Heath House Charter Limited v Her Majesty's Revenue & Customs

Decision date: 13 November 2009

Neutral citation: [2009] UKFTT 305 (TC)

Overall AI summary confidence: high

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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

Heath House Charter Ltd appealed HMRC's refusal to register it for VAT after it bought a yacht and contracted Lymington Yacht Charters (LYC) to arrange charters. The Tribunal found LYC acted as agent so each charter was a supply by Heath House, and that hiring out the yacht amounted to an economic activity carried on with sufficient continuity and substance. The appeal was allowed and HMRC's refusal to register was overturned; HMRC were ordered to pay 40% of the Appellant's costs.

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

Where a manager/broker agreement appoints an agent with authority to contract on behalf of the owner without transferring possession or ownership, charters arranged by that manager may be treated as supplies by the principal for VAT purposes; and the hiring out of tangible property is an economic activity for VAT if undertaken for the purpose of obtaining income on a continuing basis, assessed by indicia such as continuity, substance, businesslike conduct and consideration.

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 Tribunal observed that informality in related‑party financing and record‑keeping among closely connected companies does not by itself negate the existence of a business where other indicia support economic activity. It also indicated that the term "independently" in Article 9 should be read as excluding employment‑style relationships rather than activities carried out through agents.

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