The Honourable Society of Middle Temple v Commissioners for Her Majesty's Revenue and Customs
Decision date: 10 June 2011
Neutral citation: [2011] UKFTT 390 (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
Middle Temple recharged unmetered cold water to its commercial tenants and separately invoiced a "Cold Water Charge" while granting leases. The Tribunal had to decide whether the water recharge formed a single supply with the lease (subject to an option to tax) or was a separate supply. Applying tests of economic divisibility and ancillary supply, the Tribunal concluded the water charge was a separate, mutually divisible supply and allowed the appeal. The Tribunal also noted that treating the water as taxable rent would risk an unjustified fiscal distortion.
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 an element of a transaction can be supplied by a third party, is separately priced and invoiced, and retains its own identity, it is likely to be a separate supply rather than ancillary to a lease; historical contractual packaging alone does not make distinct supplies economically indivisible and economic divisibility is to be assessed objectively from the perspective of the typical consumer.
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 indicated that commercially convenient packaging of multiple supplies or historical infrastructure arrangements should not ordinarily alter the VAT characterisation of those supplies, and that contractual remedies such as forfeiture for non‑payment are not material to the economic divisibility test.