On 15 January 2015, the Upper Tribunal held that the Card Protection Plan (CPP) principles always apply to all supplies, whether standard-rated, exempt or zero-rated. The CPP principles serve to make the distinction between multiple supplies and single (composite) supplies for VAT purposes.

The taxpayer sold static caravans that sometimes came with verandas attached to the caravan. Having originally charged and accounted for VAT on the veranda element, the taxpayer subsequently sought a refund from HMRC on the basis that the whole, composite, supply should attract zero-rating treatment. HMRC refused. However the parties agreed that, if the CPP principles applied, the supply of the caravans with verandas would be a composite supply.

The Upper Tribunal allowed the taxpayer’s appeal against the First-tier Tribunal decision, holding that:

  • the CPP principles apply to all supplies, including zero-rated ones
  • as zero-rating is permitted as a derogation from EU law, express wording is needed in the national VAT legislation to exclude part of a composite zero-rated supply from zero-rating treatment. Such express wording was not present in this case
  • the sale of the caravans with verandas should therefore be zero-rated in their entirety, as a composite supply.

The decision can be viewed here