Supplying the answer: when are state-funded services “supply of services for consideration” for VAT purposes?

Melanie Hall QC and Elizabeth Kelsey acted for Colchester Institute Corporation (appellant), instructed by VATangles Consultancy.

Peter Mantle acted for HMRC (respondents), instructed by the General Counsel and Solicitor to HMRC.

In this case note, Jack Williams of Monckton Chambers analyses the recent decision of the Upper Tribunal in Colchester Institute Corporation v HMRC [2020] UKUT 0368 (“Colchester”). In summary, in overturning the First Tier Tribunal’s decision, the Upper Tribunal held that state-funding did have a sufficient link to the provision of education and vocational training provided by a college to constitute supply of services for consideration and economic activity. Nevertheless, HMRC was entitled to set-off input tax to reduce the taxpayer’s repayment claim. The implications of the case are likely to be profound: many businesses – educational and otherwise – supplying services that are funded by state agencies are now likely to argue that their provision of services does, in fact, constitute the supply of services for consideration and economic activity. That being so, there would be no need to account for output tax on those services and any accounted for with HMRC may be recoverable.

Please click here to read the case note.

The comments made in this case note are wholly personal and do not reflect the views of any other members of Monckton Chambers, its tenants or clients.