Paul Miller and Martin Voelker (Ashurst) examine a recent tribunal decision on the economic reality of making supplies in the context of tripartite arrangements and what constitutes third party consideration.
We have become used to seeing the requirement to consider the ‘economic reality’ set out in VAT judgments. Setting aside what it actually means this exhortation is often a prelude to the finding that some more or less contrived arrangement on the part of the taxpayer is ineffective for VAT purposes. Colin Bishopp’s judgment in Tesco Freetime and another v HMRC [2017] UKFTT 614 (reported in Tax Journal 8 August 2017) is an excellent example of a case in which HMRC’s argument of form over substance – to our way of thinking at least unjustified and utterly formalistic – received short shrift from a court considering the economic reality.
The facts of the case
The manner...
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Paul Miller and Martin Voelker (Ashurst) examine a recent tribunal decision on the economic reality of making supplies in the context of tripartite arrangements and what constitutes third party consideration.
We have become used to seeing the requirement to consider the ‘economic reality’ set out in VAT judgments. Setting aside what it actually means this exhortation is often a prelude to the finding that some more or less contrived arrangement on the part of the taxpayer is ineffective for VAT purposes. Colin Bishopp’s judgment in Tesco Freetime and another v HMRC [2017] UKFTT 614 (reported in Tax Journal 8 August 2017) is an excellent example of a case in which HMRC’s argument of form over substance – to our way of thinking at least unjustified and utterly formalistic – received short shrift from a court considering the economic reality.
The facts of the case
The manner...
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