In All Answers Limited v HMRC [2020] UKUT 0236, the Upper Tribunal (UT) confirmed that an online business which provided essays, theses and coursework on demand for students, was making a supply for VAT in its own right and not acting as an agent for the writers of the material.

  • Customers could register with the agency and request the supply of written academic work.
  • The agency would then price the job and one of its freelance writers would produce the work. In doing so the writer handed over copyright to the company and made a no plagiarism guarantee, backed by a £5,000 bond.
  • The writer and customer never met or knew each other's identity.
  • HMRC argued that the Agency Supplied the academic work and acted such that VAT should be applied to the whole supply.
  • The agency argued that VAT only applied to its services as a writing agency.
  • The First Tier Tribunal (FTT) Decided That the agency’s objective was to assist students in cheating with their coursework and the economic supply was made by the agency.

The agency Appealed to the UT, who considered that the FTT had not fully investigated the terms of the contracts between the parties.

The UT considered the concept of 'reciprocal performance' and thus:

  • Firstly ascertained the meaning and effect of relevant contractual terms so as to determine whether those terms impose an obligation on the appellant or the writer (or both) to provide the academic work to the customer in return for the payment that the customer makes to the appellant.
  • Secondly, it considered whether the contractual terms reflect commercial and economic reality.

The UT found that:

(1) Under the writer's contract, a writer gave the appellant authority to enter into contracts as agent on behalf of the writer.

(2) In the customer contract, which contained the 'core' obligations to deliver the academic work to the requisite standard and by the applicable deadline, were obligations that were binding on the appellant only.

(3) Under the customer contract the appellant agreed as agent for the writer, that if plagiarism was detected in the work provided, the writer would pay the customer £5,000. That obligation was binding on the writer and not on the appellant.

(4) Pursuant to the writer's contract, a writer transferred the entire copyright in the relevant academic work to the appellant. Having divested itself of that copyright, a writer would be incapable of providing any licence to use that work to a student, or indeed to anyone else.

(5) Pursuant to the customer contract, the appellant provided the customer with only a limited right to use the work. That was different from the interest the appellant obtained under the writer's contract, namely the whole copyright in the work.

The UT concluded, there was a legal relationship between the appellant and a customer under which the appellant, and only the appellant, assumes liability for the obligation to provide a limited right to use the academic work of suitable quality within the stipulated timescale. In return for the appellant assuming such liability, a customer pays the appellant a sum of money. Moreover, the terms of that legal relationship are consistent with commercial and economic reality.

The fact that a writer, and not the appellant, could be directly liable to a customer under the 'no plagiarism guarantee' does not alter that conclusion. The effect of that guarantee was to provide an assurance to a customer that the work provided was original.

Noting some flaws in the way the FTT approached the question of who made the supply, the UT agreed with its overall conclusion: the work was supplied by the appellant and not by the writers.

The appeal was dismissed.

Links

VAT: Agents and Principals
Where someone is acting as an agent for a principal, it is possible that the income received by the agent on behalf of the principal is outside the scope of VAT for the agent. What is an agent for VAT purposes? When do these rules apply?

VAT: Place of Supply
The place of supply for business-to-consumer (B2C) suppliers of digital services changed to the place where the customer who receives the service lives or is located and the suppliers therefore account for VAT at the applicable rate in the relevant member state.

How to appeal a decision of HMRC
Key steps in appealing a decision of HMRC.

How to Appeal a Tax Penalty
Step by step guide to ensure that you appeal all the right things

Agency workers 
This Practical Tax Guide looks at the changes to the treatment of workers supplied through UK based agencies, employment businesses or other intermediaries.

External links

All Answers Ltd v HMRC [2018] TC06845

All Answers Limited v HMRC [2020] UKUT 0236 (TCC)

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