The Commissioners for HM Revenue and Customs v 1. Temple Finance Limited 2. Temple Retail Limited
| Jurisdiction | UK Non-devolved |
| Judge | Judge Sinfield,Judge Falk |
| Neutral Citation | [2017] UKUT 0315 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Subject Matter | Tax,4 August 2017 |
| Date | 04 August 2017 |
| Published date | 04 August 2017 |
[2017] UKUT 0315 (TCC)
Appeal number:UT/2016/0066
VAT – whether paragraph 1 Schedule 6 VATA (supplies of services between
connected parties at below open market value) applied – whether standard method
of recovery of input tax on overheads appropriately reflected use of inputs –
whether correct approach affected by principle of fiscal neutrality – whether
activities carried on by two separately registered companies amounted to a single
business – appeal dismissed
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
THE COMMISSIONERS FOR HER MAJESTY’S Appellants
REVENUE & CUSTOMS
- and -
(1) TEMPLE FINANCE LIMITED
(2) TEMPLE RETAIL LIMITED Respondents
TRIBUNAL:
JUDGE GREG SINFIELD
JUDGE SARAH FALK
Sitting in public at The Royal Courts of Justice, The Strand, London WC2A 2LL
on 5 and 6 June 2017
Sarabjit Singh, Counsel, instructed by the General Counsel and Solicitor to HM
Revenue and Customs, for the Appellants
Nicola Shaw QC and Michael Firth, instructed by Grant Thornton UK LLP for
the Respondents
© CROWN COPYRIGHT 2017
2
DECISION
1. This is an appeal by the Appellants (“HMRC”) against a decision in principle by
the First-tier Tribunal (“FTT”) released on 25 January 2016 with neutral citation
[2016] UKFTT 41 (TC) (“the Decision”). Save as otherwise indicated, paragraph
references in square brackets in this decision are to the paragraphs in the Decision.
2. The Respondents, Temple Retail Limited (“TRL”) and Temple Finance Limited
(“TFL”), are two wholly-owned subsidiaries of PerfectHome Holdings Limited. TRL
and TFL together carry on the activities of “PerfectHome”, which operates
showrooms in various parts of the UK supplying household goods. TRL and TFL are
not members of a group for VAT purposes.
3. In summary, the FTT decided that:
(1) supplies of “store services” by TRL to TFL were not made at below open
market value (“OMV”) as had been contended by HMRC;
(2) the OMV of advertising services supplied by TRL to TFL should be
determined by reference to their respective operating profits rather than in the
manner proposed either by HMRC or by the Respondents; and
(3) TFL’s recoverable input tax on overheads should be determined using the
standard method as submitted by TRL and TFL, no standard method override
(“SMO”) being required.
The Decision also addressed a number of procedural and evidential matters that are
not relevant to this appeal and to which we will not make further reference.
4. HMRC appeals on eight grounds. These are as follows:
Ground 1: the FTT failed to apply the principle of fiscal neutrality.
Ground 2: there was inadequate reasoning to support the FTT’s erroneous
finding that TRL and TFL carry on separate businesses.
Ground 3: the FTT made an irrational or erroneous finding that there is a “shop
within a shop” arrangement between TRL and TFL, with TFL acting as a
concessionaire.
Ground 4: alternatively, the FTT took an irrational approach to the assessment
of the appropriate “concession fee”.
Ground 5: the FTT’s approach to determining the OMV of advertising services
was flawed.
Ground 6: the FTT misdirected itself in the approach to be taken to determining
TFL’s recoverable input tax on its overheads (the partial exemption issue).
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