly on international routes – Supply of aircraft to an operator who makes them available to such an undertaking – Concept of ‘operating for reward on international routes’ – Charter flights
  • J J Komen en Zonen Beheer Heehugowaard [2012] EUECJ-326/11 – Sixth VAT Directive – Article 13B(g), read in conjunction with Article 4(3)(a) – Supply of buildings and land upon which they stand – Supply of a building undergoing work with the view to the creation of a new building by transformation – Continuation and completion of the work by the purchaser after the supply – Exemption from VAT
  • International Bingo Technology [2012] EUEC C-377/11 – Sixth VAT Directive – Articles 11A(1)(a), 17(5) and 19(1) – Organisation of games of bingo – Legal obligation to use part of the card price to pay winnings to players – Calculation of the basis of assessment
  • Littlewoods Retail Ltd and others [2012] EUECJ C-591/10 – Second and Sixth VAT Directives – Input tax – Refund of excess – Payment of interest – Procedures
  • Redlihs [2012] EUECJ C-263/11 – Sixth VAT Directive – Directive 2006/112/EC – Concept of ‘economic activity’ – Deliveries of timber in order to alleviate the damage caused by a storm – Reverse charge procedure – Failure to register in the register of taxable persons – Fine – Principle of proportionality


Tax Court

  • Daruwala v The Queen 2012 TCC 257 – whether purchase of newly constructed home exempt from GST on the basis that the property had previously been used as a residence by the builder – whether property used by builder as residence
  • Scott v The Queen 2012 TCC 274 – Entitlement to rebate of portion of GST paid on the purchase of motor vehicle subsequently sold back to dealership because of persistent problems – whether two separate transactions or the rescission/cancellation of the first transaction
  • Tele-Mobile Company Partnership v The Queen 2012 TCC 256 – 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 voucher or simply a discount on the contract
  • Vincent v The Queen 2012 TCC 269 – Entitlement to input tax credits in respect of real estate business – substantiation of claims