United Kingdom VAT & Duties Tribunals Decisions

You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> Weight Watchers (UK) Ltd v Revenue & Customs [2007] UKVAT V20038 (08 March 2007)
URL: http://www.bailii.org/uk/cases/UKVAT/2007/V20038.html
Cite as: [2007] UKVAT V20038

[New search] [Printable RTF version] [Help]

Weight Watchers (UK) Ltd v Revenue & Customs [2007] UKVAT V20038 (08 March 2007)

Single or multiple supplies – Customers receiving handbook and literature on registration with weighing and talks at meeting for registration fee and meeting fee – Registered customers entitled to attend and weigh-in at weekly meetings for fee at each meeting – Ruling by Customs that single standard rated supplies – Held that separate zero-rated supplies and standard rated supplies on registration and at each meeting – College of Estate Management [2005] STC 1597 considered – Levob, ECJ [2006] STC 766 applied – Appeal allowed

LONDON TRIBUNAL CENTRE

WEIGHT WATCHERS (UK) LTD Appellant

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

Tribunal: THEODORE WALLACE (Chairman)

MRS LYNNETH SALISBURY JP

Sitting in public in London on 30, 31 January and 1, 2 February 2007

David Milne QC and Greg Sinfield, instructed by Lovells, for the Appellant

Peter Mantle, instructed by the Acting Solicitor, for the Respondents

© CROWN COPYRIGHT 2007

DECISION

This appeal concerns whether customers of the Appellant, who attend weekly meetings at which they are weighed and can then remain to attend a talk and discussion period but in any event also receive a handbook and other printed material at the meetings, receive single standard-rated supplies of a weight-loss programme or separate supplies of zero-rated printed material and standard-rated support services.

The appeal was against a decision letter dated 11 March 2005 that "with effect from 1 April 2005, the ruling given to you on 23 January 2004 is withdrawn" and Weight Watchers Classes "shall be treated as a single supply of a weight-loss programme which is liable to VAT at the standard rate." The ruling of 23 January 2004 was that the supplies were mixed supplies. In the letter of 11 March 2005 Customs accepted apportionment for the years 2003 and 2004 with 80 per cent zero-rated and 20 per cent standard-rated. Apart from the fact that the handbook in use from 2005 is very much larger than that used previously, there was no material change in the nature of the supplies. The ruling arose from a change in Customs' view of the law as to single and separate supplies.

The only witness was Mrs Melanie Stubbing, Senior Vice-President of Operations of the Appellant. She confirmed a witness statement, most of which was not challenged, and was cross-examined for a day and a half. She was an excellent witness who took considerable care in answering the questions put to her. In the nature of the dispute many of the questions were complex and sometimes lengthy, as were her answers. Given the nature of the cross-examination, it is unfortunate that there was no transcript.

Statements by five customers were accepted without challenge. There was a common bundle of documents with some specific exhibits, in particular the Switch handbook of 170 pages ("the Handbook").

The facts

The Appellant, which is a wholly owned subsidiary of Weight Watchers International Inc, offers services and products built upon its approach to weight management and weight loss. Most customers are women. The approach is based on three key principles : healthy eating, moderate exercise and modifying behaviour. The approach is designed to help customers learn how to lose weight and keep it off by means of re-education rather than a quick fix. It is designed to result in a safe and healthy weight loss of 1-2 lbs per week.

The current diet plan is branded "Switch" which was introduced in January 2005. This consists of two alternative food plans – Full Choice and No Count. Full Choice is based on the Points system which has been operated since 1996. Based on a unique formula, Points assigns values to appropriate portion sizes of foods based on their calorie and saturated fat content. Customers are given an individual daily allowance of Points based on their gender, starting weight and certain lifestyle factors. The daily allowance can be increased by exercise at various intensity levels. The method of calculating the daily Points allowance and the Points value of specified portions of food are set out in the Handbook which contains some 600 individual values.

The No Count plan allows customers to eat freely from a comprehensive list of healthy foods listed in the Handbook. It is used by 23 per cent of customers. With No Count there is an optional weekly fixed Points allowance for foods not in the No Count list; this Easy Points list is separate from the Points list described in the previous paragraph and only contains 41 items. Customers can change from one plan to the other.

