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Father with two kids skating in winter

HMRC skated over mixed supplies issue

16th Nov 2017
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The correct amount of VAT to charge on a mixed supply has been a challenge for tax advisers for over 20 years. Neil Warren explains how HMRC lost another case in this area, this time involving an ice rink business.


The issue at the heart of The Ice Rink Company Ltd & PI (Milton Keynes) Ltd (TC06117) was simple: when a child goes ice skating at a rink and pays to hire a pair of skates, as well as the admission charge to use the rink, does this involve one or two supplies for VAT purposes?

In other words, is the child receiving a single supply to use the rink with the skates included, or a separate purchase of skates and rink hire?

This question would not be a VAT problem if both supplies were subject to the same rate of VAT but the hire of skates by children is zero-rated (VATA1994, Sch 8, Group 16, Item 1). The admission charge is standard rated.


The court decided that the supplies were separate and should not be treated as a single, standard rated supply of “skates with admission” as HMRC concluded.

The fact customers hiring skates and also paying admission pay a different price to what they would pay if they acquired the two supplies separately was irrelevant. The court felt that the customer was paying for two very separate benefits and it would be artificial to treat them as a single supply.  The appeal was allowed.

Landmark case in 1999

A landmark case on mixed supplies was heard in the ECJ back in 1999: Card Protection Plan Ltd (C-349/96). This was supposed to give certainty over the VAT treatment of all mixed supply situations, but the subject continues to challenge both HMRC and taxpayers.

The main principles established by the ECJ were as follows:

  • Is there one main supply of goods or services with the other supply or supplies being ‘incidental’ or ‘ancillary’ to the main supply? If so, then the VAT liability wholly depends on the main supply.
  • Is each supply an aim in itself? Does the customer expect to receive all elements of the supply as a priority? If so, this indicates a mixed supply.

However, if the purpose of the second supply is to enhance the enjoyment of the main supply then the second supply is ignored.

Practical examples

Here are two examples of mixed supply situations based on the CPP principles in the previous paragraph:

  1. A customer pays £400 for a luxury trip on the Orient Express train with a four course meal included in the package price.
  2. A customer pays £100 for a corporate package of food, drink and a top seat at a football match, and the package includes a match day programme, which would cost £5 if purchased separately.

Example A: the Orient Express is a mixed supply of zero-rated rail travel and standard rated catering. Another way of looking at this issue is to consider if the customer would complain if he did not receive one of the items in his bundle of goods or services? The answer here is a definite ‘yes’.

Example B: the football package is a single supply subject to 20% VAT. The match day programme (which would be zero-rated if purchased alone) is a way of enhancing the customer’s enjoyment of the game (so he knows which teams are playing!) rather than being an aim in itself.


The VAT at stake in the Ice Rink case exceeded £600,000 so it was a good result for the taxpayer. I believe it is time for HMRC to review the key principles of mixed supplies and issue updated guidance to clear some of the muddy waters on this subject.  

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All Paul Accountants in Leeds
By paulinleeds
17th Nov 2017 17:29

Another clear and practical article from Neil.

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