PerfectHome VAT structure upheld

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HMRC assessed the PerfectHome group for around £4.8m, applied to two associated companies, based on a Schedule 6 Direction, and Partial Exemption overrides. These are fairly technical areas of VAT law. (This article looks at a wider issue in the case.)

The business of PerfectHome supplies ‘white goods’ to credit-constrained customers.  The business had structured itself into two subsidiaries: Temple Finance Ltd and Temple Retail Ltd. Para 7 of the Upper Tier decision outlines the arrangements between the two companies.

Although HMRC did not formally argue that the arrangement constituted ’abuse,’ their arguments included a re-calculation of the VAT Returns as if there was a single legal entity (see paras 33-51 of the Upper Tier decision). The Tribunal was clear that, in the absence of an ‘abuse’ argument, the two companies must be treated as separate legal entities, even though neither could trade without the other.

The Tribunal robustly defended the taxpayers’ right to arrange its affairs advantageously. The existence of such an advantage did not automatically constitute abuse, nor did it permit HMRC to re-calculate Returns.

The FTT decision is here:

The UT decision is here:

About Les Howard


Hi, I am a VAT Consultant, working mainly with charities. I am based in Cambridgeshire

I have over 20 years experience in VAT, and am currently also a part-time member of the Tax Tribunals.


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