CGI Group (Europe) Limited v Commissioners for Her Majesty's Revenue and Customs
Decision date: 20 August 2010
Neutral citation: [2010] UKFTT 396 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This case concerned whether VAT applied to charges for outsourced IT services where staff costs were re-charged and the staff were contractually described as jointly employed by the supplier (CGI) and the client (Cox). The FTT found the employees were jointly employed but concluded that, on the facts, the arrangement was in substance a single supply of services by CGI as principal, so the whole charge was subject to VAT; CGI's contention that the staff element was a non-VAT re-charge failed. The Tribunal also rejected CGI's claim to a legitimate expectation that HMRC Guidance (Notice 700/34) made the staff re-charge a non-VAT disbursement and would have found no abuse had the analysis produced a separate re-charge.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
The tribunal applied substance over form: where the economic purpose and factual performance show the supplier acts as principal supplying a single service, a contractual label of agency cannot prevail to characterise part of the payment as a non-VAT re-charge. VAT characterisation depends on the contract terms read in light of how performance actually satisfies the parties' interests.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The judgment suggested (obiter) that if there had been a genuine, evidence-supported separation between a supply of staff and other services, treating staff reimbursements as disbursements outside VAT would not necessarily be abusive. It also indicated that legitimate expectation based on published guidance may protect taxpayers only where the guidance covers the precise factual circumstances relied upon.