The Switch programme also contains 10 Winning Habits, starting with "Make Wise Food Choices". Customers are encouraged to do a "habit audit" and to pick habits focused on different types of behaviour on which to work.

Some 6,000 to 6,500 meetings are held each week in leisure centres, church halls, village halls, school halls and similar venues up and down the country. Some meetings are attended by as many as 70 or 80 people. The number of customers attending meetings varies from some 150,000 weekly to a peak of 350,000 for 5 or 6 weeks after Christmas, there are lower peaks after Easter and the summer holidays. There were around a million meetings enrolments in 2005, around half being new and half being customers who rejoined after having lapsed. Customers are treated as lapsed after missing five meetings.

In 2003 up to 7 November there were 894,640 registrations, of which 453,425 were new Members and the rest were lapsed Members rejoining. By far the largest source of customers was friends' recommendations, accounting for almost half of new members; the next largest sources were television, press and magazine advertising, together accounting for 112,992 new Members; the source of a considerable proportion of customers was unknown. There is extensive press advertising, with 20 inserts per week in the national press in January 2007. Meeting places are advertised in the local press. National advertisements give a telephone number to find the nearest meeting. Advertisements give the website details; the website has 15,000 pages. The publicity is primarily directed to meetings, however the website and Weight Watchers magazine do also cover At Home membership for customers who do not attend meetings.

Apart from Meetings members, the Appellant had some 12,500 At Home customers in 2006 and 100,000 Online customers, who again did not attend meetings. These customers received the printed material by post monthly and online respectively. Supplies to At Home customers are zero-rated; those to Online customers are standard-rated.

On arrival at a meeting a new customer is greeted by the organiser of the meeting, known as the Leader, fills in a registration form and pays a registration fee of £9 and a fee of £4.95 for that meeting. Sometimes registration is free under a promotion. The current national press advertisement has a free registration voucher valid up to 31 March. Some customers pay concessionary fees.

There is no written contract as such, the terms being part written and part oral. The written terms are set out at page 170 of the Handbook in a page headed "The Small Print". This starts with certain conditions of joining and exclusions. Members must be at least 5lbs overweight for their height, must not be pregnant and must be at least 10 years old and if under 16 must have GPs and parent's written approval.

Under "Joining" the following appears:-

"When you join, you pay a Registration Fee and Weekly Meeting Fee at the first Meeting you attend. After that, you pay a Weekly Meeting Fee as you attend each week. You may discontinue your Membership at any time. Previous Members can rejoin upon Payment of a Registration Fee. Your stamped Membership Card is proof of current Membership.

We charge for missed weeks, but you are allowed up to 2 holiday weeks every six months – just tell your Leader …

You will be given one copy of the current Programme materials. Extra copies cannot be given …"

Under "additional benefits" it is stated that after attending one paid meeting a week, the Member can attend as many other meetings as she wishes free of charge but can only be weighed-in once a week. It is also stated that only Members and potential Members can attend; guests are only allowed on special occasions announced in advance.

The Registration Form contains a statement that the Member agrees to abide by the Rules of Membership set out in the Handbook. The Membership Card also refers to those Rules. These rules are "The Small Print" referred to above; the Card also states "We do charge for any weeks you miss (up to a maximum of 3)." It is clear on the evidence that payment for missed meetings only arises when the Member attends a further meeting. Those attending after a missed meeting pay for the missed meeting and receive the materials which had been given out at that meeting. There is no question of paying if they simply lapse. After two or three missed meetings it is of course more economic to rejoin paying the registration fee again.

Apart from the reference to being weighed-in there is no specification in the written terms as to what will be provided at meetings. This must be communicated orally by the Leader when the Member joins although what a Member is told is unclear and presumably will vary somewhat from Leader to Leader. The new Member receives a Handbook together with a Points Calculator and Bonus Booster, which is inserted in a pocket at the back of the Handbook, with the material being distributed that week to all members – a Points Tracker form, weekly leaflet and the latest edition of the monthly "Irresistible!" magazine. The Membership Card has spaces to enter the weekly weight and weight loss.

