TC09680 - [2025] UKFTT 01332 (TC)

I have already found that Cascade’s services fall within Item 9, applying Inco Europe. Consideration of a conforming interpretation is therefore unnecessary to dispose of this appeal. That is evident from News Corp, where the Supreme Court accepted that the issue was to be first determined on domestic rules of interpretation, without regard to considerations of fiscal neutrality.

However, as I have heard argument on the point, I address the issue in case the decision is appealed.

The parties are in agreement with regard to the legal tests to be applied. They accept HMRC (being a state party) cannot rely on direct effect of the Principal VAT Directive. However, they agree that HMRC may benefit from a conforming interpretation in accordance with Marleasing. For this to apply it is both necessary that (i) treating Cascade’s supplies as standard rated would breach EU law; and (ii) it is possible to interpret the legislation in conformity with EU law, applying the tests in Vodafone 2 and Ampleaward. Where the parties diverge is the application of these principles to the facts of this case.