UT/2024/000002 - [2025] UKUT 00188 (TCC)

From the above, and as was clear from the way both parties put their case in oral submissions, a key point of contention between them was as to whether the contractual material required separate supplies to be put on separate invoices (as HMRC argued) or whether separate supplies could be itemised on the same invoice (as CBNA argued).

In this regard CBNA highlights that the FTT has stated at [276] that a separate invoice is required for services that are distinct for VAT purposes. It is worth seeing that statement in the context of the full paragraph however:

“276.

Under paragraph 6.2 of Appendix B to the Expense Allocation Policy (see paragraph 110, above), the Provider of “standalone and distinct services will be identified and all financial allocations from such providers will be treated as distinct services. These allocations will not be grouped with allocations from other providers for the purpose either of invoicing or of assessing liability for VAT and analogous charges”. It is therefore clear that any distinct services are to be identified and invoiced separately.”

In our view, given the context, the FTT was not ruling here that separate elements within Business Delivery or Support Service supplies from CBNA could only be separate and distinct supplies if they were on separate invoices. Rather, what the FTT was referring to was the treatment of any services that were not categorised as Business Delivery or Support Services (having earlier noted at [273] that the “Services” were undifferentiated). This interpretation is further reinforced by the FTT’s earlier reference to the definition of “Provider” (at [272]) as concerning the legal entity. What the FTT was saying was that the services of a similar function /type but from “other providers” (i.e. other legal entities) could not be grouped together but needed to be invoiced separately. We therefore reject the proposition that the FTT considered that things that were Business Delivery or Support Services supplies could only be separate supplies if they were on separate invoices.

As for the other specific points where it is said the FTT misconstrued the materials we do not consider that any amount to an error of law:

The above conclusions are sufficient to hold that this Ground is not made out and should be dismissed. It is, in any case, not clear to us that the FTT in fact relied on the lack of any separate invoicing of the Business Delivery or Support Services for its conclusion that there was a single supply of support functions. In our view the primary basis for the FTT’s starting point as regards the contractual material was that the GMSA did not differentiate services.

Moreover, even if it were correct that the contract, through the EAP, placed an invoicing requirement in respect of specification of distinct services (whether that was for such services to be invoiced separately (as HMRC argue) or itemised separately (as CBNA argue)) that could not be determinative of the question of whether, as matter of law, there were single or multiple supplies. The relevance of the contractual analysis is that it reveals the content of the obligation the parties had agreed with each other (and that after all is why the contractual obligation is recognised to be the correct starting point because the parties’ true bargain will normally coincide with the economic reality of the transaction). Here, it is clear what the contractual arrangements were seeking to achieve, in the description of what was being provided, was to arrive at a result which approximated as closely as possible to what it was thought the correct VAT outcome was. However it cannot be right that the views of the parties of whether that obligation made up a distinct service, when analysed under VAT law, could not be determinative, simply by being encoded through a contractual mechanism. In other words the fact the parties, following the EAP, had come to the view the relevant service was separate and distinct, would not be conclusive of the fact that it was. It would be an odd result if the characterisation of supplies could be sidestepped by effectively making the parties’ VAT analysis determinative. Thus, it would in principle still be open to find, following analysis of the nature of the obligation of what was being supplied, that there was one service despite it being separated onto different invoices, or conversely to find multiple supplies even if these only appeared on one invoice.

Ground 1 therefore fails.