The website, which is referred to in press advertising, includes the following under "Come to a Weight Watchers meeting":

"At your first meeting you'll agree your weight loss goals with your leader and find out all about the Switch programme.

You'll be welcomed in a friendly atmosphere and discover the small changes you can make – from making wise food choices to becoming more active.

Each week you'll have a confidential weigh-in and track your progress.

You'll be able to share what works with other members and stay motivated as you move towards your weight loss goals."

Meetings normally last for an hour. The first part is taken up with weighing-in both of new and existing Members. New Members will normally look through the Handbook and other materials while others are being weighed. There then follows a talk by the Leader which may take the form of a group discussion. Tea or coffee are sometimes served. Members can buy additional material such as "Weight Watchers" magazine, which is also available to the general public at retailers but is sold below normal retail price to members, and other literature. At the end of their first visit new Members are invited to stay for a 15 minute orientation talk on how Switch works and how to navigate the Handbook. Presumably this is in addition to the normal hour. Some new Members choose not to attend but most do stay for the orientation talk. Approximately 10 per cent of new Members attend a meeting once only, receiving the Handbook and other materials but not returning to further meetings. A survey in November 2006 of 45 Members who did not attend after 9 weeks or more showed 30 per cent as still following the programme. The proportion of those leaving earlier but continuing to still follow the programme was much lower.

Members attending meetings after the first meeting have a confidential weigh-in with the Leader who will normally give some praise or encouragement and will stamp their card for that week when recording the weight. The more Members who attend, the longer this will take; the fewer who attend, the more time for one-to-one support and the group talk. While waiting for the weigh-in or talk, Members can interact with other Members. In the talk the Leader will normally focus on a different subject each week, no doubt selecting what is topical. Sometimes there is a cookery demonstration. Apart from collecting the week's free handouts, Members can buy other publications, for example The Weight Watchers Shopping and Eating Out Guides or the Weight Watchers Big Book of Menu Plans.

About half of those attending any particular meeting leave after weighing-in and collecting the printed material. A survey of 200 current members in September 2006 showed 65 per cent as replying that they tend to stay for the meeting after the weigh-in. It is clear that a proportion of those who do not stay on at any one meeting do stay on at others. Some do not want to wait while others weigh-in. Some have to relieve a baby-sitter or look after a sick relative. Others may just not want to attend for a talk. There is a wide variety of possible reasons. Equally there is inevitably a wide variety of reasons why a member misses one meeting but attends another.

We now turn to the printed material, starting with the Handbook. This contains 170 pages with stiff covers, and is just over 7 inches square with ring binding. It has seven sections starting with an introduction. The next section is Make Wise Food Choices which includes choosing a food plan and the No Count and Full Choice or Points Plan. This section includes the method of calculating a personal daily points allowance. As an example, a woman of 45 who is 5 feet 3 inches and weighs 9 stone 2lbs, who sits down most of the time and who wants to lose weight, will have a daily allowance of 16 points; a man of the same age, height and weight who wishes to maintain his current weight will have an allowance of 28 points. Extra points can be earned by exercise, including brisk walking. This section is followed by 10 Winning Habits which include Be Active, Get Support, Plan Ahead and Measure and Record; the section takes up 82 pages. There is then a section headed More to Explore, which includes the Full Choice Points Lists to which we have already referred containing some 600 individual values, ranging from 18 points for 100gr of hard margarine down to around 80 items with nil points, many of them being fruit or vegetables. Before 2005 there was a smaller handbook called "Time to Eat" with 88 pages which was introduced in 2003; before then there was no handbook but instead customers were given booklets over a number of weeks.

The Points Finder with Bonus Booster on the reverse side, is a type of slide rule to work out the Points values in a portion of food if the Member knows the calories and saturated fat contained in it and a method of calculating bonus points earned through exercise. The Bonus Booster refers to page 80 of the Handbook for more information. This item can have virtually no use without the Points values in the Handbook.

