Travel Incentives Meetings Exhibitions Ltd (TIME) supplied conferences and associated travel to businesses who subsequently made onward supplies of the packages to end consumers. TIME treated the overseas travel supplies as being outside the scope of UK VAT. Travel comprised the greater part, measured by cost, of what TIME considered to be a multiple supply of both travel and conference organisation. HMRC considered that there was a single supply of conference services to which the general business-to-business (B2B) place of supply rules applied. HMRC raised an assessment for around £670k on supplies where the customer belonged in the UK. As the onward supply by the customer to an end user would in HMRC’s view be covered by the Tour Operators Margin Scheme (TOMS) that UK VAT was irrecoverable by TIME’s customer. The First-tier Tribunal allowed the taxpayer’s appeal based on the argument its supplies were covered by TOMS.
The First-tier Tribunal (FTT) began by concluding that TIME was making a single supply of conferencing. Where packages included travel, these services were considered to be ancillary to the principal supply. The taxpayer also argued that it should be able to apply TOMS, otherwise there is an inconsistency between how TIME’s supplies are treated and how its customers’ onward supplies to end users are treated. HMRC did not think that TIME could use TOMS as its supplies were not to the end user.
The FTT considered Commission v Spain (C-189/11), which concluded that the term ‘traveller’ should be interpreted to include all customers of supplies of travel facilities (whether they are the end users or not). The FTT noted that Commission v Spain (which UK policy has not yet implemented), was very clear in its findings and the FTT concluded that though there was a single supply of conference services, TIME could use TOMS and the TOMS place of supply rules. TOMS was the only method of ensuring irrecoverable VAT was not created on supplies that had nothing do with the UK/EU. The taxpayer’s appeal was allowed and the FTT directed that HMRC must establish the margins on EU conferences if it wishes to raise any “further” assessments. To read the decision click here.