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United Kingdom VAT & Duties Tribunals Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> In Health Group SA Public Body and Hospital v Revenue & Customs [2006] UKVAT V19593 (25 May 2006)
URL: http://www.bailii.org/uk/cases/UKVAT/2006/V19593.html
Cite as: [2006] UKVAT V19593
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- This appeal concerns a ruling given by the Respondents ("HMRC") that the supplies in question were exempt and not standard-rated. It is contained in a letter dated 5 March 2003.
- The issue in this case is whether the MRI related supplies made by the Appellant are standard rated or exempt for VAT purposes.
- The Law in so far as is relevant here is to be found in Article 13A of the Sixth Directive. The UK equivalent is in Group 7 Schedule 9 VATA.
- In so far as relevant the legislation is set out below.
- Sixth Directive: Article 13 Exemptions within the territory of the country.
- The UK's implementation of these European provisions is found in Schedule 9 VATA Group 7 — Health and welfare. It provides:
- We were provided with copies of the following authorities which we have read and considered:
- An agreed bundle of documents was produced. There was no agreed statement of facts.
- We heard evidence from:
- From the evidence and documents we make the following findings of fact.
- The Appellant, In Health Group SA, is a company incorporated in Luxembourg. It carries on business in the UK and is the representative member of the VAT group.
- Lister In Health Limited ("Lister") is a subsidiary of the Appellant.
- Lister's business consists of the provision of diagnostic imaging services primarily by means of MRI (Magnetic Resonance Imaging) Scanners.
- Lister provides services through mobile and static units. This appeal is only concerned with static units.
- Lister provides magnetic resonance imaging services to a number of persons. The contents of the service provided depends on the particular person to whom the provision is made.
- This particular case concerned the provision of MRI related services to NHS trusts. A sample draft contract was supplied by Lister to HMRC.
- The sample Contract was an incomplete copy of an Agreement ("the Contract"), the parties to which were to be Lister and Sandwell Health Care NHS Trust ("the Trust"). This was accepted by the parties as typical of the arrangements in question and was the basis on which this case proceeded.
- The recitals to the contract provided that Lister had agreed to develop and manage a static MRI Scanner facility on the Trust's premises. The agreement envisaged a long-term relationship between the parties with Lister committing itself to capital investment.
- Clause 1 contained definitions of the terms used in the Agreement.
- Clause 3 set out the "Provider Obligations." By Clause 3(c), Lister undertook:
- Clause 4.1 contained the Trust's obligations. The Trust agreed to:
- By clause 4.2., the Trust agreed not to let a competitor of Lister provide the same or similar services.
- By clause 5, the "operation and management of the Unit and in particular the System shall remain the responsibility of [Lister]." Lister was responsible for the service and maintenance of the equipment, the operational safety of its use and agreed to minimise disturbance to the hospital. It was agreed that only appropriate persons could carry out the scanning procedures, these were radiographers.
- By clause 7, Lister agreed to supply sufficient staff (who had to be qualified, skilled and experienced in the duties required of them) to ensure that services could be provided at all times and also agreed to appoint a Unit Manager.
- By clauses 7.6 to 7.8, the Trust agreed as follows:
- Clause 12 provided for the establishment of a "MR Management Group" which acted as a liaison body between the Trust and Lister.
- Clause 17.4 provided for the assignment and/or novation of any leasing obligations owned by Lister to the owner of the MRI Scanner in the event of termination in certain circumstances.
- Paragraph 10 of Schedule 2 to the Agreement made provision for the payment of vat if it were "properly payable" on the contract price for services.
- Schedule 1 to the Contract set out "The Services" to be provided. It read as follows:
- We find having considered all the circumstances that all Lister was doing was supplying data to the Trust. It was not supplying medical care to the Trust or anyone else.
- Lister employed radiographers to do this. No diagnosis was involved. That was the job of the Trust's radiologists.
- Lister received no consideration from the patient. It provided data to the Trust to use as it thought fit. It did not provide data to the patient.