The Points Tracker form has spaces to fill in the points allowance, bonus points, points used in each meal (including snacks) and points saved for the day for each of 7 days. A new form is provided each week.

The weekly leaflets are on good quality paper with colour illustrations and have a double fold making six pages. These are mainly directed at behaviour and motivation. Examples are Portion Power, Snack Gap Soups, Energise, In a holiday frame of mind, Stop your Saboteurs and Fitness for Health. They focus on two or three habits each week.

The monthly magazine Irresistible! is more substantial, the exhibited example having 36 pages. It is 7¾ inches square. It includes publicity material for other Weight Watchers publications. It contains food content articles, menu plans and seasonally relevant recipes. The August 2006 edition contained advice on holidays.

There are 1,700 self-employed Leaders who are normally recruited from Gold Members, who have reached and stayed within 5lbs of their goal weight for five weeks. Gold Members can attend meetings free as long as they stay within that margin. Those wishing to become Leaders attend preparation courses, a weekend training course and up to six weeks as practice at normal meetings as a trainee. The trainees are observed by Regional trainers who enrol them for a 3-day workshop once they are confident and positive. At the workshop they are given a thorough briefing and background to Weight Watchers, the science behind the materials, the mechanics of meetings including setting up, giving talks and starting sessions. Area managers book and arrange for the halls. The administrative and logistical training comes after the weekend workshop. This includes obtaining the keys to the hall and bringing the scales and materials. 53 Area managers book the halls and pay for them. Leaders are given printed training materials both before the workshop and to take away. There is regular retraining. Meeting guides are prepared centrally for Leaders giving information on the next four weeks leaflets, new products and ideas for talks. Leaders are not obliged to give their telephone numbers to Members although there is a space on the Membership Card; they tend to give their e-mail address. Meetings Members can raise a question between meetings but few do so in reality.

Leaders are paid a meeting fee and an amount based on the number of attendances and on products sold. Some Leaders have up to 12 meetings in a week, but some only have one. The average is between 3 and 4. If the attendance gets large, the meeting may be split for the next week. Leaders may ask Gold Members to help, perhaps with tea or coffee or with weighing in.

At Home customers receive all the printed materials provided to Meetings Members, the material being sent monthly by post in a specially designed folder. The current cost of a subscription for 3 months is £49.85; that for twelve months is £128.40. Instead of the Membership Card, they receive a progress card to record their weight loss. They are not entitled to attend meetings. At Home customers are often shift workers who cannot regularly attend, those who travel, older people in rural areas with transport difficulties or those with a lot of weight to lose who are uncomfortable attending meetings. Many attain their goal weight following Switch successfully.

There were witness statements from five customers, four of whom were Meetings Members. All four Meetings Members have been attending for a year or more; one has been using Weight Watchers for 40 years and another for 6 to 7 years. All four stay for meetings and mention support from the Leader or from the meeting or both. All use recipes from the leaflets and all use the Handbook. Two give the average attendance at their meetings as 40. The other witness recently used At Home for six months until she achieved her target weight loss; she previously attended Meetings but found At Home easier because her job involved travelling away from home; she uses the recipes as well as the Handbook. Mrs Stubbings told the Tribunal that given the experiences they describe, the five witnesses are reasonably representative.

Appellant's Submissions

Mr Milne submitted that the supplies by the Appellant delivered at meetings had two separate components, multiple supplies consisting of standard-rated services consisting of the various services and facilities provided at the meetings and zero-rated supplies consisting of printed materials. Neither component was ancillary to the other although both helped the customer achieve the overall aim of weight loss.

He said that the ruling on 23 January 2004 that there were mixed supplies part standard-rated and part zero-rated was correct both then and now. A split had been readily made.

He said that the question is what was the customer getting. The Handbook was self-standing and independent of meetings. It was impossible to say that it was ancillary to meetings which were only referred to in about three places.

