In Healthspan Limited v HMRC [2020] TC07979, the First Tax Tribunal (FTT) held that supplies of goods by a business established in Guernsey to consumers in the UK were liable to UK VAT under the distance selling rules.

Healthspan Ltd, is a Guernsey-based company that sells vitamins and health food supplements to UK retail customers, who place orders by post or over the internet.

  • The goods were physically located in the Netherlands and were despatched to the UK through an arrangement where customer chose to arrange transport of the goods themselves or to use PostDirect (default).
  • The distance selling rules (at the time of the supplies in question) would only apply if a business established outside the UK supplied goods to UK consumers and ‘arranged’ for the goods to be transported to the customer.

HMRC concluded that the goods had been delivered in the UK dispatched or transported 'by or on behalf of the supplier' and thus fell within the distance selling rules.

  • Healthspan argued that it did not ‘arrange’ the transport and further claimed that PostDirect acted 'on behalf of' the customers and not on behalf of Healthspan. As such, the supply of goods did not fall within the distance selling rules.

Healthspan Appealed to the FTT.

  • Initially, the FTT referred the matter to the Court of Justice of the European Union (CJEU) for guidance on the case.
  • When CJEU delivered its judgment on KrakVet (a case with similar facts), the FTT decided that it no longer needed the assistance of the CJEU and issued its decision.

The FTT concluded that the UK’s distance selling rules were appropriate and UK VAT was due on the grounds that:

  • Healthspan played a predominant role in the ultimate delivery of the goods to the consumer as it initiated and organised the transport of the goods.
  • Postage direct to customers by PostDirect was the only realistic option offered to customers. Healthspan referred to PostDirect as 'its own delivery company' Healthspan’s appeal was dismissed.


In similar cases including the case of KrakVet, the courts concluded that if the supplier has significant involvement in the dispatch and transport of the goods, the place of supply will be where consumption takes place, i.e. where the customer belongs. Businesses supplying cross border delivered goods should consider whether this case introduces additional compliance obligations, taking into account post Brexit rule changes. 

Useful guides to this topic

Exporting goods from Gb post-Brexit
The post Brexit transition period ended on 31 December 2020. What do the new rules mean for tariffs and VAT? How do you avoid double tariffs? What key rules are likely to catch you out?

Online Marketplaces: selling goods in the UK
When do you have to register for UK VAT? When is UK VAT payable? What amount is VAT payable on? What information do you have to give the marketplace provider? 

International goods
Special VAT rules apply to goods bought from and sold to non-UK businesses. This guide only considers VAT. It does not address Customs duties, or other indirect taxes and duties that might apply on goods.

Post-Brexit VAT MOSS: February deadline
UK VAT registered business supplying B2C digital services in the EU have until 10 February 2021 to register under the EU non-union MOSS scheme for January 2021 supplies. 

External Links

Healthspan Limited v HMRC [2020] TC07979

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