Commissioners of Customs and Excise v Leightons Ltd ; Same v Eye-Tech Opticians
| Jurisdiction | England & Wales |
| Judgment Date | 13 April 1995 |
| Date | 13 April 1995 |
| Court | QBD (Crown Office List) |
Queen's Bench Division (Crown Office List).
McCullough J.
Kenneth Parker QC (instructed by the Solicitor for Customs and Excise) for the Crown.
David Ewart (instructed by Stevens & Bolton, Farnham) for Leightons.
Michael Sherry (instructed by Titmuss Sainer Dechert) for Eye-Tech.
The following cases were referred to in the judgment:
Bophuthatswana National Commercial Corp Ltd v C & E CommrsVAT[1993] BVC 194
British Airways plc v C & E Commrs VAT(1990) 5 BVC 97
British Railways Board v C & E Commrs WLRVAT[1977] 1 WLR 588; (1977) 1 BVC 116
Card Protection Plan Ltd v C & E Commrs VAT[1994] BVC 20
C & E Commrs v Bushby VAT(1978) 1 BVC 158
C & E Commrs v Scott VAT(1977) 1 BVC 139
C & E Commrs v United Biscuits (UK) Ltd (t/a Simmers)VAT[1992] BVC 54
EC Commission v United Kingdom VAT(Case 353/85) [1988] ECR 817; (1988) 3 BVC 265
Rayner & Keeler Ltd VAT(1991) VATTR 532; [1991] BVC 1346
Rayner & Keeler Ltd (No. 2) VAT(LON/92/306) No. 9349; [1993] BVC 1420
Rayner & Keeler Ltd v C & E Commrs VAT[1994] BVC 194
Skatteministeriet v Henriksen VAT(Case 173/88) [1989] ECR 2763; (1990) 5 BVC 140
Value added tax - Exemption - Opticians - Supply of spectacles (goods) - Supply of services in connection with supply of goods - Whether two separate supplies or whether supply of dispensing services ancillary to supply of spectacles - Value Added Tax Act 1983, Sch. 6, Grp. 7, item 1(b) (Value Added Tax Act 1994 schedule 9 group 7Value Added Tax Act 1994, Sch. 9, Grp. 7, item 1(b)); sixth VAT directive (Directive 77/388) of 17 May 1977 (OJ 1977 L145/1), eu-directive 77/388 article 13(A)(1)art. 13(A)(1)(c).
These were two appeals by Customs against decisions of the VAT tribunal ((LON/92/2521) No. 10,928; [1994] BVC 639; (LON/92/3012 and 3289) No. 12,545) that the provision by opticians of dispensing and fitting services in connection with the supply of spectacles was exempt from VAT within the Value Added Tax Act 1983, Sch. 6, Grp. 7, item 1(b).
The taxpayers, Leightons and Eye-Tech, were dispensing opticians. Both supplied corrective spectacles, which was a supply of goods for VAT purposes, and provided dispensing and fitting services.
The services involved eye testing by an ophthalmologist or ophthalmic optician who would write out a prescription. Detailed measurements of the patient's eyes would be taken by a dispensing optician and advice given in respect of lenses and frames. A specification would be drawn up and sent to a laboratory for production to specification. Finally, the dispensing optician would fit the spectacles and make any minor modifications required.
The issue was whether the supply of spectacles constituted a single supply of standard-rated goods to which the dispensing optician's services were ancillary or whether it involved two separate supplies, one of standard-rated goods and one of services within the exemption provided by the Value Added Tax Act 1983, Sch. 6, Grp. 7, item 1(b), implementing art. 13(A)(1)(c) of the sixth VAT directive.
Customs contended that there was one standard-rated supply of spectacles to which the dispensing services were ancillary. Customs said that the relevant service was no more than "prescribing" spectacles, and a ruling of the Court of Justice of the European Communities that the UK had failed to fulfil its obligations under the sixth directive by exempting spectacles from VAT had not established that the supply of spectacles was "physically dissociable" from the supply of services by opticians, as the taxpayers had claimed.
Held, dismissing Customs' appeal:
1. The supply of spectacles was physically dissociable from the supply of measuring and fitting services by opticians, as opposed to a supply of goods which had to be provided by an optician contemporaneously with the services of fitting and measuring: EC Commission v United Kingdom (Case 353/85) (1988) 3 BVC 265 explained.