Mr Milne said that in Levob Verzekeringen BV v Staatssecretaris van Financiën (Case C-41/04) [2006] STC 766 the Court of Justice at [22] introduced a second test to the principal and ancillary test in Card Protection Plan Ltd v Customs and Excise Commissioners (Case C-349/96) [1999] STC 270 namely whether there was an indivisible supply. This test was only relevant when as here there were not principal and ancillary supplies, see Briggs J in Tumble Tots (UK) Ltd v Revenue and Customs Commissioners [2007] EWHC 103 (Ch) at [11] where the tee shirt was an indivisible part of the supply although not ancillary. The Levob test had two elements, (i) whether there was a single indivisible economic supply and (ii) whether it would be artificial to split such supply. He said that the fact that Weight Watchers At Home customers obtained the same materials separately was conclusive since the supplies had been divided and the division was not artificial. The fact that that the materials had been supplied separately to others in genuine arm's length transactions showed that the supply of those materials was not indivisible. The Handbook has a resale value and has been sold on E-Bay.

He said that the decision in Customs and Excise Commissioners v Madgett and Baldwin (Cases C-308/96 and C-94/97) [1998] STC 1189 was concerned with the principal and ancillary test. Lord Walker said at [30] in College of Estate Management v Customs and Excise Commissioners [2005] STC 1597 that the principal and ancillary analysis is not always appropriate.

Mr Milne said that each time a customer attended a meeting and paid there was a separate transaction involving both standard-rated and zero-rated supplies. In characterising the supplies, although the contract was the starting point, the real issue was what the customer obtained for the consideration. At the first meeting the Handbook swamped everything else. Thereafter a Member missing a meeting had to pay next time and then received the printed materials from that meeting. He said that there was no dispute that most meetings Members want some facilities in addition to the printed materials although for some this will simply be the opportunity to weigh in; however at the time when a customer pays she knows whether she intends to stay on or has to leave, perhaps to relieve a babysitter.

He submitted that every supply of a service or goods must normally be regarded as distinct and independent, see Card Protection at [29]; the Appellant's supplies did not constitute a single service from an economic point of view which it would be artificial to split; the printed materials were not ancillary to the meetings element and neither predominated, customers being offered both elements even if they only use one.

Mr Milne also referred to Customs and Excise Commissioners v BT plc [1999] STC 758 at 767, Card Protection Plan Ltd v Customs and Excise Commissioners [2001] STC 174 at 183, both in the House of Lords, Appleby v Bowers [2001] STC 185 at 190f, Beynon v Customs and Excise Commissioners [2005] STC 55 per Lord Hoffman and R (International Masters Publications Ltd v Revenue and Customs Commissioners [2006] STC 1450 per Arden LJ.

Submissions for Customs

Mr Mantle accepted that there were a series of transaction with a separate supply at each meeting but submitted that each supply was a single standard-rated supply. He said that the essential features of the transactions must first be ascertained to determine whether the taxable person is making to the customer, being a typical consumer, several distinct supplies or a single supply, citing Levob at [20].

He said that there was common ground as to what was received each time by members. The registration fee was more difficult : he submitted that the customer obtained the right to a package of facilities. In College of Estate Management v Customs and Excise Commissioners [2005] STC 1597 the printed material was the main component but that did not result in there being a separate supply.

He said that in week 2 members only received the Points Tracker and a weekly leaflet, whereas in week 1 they received the Handbook and mutual one-to-one support. He accepted that the Handbook was an essential feature of the Registration Fee. The Appellant had not suggested that the weeks 1 and 2 should be treated differently.

Mr Mantle said that although it is difficult to conceptualise the typical consumer referred to in Card Protection and Levob, this appeal concerned customers for the meetings package. At Home customers who only got printed materials were not typical of Meetings customers. He said that it is agreed that supplies to At Home customers are zero-rated. At Home customers were often people with difficulty in attending meetings : they were not typical of those who could attend. The best evidence of typical customers was the unchallenged statements of five customers who Mrs Stubbings had accepted as being representative and the evidence of Mrs Stubbings herself.

He said that the typical customer wanted to be able to use the Leader's assistance and to interact with other members on occasion, albeit not necessarily every week : the typical feature was that they went to meetings when they needed to. A survey, indicating that 65 per cent tend to stay after weighing, suggested that they go regularly or frequently. The typical feature of meetings customers was that they wanted to lose weight and wanted assistance in doing so otherwise they would subscribe to At Home which would be cheaper. 90 per cent of Meetings Members do return after the first meeting.

