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

In relation to separate access or availability the Appellant argues the FTT wrongly gave this a decisive role rather than a supportive one as it should have (the FTT saw separate access wrongly as part of indivisibility and indispensability). The Appellant says this error is shown by the opening words “As such, it must follow that as the different elements of the supply are indivisible and indispensable in order to achieve the aim of the supply…(emphasis added)” in FTT [295] (which followed on from the FTT’s discussion of separate availability in [293]).

We disagree. In the preceding paragraph [293] it is clear the FTT was considering separate availability as part of the holistic approach to the Levob test endorsed in Gloucestershire Hospitals of considering whether it would be artificial to split the different elements into separate supplies. The FTT was basically explaining that SPLC needed these services in order to trade and that it could only get them from CBNA. There was therefore no choice of separate availability of them in terms of SPLC getting the services or getting them elsewhere. The FTT did therefore consider separate availability separately. The reference to “As such” in relation to indivisibility and indispensability in [295] does not assist. That refers not just to the immediately preceding discussion on separate availability but from the preceding paragraph [294] which dealt with the views of the typical consumer in SPLC’s position and made the point that both the Business Delivery and Support Services were essential to carry on the business.

The Appellant also argues that the FTT’s conclusion at [293] ignored that different affiliates had different needs and would only purchase from CBNA the services they required. Business areas could, and did, choose which services to receive and as the FTT found at [47] they did not receive supplies in relation to systems they did not use.

We do not see how this point assists. Even if we put to one side evidential issues about what other affiliates did, at the legal entity level, there is no inconsistency between business areas being able to pick and choose elements and there being a single supply of support function service from CBNA. We note in passing here that there has been some blurring in terms of receiving the supply. Only SPLC was the recipient of the supply. The business areas relationship within SPLC regarding which services they used is irrelevant. At the entity level it would not matter that a certain business area was not getting a service as long as the business area that needed it (and therefore by definition SPLC) was getting it. At the entity level the precise content of the supply function service would vary but what the legal entity (the typical consumer) is interested in is getting the package of support functions in order to carry on its business. Standing back it also does not seem apt to describe this situation as one where the Appellant is not picking and choosing elements in the sense of saying that it will have a particular element but not another one, or that it would get a particular element that it did not want from CBNA from somewhere else. SPLC was required to take all that it needed to carry out its business and it had to take that from CBNA.

Mr Hitchmough’s oral submissions also took issue with the FTT’s (and HMRC’s) understanding of the separate availability test (that it concerned whether one could get the service elsewhere). The Appellant argues the FTT and HMRC misinterpreted the test of separate availability. It was not about SPLC not being able to “shop” elsewhere but about whether it could receive one service without the other. SPLC did not need to take every service on offer and did not do so. The FTT in Spectrum approached the test in that way too (as per [65] of Spectrum FTT).

It was not disputed between the parties, and was advanced with some vigour by Mr Hitchmough, that indivisibility and indispensability were of decisive importance whilst separate availability and invoicing were only supporting and not decisive (as per the CJEU in Frenetikexito). It was held in Spectrum FTT at [61] that those are determinative if they are established on the evidence. We have found that the FTT did not err in its approach and conclusions on indivisibility and indispensability, and we do not therefore need to address this argument. We did not hear full argument on the issue. However, we address it below briefly.

The question arises whether the focus of the separate availability test is on whether the typical consumer can choose whether to receive particular elements and not others or must receive the package whether or not the particular elements are required. Or whether it concerns whether they can choose to obtain elements of the package that they need from another supplier. We are of the view that there is some overlap in these issues as if one can choose not to get an element it can also be the case that one can then get that element somewhere else. In our view the approach may depend on the factual matrix.

To resolve this issue, it is instructive to go back to the authorities. This reveals that in Frenetikexito there is a difference between the CJEU’s formulation of separate availability (which is more consistent with the FTT’s and HMRC’s view of the test entailing the question of whether services can be obtained elsewhere) and the Advocate General’s conception of it which entails considering whether the different elements that make up the supply are available separately or whether the customer must take all the elements together (see [11] above). The CJEU in Frenetikexito at [39] cited in support of its proposition on separate access [43] of the CJEU’s decision in BGZ Leasing. That stated:

“The fact that insurance covering the leased item is required by the lessor, as appears to be the case in the transaction at issue in the main proceedings, does not invalidate that finding [that the insurance constituted an end itself for the lessee and not only the means to enjoy that service under the best conditions – per the preceding paragraph 42]. In particular, it must be observed that, in the circumstances at issue in the main proceedings, if the lessee is required to ensure that the leased item is insured, he has the option of insuring that with the insurance company of his choice. Thus, the requirement for insurance cover cannot, in itself, mean that a supply of insurance by the lessor, such as that at issue in the main proceedings, is indivisible or ancillary to the supply of the leasing services.”

By contrast, the Advocate General’s opinion at [29] talks about separate availability by reference to the case of Mesto Zamberk (Case C-18/12) where a typical recipient could not receive one element without another (there the ticket holder to the aquatic park was given access to all the facilities regardless of which facilities they used).

In view of the way the CJEU has described the test as outlined above, the FTT cannot be criticised for addressing the point of “separate availability” from the perspective of whether the typical consumer could get the service from someone else (it was clear on the facts the FTT found an affiliate could not get it from somewhere else). There was therefore no error of law in its analysis on separate availability.

Mr Hitchmough also submitted (although we could not see the point had been made under CBNA’s grounds of appeal before us) that while the FTT referred to indivisibility and indispensability in passing at no point had it considered and applied them. We disagree. The reasoning was encompassed in the holistic considerations of the four questions making up the Levob test which the UT GloucestershireHospitals had outlined. The FTT plainly considered indivisibility and indispensability as part of that.

Ground 5 therefore fails.