2. If the services of opticians were to be regarded as ancillary to the standard-rated supply of corrective spectacles, the exemption provided by item 1 of Grp. 7 of Sch. 6 to the 1983 Act and the sixth VAT directive would be little benefit to professional opticians. The exemption would only be available in the unusual case where a patient was measured for spectacles to have made up by someone else. That could not have been the intention of Parliament. In the typical case where the dispensing optician, for a single payment, provided both his professional services and spectacles, there were two separate supplies of services and spectacles.
Customs appealed against two decisions of the London VAT tribunal (chairman Dr A N Brice). The grounds of the appeal were that the tribunal had erred in law in holding that the standard-rated supply of corrective spectacles was a separate supply from the exempt supply of fitting and measuring services provided by opticians and ophthalmologists.
McCullough J: Introduction
These cases are of importance to dispensing opticians, namely persons engaged or proposing to engage in the fitting and supply of optical appliances: see s. 36(1) of the Opticians Act 1989.
Two appeals from VAT tribunals are to be considered. The first concerns Leightons Ltd, who are dispensing opticians with branches in many parts of the South East of England. In it the tribunal's decision is dated 31 August 1993. Its chairman was Dr AN Brice.
The second appeal concerns Eye-Tech Opticians No. 1 and Eye-Tech Opticians No. 2. Both are firms of dispensing opticians with branches in the West Country. In their case the tribunal's decision is dated 8 August 1994. Dr AN Brice alone constituted the tribunal.
Both appeals raise the same point, namely whether, in the ordinary course of their business of supplying corrective spectacles, dispensing opticians make a single supply of goods or two separate supplies: one of goods, the other of services.
Customs decided that the services performed by dispensing opticians were incidental to their supply of spectacles and that there was therefore a single supply of goods which attracted VAT at the standard rate.
The taxpayers appealed under s. 40(1) of the Value Added Tax Act 1983. The tribunals decided that there were two supplies: one of goods, the other of services. The supply of goods attracted VAT at the standard rate, but the supply of services was exempt from VAT.
From these decisions Customs now appeal under s. 11 of the Tribunals and Inquiries Act 1992.
By s. 2 of the Value Added Tax Act 1983, VAT is to be charged on taxable supplies of goods or services made by taxable persons in the course of their business.
By s. 17 supplies specified in Sch. 6 are exempt from VAT. Paragraph (b) of item 1 of Grp. 7 of Sch. 6 is material. This reads:
The supply of services by a person registered or enrolled in any of the following....
-
(b) either of the registers of ophthalmic opticians or the register of dispensing opticians kept under the Opticians Act 1989 or either of the lists kept under section 4 of that Act of bodies corporate carrying on business as ophthalmic opticians or as dispensing opticians.
The taxpayers are included in the lists. Until 1988 the opening words of item 1 had read:
The supply of services and, in connection with it, the supply of goods, by a person registered or enrolled in any of the following.
(emphasis added)
So, until 1988 the supply of spectacles was treated by Customs as exempt from VAT and the present issue did not arise.
The European Commission, however, took a different view. It maintained that item 1 infringed...
To continue reading
Request your trial
-
Pilgrims Languages Courses Ltd v Commissioners of Customs and Excise
...Munster-Innenstadt (Case 8/81) [1982] ECR 53 British Airways plc v C & E Commrs TAX[1990] BTC 5124 C & E Commrs v Leightons Ltd TAX[1995] BTC 5176 C & E Commrs v Lloyds TSB Group Ltd TAX[1998] BTC 5160 C & E Commrs v Reed Personnel Services Ltd TAX[1995] BTC 5217 C & E Commrs v Scott VAT(19......
- British Telecommunications Plc v Commissioners of Customs and Excise (No 2)
-
R v Commissioners of Customs and Excise, ex parte Kay & Company Ltd and Another and other appeals
...(Numismatists) Ltd ELRVAT[1981] AC 22; (1980) 1 BVC 330 C & E Commrs v John Dee LtdTAX[1995] BTC 5345 C & E Commrs v Leightons Ltd TAX[1995] BTC 5176 C & E Commrs v Next plc; C & E Commrs v Grattan plcTAX[1995] BTC 5134 Carl Zeiss Stiftung v Rayner Keeler Ltd ELR[1967] 1 AC 853 Congreve v H......
-
British Telecommunications Plc v Commissioners of Customs and Excise
...it a supply of services, to which the supply of goods was ancillary [or incidental]? Or did he make two supplies?" ( Customs and Excise Commissioners v. Leightons Ltd. [1995] S.T.C. 458 at p. 462), the tribunal said: "Applying this test to the facts of this case as we have found them to be......