UT/2023/000009 - [2024] UKUT 00162 (TCC)

Spectrum’s core proposition, made in reliance on [33] of the Court’s judgment in EC v UK is that, apart from the minor provision of goods, the supply of medicines and other goods prescribed by a doctor or by other authorised persons is physically and economically dissociable from the provision of the service. In its submission, EC v UK and Klinikum are not restricted to their facts but establish generally applicable principles on the scope of exemption c) and which result in there being a bespoke treatment as far as exemption c) is concerned.

Spectrum disputes the FTT’s analysis of the Advocate General’s opinion and of the CJEU’s decision. It contends that: (1) the FTT was wrong to describe the Advocate General in Klinikum as sayingthat Levob and CPP constituted a variant on the test in EC v UK of strict necessity and physical and economic indissociability; (2) the FTT overlooked the speculative and tentative nature of the language the Advocate General used in her opinion when raising the possibility of a Levob or CPP route to exemption for the provision of drugs; and (3) it did not necessarily follow from the Advocate General’s or the Court’s reasoning that either of them accepted the proposition that a transaction which failed the “EC v UK test” (that goods, unless physically and economically indissociable, could never fall within c)) could nevertheless be exempted under exemption c) because the provision of drugs was encompassed within a single composite supply under CPP or Levob principles.

Allied to this submission, Spectrum emphasises the narrow scope of exemption c) compared with exemption b). Exemption c) is limited in terms of when, where and by whom the service is provided (namely a confidential consultation by a certified medical practitioner in a consulting room). In contrast, a breadth of possibilities is envisaged by exemption b), encompassing the much wider range of activity that could take place in a hospital setting. Moreover, exemption b) covered activities which were “closely-related” whereas exemption c) did not. Against that backdrop, Ms Hall argued that the FTT’s conclusion that the drugs and contraceptives were exempt indicated that something had gone wrong in its analysis: it had the impermissible effect of allowing goods that would not even have been within with the wider scope of exemption b) to come within the narrower exemption of c).