Frasers Group Financial Services Limited v The Commissioners for HMRC
Decision date: 28 October 2026
Neutral citation: [2026] UKFTT 1496 (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 appeal concerned whether photography and modelling costs were exclusively attributable to taxable supplies of goods or were residual and therefore attributable also to VAT-exempt credit supplies, whether HMRC's use of the standard turnover method to apportion residual marketing costs was fair and reasonable, whether an amended 2023 PESM provided a more precise apportionment, and whether two specific assessments were in time. The Tribunal held the photography and modelling costs were residual, upheld HMRC's use of the standard turnover method, dismissed Studio’s amended 2023 PESM, and found the challenged 09/19 and 03/20 assessments were within the s.73(6)(b) time limits. All of Studio’s appeals were dismissed.
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
Photographs and similar marketing component costs are residual where, objectively, they are used in marketing materials that prominently and specifically promote both a product and associated credit terms; in such cases the costs have a direct and immediate link to both taxable and exempt supplies. Where costs are residual, the standard turnover method is the appropriate default apportionment unless the taxpayer demonstrates an alternative that guarantees a more precise measure of deductible VAT based on economic reality and observable business features. For s.73(6)(b) timing, the assessment period begins when the assessing officer first receives evidence of sufficient weight, in the officer’s view, to justify making the assessment.
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 an integrated or “symbiotic” business model does not automatically make non‑referenced marketing inputs residual; small factual differences can change attribution. It also noted de minimis considerations belong to apportionment rather than attribution under Regulation 101 VATR, and that a PESM can be approved subject to factual adjustments that do not alter its underlying methodology.