In BPP University College of Professional Studies Limited v HMRC [2018] TC06632¸ the First-Tier Tribunal (FTT) found that printed materials was a separate zero-rated supply to tuition courses provided by another group company.
This case followed an earlier hearing which proceeded to the Supreme Court, eventually finding that HMRC should be barred from this hearing due to its failure to adhere to deadlines set by the FTT.
HMRC were not therefore present, but the FTT decided to consider HMRC’s skeleton argument which was produced as part of the barring order hearings.
- BPP Learning Media Limited operated the publishing side of the BPP group business:
- It developed, produced, published and distributed learning material in print and e-format.
- It sold these to students, universities, and to retailers. It also sold licences to print its materials.
- A person could purchase the tuition materials even if they do not pay for a course.
- BPP Professional Education Limited operated the Tuition side:
- Students paying for a course would need to purchase the printed materials.
- It did not have to buy them from BPP Learning Media. They could buy them for the same price from retailers or they could purchase second hand books.
- Although in the same corporate group, they were in different VAT Groups.
- BPP began to account for VAT on the printed materials on a protective basis, following a change in law in 2011. At the same time they queried the position with HMRC.
- HMRC took the view that the printed materials should be standard rated as part of the Single supply of tuition.
- BPP appealed this decision.
The FTT found that the printed materials and tuition were separate supplies from an economic point of view:
- A significant number of customers bought the printed materials without the course. This means for many customers the purchase of the materials is an end in itself.
- Students could take a course and purchase the same materials from an unconnected third party. They were not forced to acquire the materials from BPP.
- The fact that the materials appear to be intended to support a BPP tuition course is not, in itself, sufficient to mean there is a single, indivisible economic supply that would be artificial to split.
- Separate prices were charged for the two elements.
- Where BPP provided the course and materials, BPP Professional Education Limited would raise a single invoice, but it would specify the price for the materials and state that it was acting as Agent for BPP Learning Media.
The FTT concluded that, even if the same BPP company had provided both tuition and printed materials, it would still have been two separate supplies.
The supply of the printed materials could be zero-rated.
Links
Tardy HMRC barred from proceedings
External link BPP University College of Professional Studies Limited v HMRC [2018] TC06632