The Towards Zero Foundation (Formerly Global New Car Assessment Programme) v Her Majesty's Revenue & Customs
Decision date: 22 July 2022
Neutral citation: Neutral citation not available
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 The Towards Zero Foundation’s provision of free initial vehicle crash-testing is a non-business (non-economic) activity for VAT purposes or part of a single business supplying testing services to manufacturers. The Tribunal found the free testing is a necessary investment and integral to the Foundation’s later taxable, manufacturer-funded testing, so the Foundation was entitled to recover the relevant UK input VAT. HMRC’s assessments (total £152,311) were set aside and the appeal allowed.
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 initially free activities are a necessary precursor to and integral to a later taxable supply, those activities may be treated as part of the single business for VAT input tax recovery; accordingly overhead input tax attributable to such integrated activity is recoverable. The Tribunal applied this principle to hold the Foundation’s free initial tests formed part of its taxable business rather than a separate non-business activity.
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 in more mature NCAPs some free tests might persist for reasons of independence yet remain costs borne for the benefit of the taxable, manufacturer-funded programme. The Tribunal also noted that, had HMRC been justified in making an assessment, it could properly have used a best-judgment basis given the lack of evidence on an alternative quantum.