DCM (Optical Holdings) Ltd v The Commissioners for HM Revenue and Customs
| Jurisdiction | UK Non-devolved |
| Judge | Lord Tyre,Judge Dean |
| Neutral Citation | [2018] UKUT 0409 (TCC),[2018] UKUT 0409 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Subject Matter | Tax,5 December 2018 |
| Date | 05 December 2018 |
| Published date | 06 December 2018 |
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[2018] UKUT 0409 (TCC)
Appeal number: UT/2018/0024
VALUE ADDED TAX – VATA 1994, sections 19(4) and 73(6) – opticians –
separately disclosed charges – Information Sheet 08/99 – attribution of discounts –
whether decisions issued more than four years after repayment returns submitted
time barred – whether assessments out of time – appeal allowed in part
UPPER TRIBUNAL
(TAX AND CHANCERY CHAMBER)
ON APPEAL FROM THE
FIRST-TIER TRIBUNAL (TAX CHAMBER)
DCM (OPTICAL HOLDINGS) LIMITED
Appellant
v
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMS Respondents
TRIBUNAL: LORD TYRE
JUDGE DEAN
Sitting in public at George House, 126 George Street, Edinburgh on 8, 9 and 10 October
2018
Roderick Cordara QC and Andrew Legg, instructed by Harper Macleod LLP, for the
Appellant (DCM (Optical Holdings) Limited)
David Thomson QC and Elizabeth Roxburgh, instructed by the Office of the Advocate
General for Scotland, for the Respondents (HMRC)
© CROWN COPYRIGHT 2018
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Introduction
1. The appellant (“DCM”) carries on business as an optician under the trading name Optical
Express, specialising in the sale of dispensed spectacles and the provision of refractive
eye surgery. For the purposes of value added tax, DCM, in common with other opticians,
makes both taxable supplies of goods and exempt supplies of medical services. This
gives rise to complexities as regards both output tax chargeable and input tax recoverable.
The current proceedings are concerned only with output tax related issues.
2. DCM appeals against a decision of the First-tier Tribunal (“FTT”) which concerned six
separate appeals. In accordance with the approach adopted by the parties in their written
and oral submissions and by the FTT in its decision, we will not address the six appeals
individually. Instead we will deal thematically in turn with the four disputed matters that
are identified in the grounds of appeal, some of which relate to more than one appeal.
3. The original decision of the FTT was issued on 23 March 2017. Following the
submission by DCM of an application for permission to appeal, the FTT decided that it
was appropriate to review its decision. A revised decision bearing the original release
date was issued on 30 October 2017. DCM submitted an amended application for
permission to appeal which was granted by the FTT on 13 February 2018. One of the
grounds of appeal raised the question whether the revised decision was wholly or partly
outside the scope of the power to review permitted by rule 41 of the Tribunal Procedure
(First-tier Tribunal) (Tax Chamber) Rules 2009. In the event no submissions were made
to us in support of this ground of appeal, and it is unnecessary for us to address it. Our
consideration of the appeal proceeds on the terms of the FTT’s revised decision.
Opticians and VAT
4. As already noted, opticians make both taxable and exempt supplies for VAT purposes. In
EC Commission v UK [1988] STC 251, the Court of Justice ruled that a supply of goods
such as spectacles was physically and economically dissociable from the provision of
medical care and should not therefore be exempted from VAT. Thereafter HMRC sought
to treat the supply of spectacles as a single standard-rated supply to which the dispensing
opticians’ services were merely ancillary. This approach was rejected in C&E
Commissioners v Leightons Ltd [1995] STC 458, in which it was held that in substance
and reality there were two separate supplies: a taxable supply of spectacles and an exempt
supply of services of the dispensing optician.
5. Section 19(4) of the Value Added Tax Act 1994 states:
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