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Metropolitan International Schools – goods or services or both?

12th Nov 2015
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The Tribunal has heard yet another case where the taxpayer provided a ‘basket’ of supplies, and had to unpick the arrangements to determine exactly what was being supplied. Once that decision was reached, the matter of the VAT liability could then be decided.

The company offered “blended distance-learning courses” covering such diverse subjects as plumbing and computer animation. The main issue was decided quite simply – there was a single zero-rated supply of printed matter. (The courses were commercial, so the exemption for education services was not applicable.)

The taxpayers marketing material and website referred to tutor support. The Tribunal accepted the taxpayer’s explanation that this was over-stated. In fact very few students availed themselves of this support (HMRC had quoted website testimonials which referred to tutor support, to support their argument that the zero rated printed materials were only part of a wider standard rated package.)

To make matters more complex, students could pay in instalments, so the Tribunal had to give some consideration to the Tax Point rules. In the event, of course, this was not relevant.

Paras 11-14 of the decision outline the history of the taxpayer’s dealings with HMRC, indicating contradictory rulings, and sloppy decision making, forcing the taxpayer to pursue an expensive Judicial Review. (Why, I why do we read this so often?)

Paras 99-101 of the decision make reference to HMRC’s reliance on the House of Lord’s decision in College of Estate Management. But, more significantly, HMRC simply misunderstood the Appeals process! The HL did not re-hear the FTT case, as HMRC seemed to maintain. Rather, the HL simply acknowledged that it was reasonable for the Tribunal to come to the decision that it did. Again, such basic lack of understanding on the part of HMRC is appalling.

Case: http://www.financeandtaxtribunals.gov.uk/Aspx/view.aspx?id=8651

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