- Lister seemingly had a licence to use the Unit. We did not have a site visit but understand that the Unit was within the area of land on which the hospital complex stood. We make no finding as to whether the Unit was part of the hospital. We would be inclined to hold that it was not. We find, if relevant, that what Lister did was not hospital care. We have already found it was not medical care.
- We find for completeness that Lister was not a hospital nor a body governed by public law or other body falling within Article 13A1(b).
- In essence, the Appellant submitted that:
- It was also suggested that this might lead to lower overall cost so helping to achieve the purpose of the Article.
- The Appellant further argued that the starting point should be the Sixth Directive. It was that the Appellant relied on. The Respondent could not rely on its failure to implement the Directive properly.
- In essence, HMRC submitted that what was supplied was medical care. In more detail the submissions included the following.
- The approach we adopt in deciding this case is that set out in paragraph 31 of Gambro, namely "we have to look at what the Appellant was doing and determine its correct classification". This requires us to consider two questions:
- We have set out our findings of fact above. In summary we found as follows:
- We confirm that what is set out in paragraph 40 is a summary of our primary findings of fact. We conclude from an examination of all the circumstances and not just the Contract that what the appellant was doing was collecting data which it supplied to the trust. This enabled the Trust to carry out its statutory duty and so was also of benefit to the patient but it was not supplied to the patient in the technical VAT sense.
- This main question requires a number of other questions to be answered. These include:
- We have found Lister provided the services to the Trust in all the circumstances including the Contract. We find that there was:
- The only payment was by the Trust to Lister for "the Services" listed in the Contract. The patient provided no consideration. Having considered all the circumstances carefully we conclude that this was not a case of third-party consideration. It was not a supply by Lister to the patient where the consideration was provided by the trust. We conclude that the supply was made by Lister.
- In reaching this decision we have borne in mind the cases cited to us and particularly paragraphs 35-41, 45 and 46 of WHA. It was said there:
- We have also borne in mind the discussion of what Lord Millett said in Plantifor, but consider that it is not applicable here for the reasons set out in WHA which we respectfully adopt.
- This aspect is closely linked to the question by whom was the supply made as discussed in the immediately preceding paragraphs. For the reasons given above we find (having considered all the circumstances including the Contract) that Lister made the supply to the Trust and not to the patient or a combination of the trust and the patient
- We have considered this above under the heading "what was the appellant doing?" We concluded that Lister provided the data resulting from the scan to the Trust whose radiologists (ie the Trust's Radiologists) could if they chose to do so use it in making diagnoses. We find that the supply consisted of the provision of the data resulting from the scan to the Trust. It did not consist of diagnosis, treatment or cure. Medical care was not the purpose for which Lister made the supply and we so find as a matter of fact. It was an input to the Trust which could use it as it saw fit in its provision to the patient. Even from this point of view it was not diagnosis, treatment or cure. We find this as a fact.
- For the avoidance of doubt we record that these findings of fact also stand where contrast is administered.
- Following Jacob J.'s comments in Century Life (at paragraphs 6-8 [2001] STC 38 and approved in a number of other cases) we only concern ourselves with the wording of Article 13B of the Sixth Directive (set out so far as is relevant above) and not with the wording of Group 7. This is because the Directive is the governing matter and the courts have commended us to do so.
- The issue here comes essentially down to whether there was "medical care" i.e. a supply consisting of "diagnosis, treatment or cure". We find as a matter of fact that the supply did not have a therapeutic purpose. It was the supply of data with no therapeutic purpose.
- We consider "diagnosis, treatment or cure" to be the core meaning of "medical care" in this context for the purposes of Community Law. This is because it is said to be so at paragraph 22 of LuP GmbH citing Dornier, Kugler and more recently Ygeia.
- We have found that here the supply was the supply of data which, at the very most, was the provision of data potentially preparatory to diagnosis by someone else, if that person decided so to use it. The supply was not for, or of diagnosis, treatment or cure, but consisted of the supply of data for the Trust to use as it saw fit. We have also found that it does not of itself have a therapeutic purpose. We also find that when Lister made the supply it did not have a therapeutic purpose. It was the provision of data and not the supply of hospital or medical care.
