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Fenix International Ltd v RCC [2020] UKFTT 499 (TC) (First-tier Tribunal, Tax Chamber, 15 December 2020)
Fenix International Ltd is the operator of the well-known Only Fans website/online social media platform, which allows “Creators” to post content for “Fans” in return for payment. Fenix’s case is that it acts as agent in respect of transactions between Creators and Fans. Fenix charges Creators a 20% commission on all sums paid by Fans and accounted for VAT in respect of that intermediary service for the accounting periods at issue. Thus, if a Fan pays 100 and Fenix charges the Creator commission of 20, Fenix accounted for VAT on the 20, rather than the 100.
HMRC have assessed Fenix for VAT on the basis that Article 9a of Council Implementing Regulation (EU) No. 282/2011, which was directly applicable in the UK prior to IP Completion Day (23:00 GMT on 31 December 2020) and which remains applicable in the UK, deems Fenix to be liable for VAT on 100. Fenix has appealed against those assessments to the First-tier Tribunal (Tax Chamber) (“FTT”), arguing that the deeming provisions go beyond the power to “implement” the Principal VAT Directive, in this case Article 28 PVD, conferred on the Council by Article 397 PVD. Prior to IP Completion Day, any challenge to the validity of an EU Regulation could only be entertained by the CJEU; and challenge before a national court had to be referred for a preliminary ruling under Article 267 of the Treaty on the Functioning of the European Union (“TFEU”).
On 15 December 2020, the FTT referred a question to the CJEU concerning the validity of Article 9a under Article 267 TFEU. On 22 December 2020, the FTT’s order for reference was registered at the CJEU Registry (as Case C-695/20). On IP Completion Day, the ability of UK courts and tribunals to make Article 267 references (relevantly) ended. The combined effect of the Withdrawal Agreement (Articles 86 and 89) and section 7A of the European Union (Withdrawal) Act 2018 is that the CJEU has jurisdiction to entertain the FTT’s reference and that the FTT and UK will be bound by the CJEU’s answer.
Valentina Sloane QC, leading Max Schofield of 3PB, acted for Fenix.
Andrew Macnab acted for HMRC.
Read the FTT’s decision to refer here.