The long running saga of single v multiple supplies
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31st May 2013
Back in 2001 the lead case of Card Protection Plan
brought before the courts the issue of single versus multiple supplies.
Some hoped that finally having a case on which the ECJ had advised
be clarity on the murky waters of supplies with multiple elements. 12
years later and another case appears before the tribunal.
Having already had a judgement against them in the First Tier
Tribunals, HMRC appealed to the Upper Tribunal in the case of The
Society of Middle Temple. The background to the case is that
Society owns land and buildings which it then lets to barristers for
chambers and other business for commercial purposes. They had ‘opted to
tax’ the buildings and charged VAT on the rent as one would expect.
Additionally they also owned the underground pipe network which
water to the chambers. The Society effectively bought in supplies of
water from the utilities provider, and then resupplied this to its
tenants. As the chambers do not have meters installed, the charge is
based on the area
the chambers occupies.
The Society considered that the two supplies were separate,
duly zero rated the supplies of water. HMRCs argument was that the
of cold water was merely a means of better enjoying the lease of the
and as such the cold water was not an aim in itself for the tenants.
would the tenant want the supply of water without the supply of the
attached to it they questioned. The First Tier Tribunal, however,
disagreed with that point and found in favour of the Society. The Upper
Tribunal has re-examined the case with reference to a number of
decisions, including Card Protection Plan, and
decided that where there
contractual freedom to obtain services from a third party and as such a
separately identified charge is made for the service, this supports the
existence of several independent supplies rather than a composite
supply. As this was not the case with the Society’s charge it must be a
supply and so HMRC’s appeal was allowed.
This once again highlights the dangers of composite versus
multiple supplies as a VAT minefield, where specialist advice can
really help ensure
the business is compliant and lessen the risk of any future penalties
charges for unpaid VAT.
About the Author
VAT People are leading VAT and Customs Duty
consultants based in the
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throughout the UK as well as assisting our accountancy colleagues to
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Article Published/Sorted/Amended on Scopulus 2013-06-18 12:56:29 in Tax Articles