- We conclude that the supply was not a supply of medical care within that phrase's meaning for the purposes of Community Law. Accordingly, the supply could not fall within Article 13 this is because it is not a supply of medical care. We have already found that it was not a supply of hospital care.
- Accordingly, for the reasons given above we find that there was a standard rated supplied by Lister to the trust which did not consist of medical care.
- We have found that:
- Accordingly, the appeal is allowed with costs.
19593
VALUE ADDED TAX – Provision of MRI data – Exempt as medical care Article 13A(1) and (2) or standard-rated – held standard-rated
LONDON TRIBUNAL CENTRE
IN HEALTH GROUP SA
PUBLIC BODY AND HOSPITAL Appellant
- and -
THE COMMISSIONERS FOR HER MAJESTY'S
REVENUE AND CUSTOMS Respondents
Tribunal: ADRIAN SHIPWRIGHT (Chairman)
Professor ROY SPECTOR MD PhD FRCP FRCPATH
Sitting in public in London on 27, 28 and 29 March 2006
David Milne QC and Sadiya Choudhury, Counsel, instructed by Ernst & Young, for the Appellant
Kieran Beal, Counsel, instructed by the Acting Solicitor for HM Revenue and Customs, for the Respondents
Introduction
The Issue
The Law
The Legislation
Exemptions for certain activities in the public interest
1 (a) Without prejudice to other Community provisions, member states shall exempt the following under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of such exemptions and of preventing any possible evasion, avoidance or abuse-…
(b) hospital and medical care and closely related activities undertaken by bodies governed by public law or, under social conditions comparable to those applicable to bodies governed by public law, by hospitals, centres for medical treatment or diagnosis and other duly recognised establishments of a similar nature;
(c) the provision of medical care in the exercise of the medical and paramedical professions as defined by the member state concerned.
2 (a) Member States may make the granting to bodies other than those governed by public law of each exemption provided for in 1(b), (g), (h), (i), (l), (m) and (n) of this Article subject in each individual case to one or more of the following conditions:
- they shall not systematically aim to make a profit, but any profits nevertheless arising shall not be distributed, but shall be assigned to the continuance or improvement of the services supplied;
- they shall be managed and administered on an essentially voluntary basis by persons who have no direct or indirect interest, either themselves or through intermediaries, in the results of the activities concerned;
- they shall charge prices approved by the public authorities or which do not exceed such approved prices or, in respect of those services not subject to approval, prices lower than those charged for similar services by commercial enterprises subject to value added tax;
- exemption of the services concerned shall not be likely to create distortions of competition such as to place at a disadvantage commercial enterprises liable to value added tax.
"Item No
1 The supply of services by a person registered or enrolled in any of the following—
(a) the register of medical practitioners or the register of medical practitioners with limited registration;
…
(c) the register kept under the Health Professions Order 2001.
…
4 The provision of care or medical or surgical treatment and, in connection with it, the supply of any goods, in any hospital or state regulated institution.
…
NOTES
(1) Item 1 does not include the letting on hire of goods except where the letting is in connection with a supply of other services comprised in the item.
(2) Paragraphs (a) to (d) of item 1 and paragraphs (a) and (b) of item 2 include supplies of services made by a person who is not registered or enrolled in any of the registers or rolls specified in those paragraphs where the services are wholly performed or directly supervised by a person who is so registered or enrolled.
(3) Item [3 ][1] does not include the letting on hire of goods.
…
(8) In this Group "state-regulated" means approved, licensed, registered or exempted from registration by any Minister or other authority pursuant to a provision of a public general Act, other than a provision that is capable of being brought into effect at different times in relation to different local authority areas.
Here "Act" means-
(a) an Act of Parliament;
(b) an Act of the Scottish Parliament;
(c) an Act of the Northern Ireland Assembly;
(d) an Order in Council under Schedule 1 to the Northern Ireland Act 1974;
(e) a Measure of the Northern Ireland Assembly established under section 1 of the Northern Ireland Assembly Act 1973;
(f) an Order in Council under section 1(3) of the Northern Ireland (Temporary Provisions) Act 1972;
(g) an Act of the Parliament of Northern Ireland."
