VAT: Iansyst Ltd First-tier Tribunal decision

VAT: Iansyst Ltd First-tier Tribunal decision

The FTT concludes that a mobile device with software installed is equipment or appliances designed solely for use by handicapped persons.

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This case concerns the zero rating under VATA 1994, Sch 8, Group 12, item 2(g). This zero rates equipment and appliances designed solely for use by a handicapped person. The item in question is a mobile phone with Capturatalk software installed. This software:

  • Reads text aloud, e.g. can read out the text of web-pages navigated on to the mobile device;
  • Can convert text in a picture taken by the camera on the mobile device and then read it aloud;
  • Can write text from speech, i.e. when dictated to;
  • Contains a link to a dictionary; and
  • Assists the user to distinguish between words that sound similar e.g. there, their, they’re

The First-tier Tribunal (FTT) concluded that the item, viewed as a package was zero rated.

The taxpayer argued that the sale of such phones with the software installed was zero rated. The FTT, in considering such cases as the British Disabled Flying Association UT [2013] (BDFA), was of the view that it must decide if, at the time of supply, the item being supplied has the characteristics of an item that is designed solely for use by handicapped persons. When considering the concept of ‘solely’ the FTT noted the Kirton Designs VAT Decision [1987] in which the Tribunal concluded that “a product can be designed solely for use by a handicapped person, notwithstanding that it is capable of use by a normal person”.

The FTT went on to find that once the software is installed, a handicapped person can use the mobile device to access webpages as on any other mobile device. However, once accessed, the use of the webpage has changed substantially. The user will listen to the content of the web-page rather than read it. The FTT added that the ability of the phone to convert text within a photograph to spoken word is not something that is usually possible with an unaltered mobile device.

The FTT concluded that the package as a whole allowed a handicapped person to use the device differently from the way in which a non-handicapped person would use it, and to use it more effectively than such a handicapped person would be able to use it without the technology installed.

Looking at the package as a whole at the time of supply, the FTT concluded that the conditions for zero rating under 2(g) were met. To access the decision click here.

 

For further information please contact :

Karen Killington

Steve Powell  

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