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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 there would 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 Honourable Society of Middle Temple. The background to the case is that the Society owns land and buildings which it then lets to barristers for use as 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 delivered cold 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, and duly zero rated the supplies of water. HMRCs argument was that the supply of cold water was merely a means of better enjoying the lease of the premises and as such the cold water was not an aim in itself for the tenants. Why would the tenant want the supply of water without the supply of the premises 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 existing decisions, including Card Protection Plan, and decided that where there is genuine 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 composite 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 or charges for unpaid VAT. 

About the Author

The VAT People are leading VAT and Customs Duty consultants based in the North West of England. We work with a wide range of businesses throughout the UK as well as assisting our accountancy colleagues to unravel the thorny VAT issues for their clients. We are one of the UK's largest and most comprehensive sources of VAT and Customs advice, our consultancy team having over 140 years of experience in VAT and Customs gained in either HMRC or a Big 4 accountancy practice environment.

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Article Published/Sorted/Amended on Scopulus 2013-06-18 12:56:29 in Tax Articles

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