The Authorities
The Health Professions Order 2001, SI 2002/054
The Health Professionals Order 2001 (Consequential Amendments) Order 2002, SI 2002 No. 880
The Health Professionals Order 2001 (Consequential Amendments) Order 2003, SI 2003 No. 1590
Customs & Excise Public Notice 701/57
Case 8/81 Becker v. Finanzamt Muenster-Innenstadt [1982] ECR 53, ECJ
Case 353/85 EC Commission v United Kingdom [1988] STC 251, ECJ
Case 106/89 Marleasing [1990] ECR I-4135, ECJ
Case C-91/92 Faccini Dori [1994] ECR I-3325, ECJ
Case C-349/96 Card Protection Plan v Commissioners of Customs and Excise [1999] ECR I-973, ECJ
Case C-216/97 Gregg v Commissioners of Customs and Excise [1999] ECR I-4947, ECJ
Case C-384/98 D v W [2000] ECR I-6795, ECJ
Case C-76/99 Commission v France [2001] ECR I-249, ECJ
Case C-141/00 Kügler [2002] ECR I-6833, ECJ
Case C-62/00 Marks & Spencer Plc v Commissioners of Customs and Excise [2003] QB 866, ECJ
Case C-45/01 Christoph-Dornier-Stiftung fur Klinische Psychologie v Finanzamt Giessen [2003] ECR I-12911, ECJ
Case C-307/01 Peter d'Ambrumenil and Dispute Resolution Services Ltd v Commissioners of Customs and Excise [2003]ECR I-13989, ECJ
Case C-212/01 [2003] ECR I-13859, ECJ Unterpertinger v Pensionsversicherungsanstalt der Arbeiter
Case C-498/03 Kingscrest Associates Ltd v Commissioners of Customs and Excise [2005] ECR I-4427, [2005] STC 1547, ECJ
Customs and Excise Commissioners v British Telecommunications plc [1999] 1 WLR 1376; [1999] STC 758, HL
Card Protection Plan v Commissioners of Customs and Excise [2002] 1 AC 202; [2001] STC 174, HL
Marks & Spencer plc v Commissioners of Customs and Excise [2005] UKHL 53, HL
Benyon and Partners v Commissioners of Customs and Excise [2004] UKHL 53; [2005] 1 WLR 86, HL
College of Estate Management v Commissioners of Customs and Excise [2005] UKHL 62, HL
Barkworth v Commissioners of Customs and Excise [1988] STC 771, QBD
Commissioners of Customs and Excise v Kingscrest Residential Homes Ltd [2002] STC 490, Ch.D.
Aslan Imaging v Commissioners of Customs and Excise Commissioners (1989) VATTR 54, VAT Tribunal
Cleary and Cleary t/a Mobile X-Rays v Commissioners of Customs and Excise [LON/91/2295, decision of the Tribunal, Mr Wallace, Chairman, dated 16 March 1992]
Peter d'Ambrumenil and Dispute Resolution Services Ltd v Commissioners of Customs and Excise [2004] UKVAT V18551 (Mr Oliver QC, Chairman)
Gambro Hospal Limited v Commissioners of Customs and Excise [2004] UKVAT V18588, VAT Tribunal (Mr Barlow, Chairman)
Case C-41/04 Levob Verzekeringen BV, OV Bank NV v Staatessecretarias van Financien [2005], ECJ
Century Life Plc v Commissioners of Customs and Excise [2001] STC 38
WHA Ltd v Commissioners of Customs and Excise [2003] STC 648
We were also provided with a copy of the French text of the Advocate General's Opinion in L.U.P. GmbH v Finanzant Bochum Mitte and an unofficial translation.
The Evidence
Philip White Cross, the Appellant's Finance Director;
Michael Hadfield;
Dr Newman Sandars, Consultant Radiologist at the hospital;
Mr David McManus, Principal Research Fellow and Honorary Senior Lecturer at University College London; and
Mrs Susan Vanden Bon, the officer responsible for the contested decision.
A witness statement was provided for each witness and was admitted as evidence in chief. Each of the witnesses was cross examined.
