In Colaingrove13 the Upper Tribunal (UT) applied Card Protection Plan Ltd14 (CPP) and allowed an appeal by the taxpayer on the VAT treatment of verandas sold with caravans.

Background

Colaingrove Ltd sells residential (static) caravans as part of its business operating UK based holiday parks and resorts. Sale of the caravans is zero-rated under Schedule 9, Group 8, VATA.

Alongside the caravans, Colaingrove often sells verandas. If sold separately, the verandas would fall to be taxed as standard rated supplies. However, the caravans often required an entry platform to ensure stable access, in addition to extending the living space available by creating an outdoor area. Despite the link between the two supplies, the FTT was of the view that they were distinct and found in favour of HMRC, concluding that the supply of verandas was not zero-rated. Colaingrove appealed to the UT.

Decision

The main question for the UT was whether the principles in CPP applied in this case15. The UT confirmed that in deciding this question, regard should be had to all the circumstances of the case, including the customer’s perception of whether he or she intended to purchase one good/service or two or more distinct ones.

The UT concluded that the FTT had erred in not applying CPP correctly. The FTT relied heavily  on the judgment of the CJEU in Talabre16 which concerned UK legislation which expressly excluded the “removable contents” of a caravan from the zero-rated supply provision under Schedule 9, Group 8, VATA. In the view of the UT, however, Talabre dealt with a specific derogation and there was detailed legislative wording on how fittings within a caravan should  be dealt with for VAT purposes. While there might be other cases where very clear wording could limit or exclude elements of a supply in this way, there was nothing in Schedule 9, Group 8, VATA that could exclude or limit the scope of zero rating for an element or elements of a single supply of which the principal part was a caravan and the ancillary part was a veranda.

The UT cited dicta of Mr Justice Vos (as he was then) in Wm Morrison17 that Talabre simply identified that the CPP analysis could not be used to extend zero-rating to include “removable contents” where that was expressly excluded. It did not eliminate the potential application of CPP in order to determine multiple supplies, as opposed to single supplies, when applying to circumstances outside of the express exclusions.

HMRC and Colaingrove were in agreement that the sale of a caravan with a veranda would be exempt as zero rated for the purposes of Schedule 9, Group 8, VATA, if the principles in CPP applied. The verandas, as ancillary elements, therefore deserved the same tax treatment as the principal supply of the caravan, and the whole single supply was subject to zero-rate VAT. Colaingrove’s appeal was therefore allowed.

Comment

In this case, the UT has confirmed the importance and broad application of the CPP test in deciding between single supply and multiple supplies, and that the test has not been diminished by cases such as Talabre.

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