Weekly VAT Update – 14 March 2017
Reference to Europe re Bridge
In 2015, in respect of the English Bridge Union, the Upper Tribunal made a reference as to whether Bridge is a sport to the CJEC. The question was: “What are the essential characteristics which an activity must exhibit in order for it to be a ‘sport’ within the meaning of the Principal VAT Directive? In particular, must an activity have a significant (or not insignificant) physical element which is material to its outcome, or is it sufficient that it has a significant mental element which is material to its outcome?” The hearing recently took place and the decision should be available in the not too distant future.
HMRC’s notes on TOGCs and VAT groups
HMRC has issued some notes on TOGCs by way of two examples:
Example 1: A banking engine business is sold to a company (‘A’) that is a member of a VAT group. ‘A’ uses the banking engine business to provide services to another member of the group (‘B’) which is a retail bank. ‘B’ incorporates these services into its own supplies of services to third party customers outside the VAT group. The initial sale of the banking engine business to ‘A’ is a TOGC.
Example 2: A decorating business is sold to a company (‘X’) that is a member of a VAT group. ‘X’ uses the business to provide decorating services to another member of the VAT group (‘Y’) that only provides online legal advice to customers. The initial sale of the decorating business to ‘X’ is not a TOGC because there is no link between the services received by ‘Y’ and the services that it provides to its customers.
The distinction between the two examples was highlighted by the case, Intelligent Management Services, which we have previously covered.