Findings of Fact
The Appellant and Lister
MRI provision by Lister
The Draft Contract
"to ensure compliance with established medical practice of medical guidelines relating to MRI scanner use and (without limitation) in particular:
i. determining that an MRI Scan and the procedure required in connection therewith are safe and suitable for the particular patient on the basis of the patient consent form interview;
ii. fully informing Trust Patients, private Patients and Other Patients of the nature of all reasonably foreseeable risks and alternatives to an MRI Scan in accordance with agreed protocol; and
iii. not to provide the Services to any Trust Patient, Private Patient or Other Patient who has not completed and signed a patient consent form consenting to the MRI Scan."
"(a) refer Trust Patients requiring MRI Scans to [Lister] at the Unit and [to] use all reasonable endeavours to encourage Trust employed consultants to refer Private Patients requiring MRI Scan to [it];
(b) …
(c) arrange for the delivery of Trust Patients to the Unit;
(d) pay to [Lister] the Contract Price in accordance with the provisions of Schedule 2;
(e) permit [Lister] to use the Unit including the System to undertake Private Patient and Other Patient procedures for its own account;
(f) supply the services listed in schedule 6 at no cost to the Provider."
"7.6 The Trust shall use all reasonable endeavours to procure that the contracts of employment of the Trust Radiologists shall remain with their employing authority who will be responsible for all salaries, PAYE, holiday pay, pension entitlements and other emoluments or entitlements thereunder whatsoever;
7.7 The Trust shall ensure that the Trust Radiologists whose services are supplied under schedule 5 shall at all times be suitably qualified and experienced in MR imaging to carry out the duties to which they are assigned within the National Health Service and shall hold all necessary certificates of competence and qualification…
7.8 The Trust shall ensure that there are at all times sufficient Trust Radiologists to carry out the projected annual procedures required by the Trust [subject to notice requirement]. If the Trust is unable to provide sufficient Trust Radiologists… [Lister] shall use all reasonable endeavours to procure the reporting of the procedure by an Approved Radiologist, at an additional fee to the Trust of £25 per scan area ('Report Fee')." (Emphasis in original)
"The Services"
Clause 3
"1 The Provider will:
(a) provide an MRI scanning service in accordance with the protocol agreed by the MR Management Group which shall include the making of a patient appointment, the MRI Scan and one set of films and shall include both routine and emergency examinations. The Services shall be available between the hours of 8.00am and 6.00pm. Out of these hours the Trust shall be entitled to use the Unit for emergency procedures only in accordance with the agreed protocol and shall agree costs of and liabilities for such emergency use with the Provider;
(b) use its reasonable endeavours to ensure provision of the Services to meet the Trust's reasonable requirements;
(c) from the date the Unit is Ready for Public Use make appointments for Trust Patients within 2 working days of receipt of a request from the Trust such appointments to be made direct with the Trust Patient at a time suitable to the Patient;
(d) from the date the Unit is Ready for Public Use arrange for Trust Patients to be scanned within 3 weeks of receipt of request;
(e) prior to the scan ensure the Trust Patient completes and understands and signs a check list to ensure that the Trust Patient is suitable to be scanned;
(f) where an emergency scan as defined in the protocol is requested seek to produce the scan in accordance with the provisions of the protocol agreed by the MR Management Group;
(g) monitor the quality of the scans with a consultant radiologist from the Trust;
(h) ensure there is the available capacity to meet the Trust's requirements;
(i) provide initial MRI training to Trust Radiologists and radiographers on the System at no cost to the Trust;
(j) keep optical disc copies of all scan images for a period of 7 years;
(k) instruct Trust staff likely to enter the Unit in safety aspects of MRI scanners;
(l) provide adequate notice to the Trust for inpatient scan appointments; and
(m) liaise with the Trust's management on the marketing of the Services."
The Unit and the Site
The Submissions of the Parties
The Appellant Submissions in outline
(a) There was one supply to the Trust of MRI services by the Appellant.
(b) The Trust used that input in its provision of health care.
(c) No medical care was supplied to the Trust by the Appellant.
(d) What was supplied was not supplied by a public body or hospital etc.
HMRC's Submissions
(a) There was one supply of medical care.