He said that the question was not whether other customers wanted the Handbook and printed material separately but whether it was artificial to split the supply to Meetings Members into assistance and printed materials. Even where there are two distinct elements of a transaction both being central and indispensable, there can still be a single supply, see College of Estate Management at [30]. That was the case here. The possibility of the separate sale of the Handbook does not address the question of whether it is artificial to split the supplies to Meetings Members.

Mr Mantle accepted that goods and services are inherently dissociable physically. He said that economic dissociability is not the sole criterion under Levob at [22]; the question is whether division would be artificial. In deciding that question, the Tribunal should ask "why objectively people are likely to want to join", see per Lord Slynn in Card Protection Plan Ltd [2001] STC 174, HL at [25]. The 50 per cent, who leave meetings without waiting for a talk, have the facility to stay if they wish.

He said that the decision of Warren J in Byrom v Revenue and Customs Commissioners [2006] STC 992 at [51] shows the need after College of Estate Management to engage in an overall view of what constituted the supply. Here "assistance in losing weight" or "weight loss programme" were apt descriptions of the supplies. Here there were mutually reinforcing elements of a package offering a range of assistance which should not be split.

Conclusions

The starting point in considering whether there are single composite supplies or separate supplies for VAT purposes must be the decision of the Court of Justice in Levob [2006] STC 766 developing the principles in Card Protection Plan [1999] STC 270 and earlier cases.

Unlike Card Protection Plan which was solely concerned with services, Levob concerned the supply of data carriers with basic software which the appellant in that case contended were goods and customisation and training which were services. At [19] onwards the Court in Levob said as follows:

"[19] … where a transaction comprises a bundle of features and acts, regard must be had to all the circumstances in which the transaction in question takes place in order to determine, firstly, if there were two or more distinct supplies or one single supply and, secondly, whether, in the latter case, that single supply is to be regarded as a supply of services (see, to that effect, Faaborg-Gelting Linien A/S v Finanzamt Flensburg (Case C231/94) [1996] STC 774 at [12] to [14] and Card Protection Plan at [28] and [29].

[20] Taking into account, firstly, that it follows from Article 2.1 of the Sixth Directive that every transaction must normally be regarded as distinct and independent and, secondly, that a transaction which comprises a single supply from an economic point of view should not be artificially split, so as not to distort the functioning of the VAT system, the essential features of the transaction must in the first place be ascertained in order to determine whether the taxable person is making to the customer, being a typical customer, several distinct principal supplies or a single supply (see by analogy Card Protection Plan at [29]).

[21] In that regard, the Court has held that there is a single supply in particular in cases where one or more elements are to be regarded as constituting the principal supply, whilst one or more elements are to be regarded, by contrast, as ancillary supplies which share the tax treatment of the principal supply (Card Protection Plan at [30] and Customs and Excise Commissioners v Prunback Ltd (Case C-34/99) [2001] TC 803 at [45]).

[22] The same is true where two or more elements or acts supplied by the taxable person to the customer, being a typical consumer, are so closely linked that they form, objectively, a single, indivisible economic supply, which it would be artificial to split."

We accept the submission of Mr Milne with which Mr Mantle did not disagree that [22] contains a test to be applied when [21] does not apply. The use of the words "in particular" in [21] which replicates [30] in Card Protection Plan supports this. Furthermore the Court said in terms at [27] in Card Protection Plan that "it is not possible to give exhaustive guidance". The same point was made by Lord Walker at [33] in College of Estate Management.

It is clear from Card Protection Plan that the fact that a single price is charged is not decisive but that this may suggest a single supply, see [31]; the circumstances may suggest that customers intended to purchase two distinct supplies in which case the price must be apportioned by the simplest possible method.

Levob shows at [24] that the economic purpose of the transaction is potentially relevant as is the question of whether the separate elements are of any economic use by themselves. The reference to economic is in our view included because the supply in that case was for the purpose of an economic activity of the recipient. That does not apply here; however the purpose of the recipient must be relevant notwithstanding that the customer is not using the supply for an economic purpose.

