VAT Insights – December 2023

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A VAT summary document for busy accountants in general practice

In this December 2023 edition, I have looked to cover the following two VAT cases:

GAP Group Ltd                                             Single vs Multiple supplies made?

Derby Quad Ltd                                           – Cultural VAT exemption applied?

I also refer to two changes made by HMRC, namely:

VAT DIY Housebuilders Scheme               – Claim deadline / Digital claims / Invoices

Option to Tax                                               – Revocation update

GAP Group Ltd (“GAP”)

This decision of the Scottish Tribunal, concerned single composite and multiple supplies made. The two supplies made were:

  1. Plant hire – chargeable at the standard rate of VAT; and
  2. Supply of red diesel – chargeable at the reduced rate of VAT (5%).

The question which arose concerned whether HMRC was correct in raising an assessment for under-declared VAT to the tune of £1.4m, which was later reduced to £844k. The basis of its assessment, was that VAT at the standard rate should be accounted for in respect of both supplies, as constituting a single composite supply.

GAP on the other hand, considered that it made two separate supplies, each with their own independent VAT liability.

It should be noted, that both VAT registered and private individuals had been charged by GAP over a long period of time. Accordingly, part of the VAT was not capable of passing on down the chain of supplies, which resulted in GAP being out of pocket.

The court considered the principles which had been established in earlier case law on the subject of single composite and multiple supplies. The essential feature of the transaction from a typical customers perspective, was that of having the plant. The customers could decide for the tank to be refilled by GAP, or could themselves refill it – “general contractual freedom” as described by the courts, was available. This ultimately pointed to separate supplies having been made.

This is one of a long line of decisions which the courts have made. It would appear that HMRC has achieved its objective in terms of assessing a number of businesses within this sector, whom accepted the assessment made. It is only the few numbers of businesses which looked to take this the whole way to the courts and to put up a fight, whom have been successful.

It remains to be seen as to whether HMRC will further appeal this decision. However, this is unlikely as the legislation has now changed. We should know the answer to this question by 28th December 2023.

If you have a similar dilemma with a single composite vs multiple supply in your business dealings, causing you sleepless nights, please pick up the phone and give me a call. We have advised on this matter successfully on a number of occasions.

Derby Quad Ltd (“Derby”)

This VAT case concerned a charity which ran a “cultural hub” in Derby. One of its activities was the broadcast of live theatrical performances, performed at the National Theatre.

The question that arose was whether ticket sales were VAT exempt as it was an “eligible body” supplying the right of admission to a cultural event. Derby thought so. However, HMRC didn’t. It thought the right of admission was restricted to a live event. It thought that VAT at the standard rate was applicable.

The courts agreed with HMRC and held that the evidence clearly demonstrated that there were differences between the “broadcast experience” and the “live experience”. The main thing was the lack of interaction between the performers and the audience. As such, the screening was no more than a cinematic screening. In light of earlier decisions reached, the cultural VAT exemption did not extend to tickets sold, to see films.

The conclusion reached, was logical. However, in light of technical advances being made in this area, one should watch this space as it evolves.

VAT DIY Housebuilders Scheme

A number of changes have been made to the VAT DIY Housebuilders Scheme, on 5th December 2023. These changes were announced in the 2023 Spring budget.

The three main changes are:

  1. Claim deadline extended to 6 months;
  2. Digital claims now possible; and
  3. Invoices no longer required, to be submitted with the claim.

The extension from three to six months, will hopefully reduce errors in claims being made. In addition, the digitisation and invoices no longer being required at the time of submission, should simplify the overall process.

As explained on a number of previous occasions, only time will tell if these benefits will assist claims being made.

Option to Tax

The VAT form used to notify HMRC of a revocation after 20 years, has been updated – VAT1614J.

The form and supporting documentation are now to be sent to:


HM Revenue and Customs


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