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The Court of Appeal have given judgement in Weight Watchers v. HMRC. Peter Mantle represented HMRC, who successfully overturned the decision of the VAT & Duties Tribunal. The issue in this VAT case was whether or not Weight Watchers made a single supply (standard rated) to its meetings members, or separate supplies of services at the weekly meeting and of zero rated printed materials. The Court of Appeal concluded that there was a single supply.
The case is important because the Court, in correcting errors made by the Tribunal, emphasised, that in applying the ‘artificial to split test’ found in the ECJ’s judgement in Levob it is necessary to have full regard to (1) the economic element of the test, that is the need to assess from the economic point of view, in business to consumer transactions as well as B2B transactions; and (2) the need to look at the transaction from the perspective of the typical consumer. In particular the Tribunal’s refusal to identify a typical consumer, on the basis that customers had diverse characteristics and motives so that there could be no typical consumer, and their failure even to identify minimum attributes of meetings members was fatal to their analysis. The Court rejected aspects of the Tribunal’s approach that could have led to a narrowing of the circumstances in which a single supply was identified in the UK on the ‘artificial to split’ basis (rather than the ‘principal/ancillary’ basis) contrary to the jurisprudence of the ECJ. Though not strictly necessary for the decision, the Chancellor affirmed that although an appeal court had to show circumspection on this type of VAT appeal it was not limited to intervening only when the test in Edwards v. Bairstow was met. This also helps elucidate his approach in Zurich Insurance Co [2007] STC 1756, a case used by some to try to restrict generally the scope of appeals involving VAT classifications
Peter Mantle was instructed by HMRC.
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Peter Mantle