TC09680 - [2025] UKFTT 01332 (TC)

Fecha: 24-Jun-2025

Conforming interpretation

Conforming interpretation

35.

Whilst the Principal VAT Directive can have direct effect, so a taxpayer can rely on it, member states may not.

36.

A conforming construction is only possible if:

(1)

treating Cascade’s supplies as taxable would breach European law; and

(2)

it is possible to interpret the legislation as exempting Cascade’s supplies so as to comply with European law.

37.

With regard to whether treating Cascade’s supplies as taxable would breach fiscal neutrality:

(1)

In LIFES the Court of Appeal rejected various allegations that the same legislation breached fiscal neutrality. Differences between different parts of the UK could be justified by the scope of the different regulatory regimes (see LIFES [90]-[95]);

(2)

The regulation of care services undertaken by CIW in Wales is not the same as that undertaken by the Care Quality Commission in England;

(3)

A difference in VAT treatment of supplies made by the same supplier before, compared with after, a change in the regulatory position does not demonstrate a breach of fiscal neutrality.

38.

With regard to the possibility of a conforming interpretation, Cascade acknowledge that Vodafone 2 allows a “highly muscular” approach to statutory interpretation, which can include altering the literal meaning. However, the ability to apply a conforming construction is limited: HMRC v Ampleaward Ltd [2021] EWCA Civ 1459 (“Ampleaward”) at [86]-[97].

39.

Cascade notes that recent examples where legislation has been found to be incapable of a conforming construction include Ampleaward and TalkTalk Telecom Limited v HMRC [2023] UKFTT 12 (TC). In both cases, the interpretation required to make the statute conform went against the grain of the legislation.