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

The focus of this ground are the provisions of the 2019 GMSA. It is argued the FTT erred in ignoring those provisions on the grounds that there had been no change to the services provided before and after the coming into effect date of the 2019 GMSA (at ([289]) and on the basis that such agreement was “brought into effect during the period when CBNA and HMRC were in discussions” ([280] – [281]).

It should be noted however that no challenge is brought by the Appellant to the FTT’s finding that there was no change to the services. That was based on the evidence of the Appellant’s witness who had confirmed “there was no alternation in the nature or number of the [inter-group] services supplied or change in the underlying business as a result of the 2019 restatement of the GMSA”. While the Appellant argues the 2019 GMSA changes should have caused the FTT to reconsider its analysis of the earlier GMSAs, we agree with Mr Beal that this puts matters the wrong way round. The evidence (which is accepted) that nothing had changed meant that the starting point was that the analysis of the earlier periods applied just as much to later periods. It is also a mischaracterisation to say that the FTT ignored the provisions of the 2019 GMSA. It was simply rejecting the determinacy of the contractual description of the different services referred to in the 2019 GMSA (which changes it had set out at length earlier in its decision). The FTT’s essential point was that the true nature of the agreement (which it concluded involved providing undifferentiated services of support functions) had not changed despite that change in description of the services. That did not amount to ignoring the provisions, but a view that the provisions did not have the effect for the purposes of a VAT characterisation of the services that the parties thought it did. The FTT was not thus, as the Appellants argue, going “behind the contract” but simply taking a view, as it was entitled to, that the nature and scope of the services described in the contract continued to amount to an undifferentiated supply. It was also not irrelevant in this regard for the FTT to note the context in which the 2019 GMSA arose (the dispute with HMRC). That context was relevant to reconciling why, when the substance of what was being provided had not changed, the contractual description of it had.

The Appellant also argues that to the extent the FTT found as fact that the 2019 GMSA was conceived with the current litigation in mind that was an Edwards v Bairstow error of law It argues such a finding went against various of the FTT’s other findings (that the VAT team would not have had “the clout” to require a review of the GMSA, that CBNA and SPLC had been identifying separate and exempt supplies, and Mr Bradley’s evidence that the VAT team viewed the 2019 GMSA as “an opportunity to include an appropriate description of the services and address the gap in the 2006 GMSA” ).

We disagree there was any such error. As explained below, none of the findings relied on mean it was not open to the FTT to make the impugned finding (to the extent it did).

At [280] the FTT concluded in respect of the 2019 GMSA “However this iteration …was brought into effect during the period when CBNA and HMRC were in discussions… and it is not disputed that this was one of the reasons behind the restatement of the GMSA…”. The FTT also found (at [126]) that: “Although VAT was one of the factors involved in the 2019 restatement it was not the sole factor”. The FTT had earlier explained at [125] how in 2017, discussions with HMRC which had started regarding outsourcing in 2014,”had expanded to consider matters which led directly to the present appeal” and “During that process it was recognised that the nature of the intra-group services being supplied had not been adequately explained by the 2006 GMSA”. The VAT team considered how best to explain those services and their VAT treatment to HMRC. Also JPMorgan was undertaking a review of its approach to outsourcing and a process known as the “war room” took place, the end of that was that the GMSA should be streamlined and “in response to the VAT dispute which led to the appeal” involved a conclusion that “the nature of the services should be clarified and better defined”. Thus the lack of clout of the VAT team being able to initiate the war room process did not mean the outcome of that process was incapable of taking account the VAT discussions that had already taken place. Any finding one of the reasons the 2019 GMSA was conceived of is because of the current litigation is actually supported by, rather than inconsistent with CBNA and SPLC identifying separate exempt supplies given it was accepted (following the discussions with HMRC from 2017) that the nature of the services should be clarified and better defined. It is also consistent with the finding that the VAT team saw the 2019 GMSA as an opportunity to address gaps (in other words if there was a concern the Appellant’s views on characterisation did not coincide with HMRC’s then it would be entirely understandable why the Appellant would want to make its favoured analysis clearer by addressing gaps.)