(b) The supply was to both the trust and the patient.
(c) Both the trust and the patient benefit from MRI scan.
(d) Accordingly, this makes good (a) and (b) and there is a supply both the Trust and the patient.
(e) This is not a case of the Appellant making an input supply to the trust which uses it to make its provision to the patients.
(f) The scan is a diagnostic process itself which is part of the care and diagnosis from which the patient benefits and is a necessary part of the discharge of the trust's statutory duty.
Accordingly, there is an exempt supply of medical care which falls within Group 7 Schedule 9 VATA and/or article 13 A of the Sixth Directive.
Discussion
Introduction
(1) What was the Appellant doing?
(2) What is the correct classification?
Each of these main questions has sub issues. We will consider each of these main questions and related sub issues in turn.
What was the Appellant doing?
(1) Lister entered into a contract with the trust;
(2) The contract recited that the Trust wish to have an MRI facility
(3) The contract required Lister to provide the "Services". Essentially, Lister was to "provide an MRI scanning service in accordance with the protocol agreed by the MR Management Group which will include the making of a patient appointment, the MRI scan and one set of films and shall include both routine and emergency examinations".
(4) No diagnosis was involved. Diagnosis was the job of the Trust's radiologists who are not employed or provided by Lister. Lister could do so though, on request, and for a specified fee. This was not the issue in dispute.
(5) Lister was paid a fee per patient by the trust in respect of the "Services". Lister received nothing from the patient.
(6) The essence of what Lister did was the scan to collect data. To do this it employed radiographers to operate the scanner.
(7) Lister provided the data resulting from the scan to the Trust whose radiologists could if they so decided use that data in making diagnoses.
(8) That data was at the very most the provision of data preparatory to diagnosis, treatment or care by someone else if that person decided to use it in that way. It did not of itself have a therapeutic purpose and was not medical care.
(1) Who made the supply?
(2) To whom was the supply made?
(3) What did the supply consist of?
(4) Was it a supply of "medical care"?
Who made the supply?
(1) No joint supply by Lister and the Trust to the patient;
(2) No supply to the patient by Lister at the Trust's request and expense;
(3) No other single, compound, multiple or other description of supply.
We find this as a matter of fact. There may have been provision of benefit to others (e.g. the patient) but there was no supply, in the technical VAT sense, other than by Lister to the Trust.
"[35] When considering this issue, Lloyd J observed that: '[t]he contractual position is not conclusive as to what taxable supplies are made to whom, but it must be the starting point' (see 2003 STC 648 at [23]). I agree.
[36] The essential features which are said to justify the conclusion that the garage makes a supply of services to WHA are as follows. First, the invoice is in respect of work carried out by the garage pursuant to an instruction by WHA. Secondly, the only contractual relationship, pursuant to which the work the subject of the invoice is carried out, exists under an agreement between WHA and the garage. Thirdly, the only person who is liable to pay the garage in respect of that work is WHA. Fourthly, WHA gets into the contractual relationship with the garage in the course of its business. Fifthly, by ensuring the garage carries out the work, WHA fulfils its obligation to Viscount under the claims handling agreement, and also becomes entitled to earn its £17·60 in respect of the claim resulting in the works.
[37] In these circumstances, it appears to me that, unless there is some reason for reaching a contrary conclusion, there is indeed a 'supply of services' by the garage to WHA when the garage carries out repair work to a vehicle under a policy. Given the very wide definition of 'services' in s 5(2)(b), it is hard to resist the conclusion that, if something is supplied to WA it can be described as 'services': WHA receives a benefit from the carrying out of the repairs (namely satisfaction of an obligation to Viscount and the ability to earn the £17·60) and it is work which WHA will have authorised to be done. The fact that there is another beneficiary of the work, who may even fairly be said to be the primary beneficiary, namely the owner of the vehicle, should not, at least of itself, prevent the arrangement operating as a supply of 'services' to WHA.
