HSBC Electronic Data Processing (Guangdong) Ltd and Others v The Commissioners for HM Revenue and Customs [2022] UKUT 00041 (TCC)
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Zacaroli,Judge Thomas Scott |
| Neutral Citation | [2022] UKUT 00041 (TCC) |
| Subject Matter | 15 February 2022 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Published date | 15 February 2022 |
[2022 ] UKUT 00041 (TCC)
Appeal number: TC/2019/00787
TC/2019/00786
TC/2019/00788
TC/2019/00789
TC/2019/00791
TC/2019/00798
VALUE ADDED TAX – preliminary issues hearing –VAT grouping rules -
interpretation of “established” and “fixed establishment” in section 43A
Value Added Tax Act 1994 – relevance of any failure to consult VAT
Committee – measures which are permissible to prevent tax evasion or
avoidance – relevance and interpretation of section 84(4D) VATA
UPPER TRIBUNAL
(TAX AND CHANCERY CHAMBER)
TRIBUNAL:
MR JUSTICE ZACAROLI
JUDGE THOMAS SCOTT
HSBC ELECTRONIC DATA PROCESSING Appellants
(GUANGDONG) LTD
HSBC ELECTRONIC DATA PROCESSING
INDIA PRIVATE LTD
HSBC ELECTRONIC DATA PROCESSING
(LANKA) PRIVATE LTD
HSBC ELECTRONIC DATA PROCESSING
(MALAYSIA) SDN BHD
HSBC ELECTRONIC DATA PROCESSING
(PHILIPPINES) INC
HSBC BANK PLC
- and -
THE COMMISSIONERS FOR Respondents
HER MAJESTY’S REVENUE AND CUSTOMS
2
Sitting in public by way of video hearing treated as taking place in London on 5 to
8 October 2021, with further written submissions received on 13 October 2021
Melanie Hall QC and Christopher Leigh, instructed by KPMG LLP, for the
Appellants
Hui Ling McCarthy QC, Katherine Apps, Michael Ripley and Edward
Waldegrave, instructed by the General Counsel and Solicitor to HM Revenue and
Customs, for the Respondents
© CROWN COPYRIGHT 2022
DECISION
Introduction
1. This is the hearing of four preliminary issues ordered by Judge Greg Sinfield,
President of the First-tier Tax Tribunal (“FTT”), by a decision dated 12 October 2020.
The trial of the preliminary issues was transferred to be heard by the Upper Tribunal
by order of Judge Sinfield with the agreement of the President of the Upper Tribunal.
2. The preliminary issues arise in the context of an appeal by HSBC Bank Plc and
five entities within the HSBC group carrying out global services for the group (the
five entities together will be ref erred to as the “GSCs” and, together with HSBC Bank
Plc as “HSBC”). The appeals are against HMRC’s decisions dated 22 Dece mber 2017
that removed the GCSs from the HSBC VAT Group with effect from 1 October 2013
or, alternatively, with effect from 1 January 2018.
3. HMRC’s primary case is that the GSCs have not been establishe d or had a fixed
establishment in the UK since at least 1 October 2013 and accordingly ceased to be
eligible to be members of the HSBC VAT Grou p from that date. HMRC’s alternative
case is that HMRC had made decisions to remove the GSCs from the HSBC VAT
Group with effect from January 2018 in exercise of their powers for the protection of
the revenu e under section 43C(1) of the Value Added Tax Act 1994 (“VATA”).
4. The issues raised by HSBC’s appeals include, in summary, the following:
(1) Are the GSCs, or any of them, “established ” or do they ha ve a “ fixed
establishm ent” in the UK within the meaning of those exp ressions in section
43A VATA?
(2) Are sections 43C(1) and (2) of VATA ultra vires?
(3) Were HMRC entitled to remove the GSCs from the HSBC VAT Group
on the grounds that this was necessary for the protection of the revenue?
5. The terms of the preliminary issues that have been ordered to be determined were
agreed between the parties and are as follows:
(1) How is the concept of two or more bodies corporate being
“established” or having a “fixed establishment” in section 43A of
VATA, which it is common ground purports to implement the words
“any persons e stablished in the territory of that Member State” in
Article 11 of Council Directive 2006/11/EC (the Principal VAT
Directive, or “PVD”), to be interpreted? (the “Section 43A Issue”)
(2) Is the question of whether the UK discharged its obligation to
consult the VAT Committee relevant? If it is relevant what would be
consequences of any brea ch of the obligation to consult? (the “ VAT
Committee Issue”)
(3) Are the measures which a Member State may adopt under the
second paragraph of Article 11 of the PVD to prevent tax evasion or
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