In The Ice Rink Company Ltd and PI (Milton Keynes) Ltd [2019] UKUT 0108  the UT found that the FTT had made an error of law, when it decided that a “skate hire and admission” package sold as a package were two separate supplies as opposed to a single standard-rated supply and the skate hire supply element of the package could be treated as zero-rated if supplied to children. The case has been remitted to FTT for reconsideration.

  • The ice rink operator had a separate charging structure for “ice rink admission only”, “skate hire only” or a combined “skate hire and admission” package.
  • This was further complicated by the fact that admission charge is standard-rated but the hire of skates by children is zero-rated (VATA 1994, Sch 8 group 16 item 1).
  • Therefore, if the companies made separate supplies, the hire of skates to children would be zero-rated.  If they made a single supply, the whole package would be standard rated.

HMRC argued that the skate hire and admission package was a single supply applying familiar principles set out in various cases including Card Protection Plan Ltd.

The taxpayer said they were two separate supplies.

The First-tier Tribunal found in favour of the taxpayer largely based on the fact that the individual constituents of a combined package could be and were bought on their own.

HMRC then appealed on the ground that the FTT should have assessed the “skate hire and admission” package from the perspective of customers of that package but instead assessed it from the perspective of customers of the rinks as a whole.

The Upper Tribunal said the FTT had taken the wrong approach of assuming ‘that aspects of supplies made to someone other than the “typical consumer” are necessarily determinative of the nature of the supply to that typical consumer’ i.e. they should have assessed the “skate hire and admission” package from the perspective of customers of that package alone. 

The companies also made a cross-appeal arguing that even if they made a single standard-rated composite supply, the hire of children’s skates can be “carved out” and a zero-rate applied to that element of the supply. The tribunal refused that appeal.

HMRC’s appeal was allowed and the case was remitted to the First-tier Tribunal.

Comment

This case further illustrates that deciding on whether or not a transaction is a single or multiple supply can be a contentious area, not least because there is no definition of single or multiple supplies in either EU or UK VAT legislation and hence it is worth carrying out a regular review to ensure that the VAT treatment is still correct.

Links

Single or multiple supply?

FTT Decision: The Ice Rink Company Ltd and PI (Milton Keynes) Ltd [2017] TC06117

External links

The Ice Rink Company Ltd and PI (Milton Keynes) Ltd [2019] UKUT 0108

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