[38] It further appears to me that the services in question are 'supplied' to WHA. Again, the fact that they are also provided to the vehicle owner does not, to my mind, prevent them from being treated as 'supplied' to WHA. The fact that WHA authorises and pays for the work, and, indeed, is rendered the invoice for the work, serves to underline this conclusion. Of course, if any of these steps could be regarded as sham or bogus, different considerations might well apply. But, at least unless it is necessary to resort to the further arguments, which impinge on the scheme as a whole, no suchcontention has been raised in the present case.
[39] As to the third requirement, once it is accepted that the work done by the garage constitutes the 'supply of services' to WHA, I do not see how it could be suggested that the services so supplied are not 'used for the purpose of [WHA's] business'. Indeed, I do not understand Mr Peacock to contend otherwise.
[40] Casting one's eyes more widely, I can see no reason for calling that conclusion into question. The suggestion that the vehicle owner, rather than WHA, is the person to whom the services should be treated as supplied has an initial attraction. However, such a conclusion suffers from the unattractive feature that the owner does not pay for the work, and receives no invoice in respect of it, and that, accordingly, even if the circumstances would otherwise justify someone recovering the input tax, there could be nobody entitled to recover the input tax, at least on the face of it. The owner could not recover input tax because he had not paid it, and neither could WHA, because although it had paid the VAT, it could not be treated as input tax because there would have been no supply of services to WHA. While I readily accept that there can be circumstances where such a dichotomy can arise, and while I accept that there may be regulations which avoid such dichotomies at least in certain circumstances, it appears to me that the court should certainly not lean in favour of analysis which results in such a dichotomy. Even assuming that Mr Peacock is correct in his contention that there cannot have been a 'supply of services' both to the owner and to WHA, it appears to me that the proper analysis in the present case is that the services were 'supplied' to WHA albeit that they were also provided to the owner.
[41] I believe that this conclusion is supported by authority, and in particular by the decision of the House of Lords in Redrow to which I have referred. In that case, Redrow, a residential developer, instructed agents to value and sell houses owned by prospective purchasers of new houses erected by Redrow. Under the arrangement, Redrow would pay all the agents' fees if the prospective purchaser bought a Redrow home, whereas, if the prospective purchaser did not buy a Redrow home, he would be responsible for the agent's fees. The House of Lords unanimously held that, in those circumstances, Redrow was entitled to treat the VAT payable in respect of the fees of any agent for which it was responsible, as input tax.
[45] In my judgment, these two passages, from the only two reasoned speeches in the unanimous decision of the House of Lords in Redrow, present the commissioners' contention on the first issue with serious problems. Lord Hope's confirmation of the tribunal's view that there could be a supply of services to the prospective purchaser and to Redrow render it very difficult for the commissioners' case to get to first base. Even if the commissioners are right in saying that there is in the present case a supply of services to the vehicle owner, that would not, it would appear, prevent there also being a supply of services to WHA.
[46] To use Lord Hope's words, it is enough for WHA's case on the first issue that 'something', namely the repair work, was 'done for' WHA, in the sense that it was authorised and paid for by WHA and WHA benefited from the work. Lord Millett's approach may be said to be slightly different, although I believe that the difference is one of language or emphasis, rather than of concept or principle. His approach would appear to involve, in the present case, asking oneself who paid for the works, on the basis that any person who did not pay for the works, such as the insured, 'has no claim to deduction'. Once one identifies the payer, namely WHA, one simply asks whether he received 'anything at all' for the carrying out of the work by the garage. Given that it satisfied WHA's obligation to Viscount, and it enabled WHA to earn its £17·60, the answer to that question must, to my mind, be in the affirmative."
To whom was the supply made?
What did the supply consist of?
Was it a supply of "medical care"?
Conclusion
(1) what Lister did was provide data to the Trust. The Trust and its personnel such as the radiologists and others could not use it or use as they saw fit. That provision did not have a therapeutic purpose. That provision was at the very most the supply of data preparatory to diagnosis by someone else if they decided so to use it of itself it did not have a therapeutic purpose either for Lister or for the trust; and
(2) the correct classification of the supply is not as medical care but as a standard rated supply of services. It is not correctly classified as an exempt supply.
LON/2003/0325
Note 1 Presumably this should read (4). We have assumed this to be the case. [Back]