Mr Mantle placed considerable emphasis on the reference at [22] to a typical consumer. With supplies such as those in the present case it is far from easy, if it is possible at all, to identify a typical consumer. Although Mrs Stubbings said that the five witnesses were reasonably representative given the experiences they describe, that is clearly not the same as treating them as typical. Indeed in one sense they were manifestly atypical in that all had been following Weight Watchers for a year or more apart from the At Home customer who had reached her target weight. The significant disparity between an annual enrolment rate of 1 million and the average weekly attendance rate of 150,000 to 350,000, makes it clear that the lapse rate within a twelve month period is considerable and the level of consistent attendance at meetings is relatively low. Looked at another way if there were 80 members, the maximum number mentioned, at each of 6,500 weekly meetings, the capacity would only be 520,000 a week, which is roughly half of the annual enrolments.

Perhaps more important is the wide variety of reasons which Members have for attending or not attending and for staying after weighing-in or not doing so. Some welcome the social element. Others will not wish to tell other Members about their weight problems or listen to others speak about theirs. Some will be motivated by a group discussion, others will be more interested in recipes. Some will not appreciate queuing to be weighed, perhaps attending primarily for the discipline of the weigh-in. Some have busy lives, others have time to spare.

In our judgment the reference to a typical consumer is really directed at the need to decide objectively whether there is an indivisible supply which it would be artificial to split. If there is a one-off transaction involving separate elements, there cannot be a typical consumer. "Typical" is defined in the Shorter Oxford English Dictionary as "serving as a representative specimen of a class or kind." It is not possible to have a representative specimen of a class of one. Equally it is of little meaning to seek to identify a typical consumer when it is clear that consumers have widely differing attributes and motives which are potentially relevant. We doubt that we would have been any nearer to identifying a typical customer if we had heard 100 witnesses. In the present case we find it impossible to ascribe attributes to a representative consumer unless they are so general as to be devoid of real meaning for the purpose of deciding whether there is a single indivisible supply.

In our judgment it is not helpful in a case such as this to label or describe the transaction before deciding whether there is a single supply. Inevitably when considering alternative arguments, labels may be attached if only as a shorthand form of reference, however the characterisation of the supply or supplies as goods or services and as exempt or standard-rated can only be determined once it has been determined whether it is a single supply or not.

Nevertheless when applying the second test in Levob, although we cannot meaningfully identify a typical consumer, we can consider objectively what is supplied to Members in the light of what are their minimum attributes. The second test cannot depend on the differing aims or intentions of customers. In Beynon v Customs and Excise Commissioners [2005] STC 55 Lord Hoffman referred at [32] to the need "for practical reasons to have a rate which applies to all transactions of a certain kind."

Mr Mantle relied strongly on the decision of the House of Lords in College of Estate Management. In that case the decision of the Tribunal that there was a single supply of education and that the printed materials were not an end in themselves for the students was upheld. However it is important to note that the House of Lords did not purport to make its own positive finding. Lord Walker at [31] said this,

"The evaluative findings which the Tribunal made at paragraphs 61-64 of its decision, set out above, were conclusions which were open to it on the evidence."

Lord Rodger at [13] said that the Tribunal was entitled to reach their conclusion on the basis of the findings which they made. The position would have been quite different if the House of Lords had reached the contrary decision to that of the Tribunal.

In the present case although separate fees are charged at the initial meeting for registration and for attendance at that meeting, a customer cannot attend as a Member without paying the registration fee, except when there is a special promotion, and cannot register without paying the meeting fee for that week. We conclude that as a matter of contract and VAT law there is a single transaction at the first Meeting for a consideration comprising both fees. For this consideration the Member is supplied with the Handbook with Points Finder and Bonus Booster insert and is given an orientation talk in addition to the supplies made at weekly meetings thereafter; the Member is also given the right to attend further meetings without paying further registration fees.

Each time the Member attends a meeting thereafter there is a further transaction for a separate consideration. There is no contractual obligation to attend further meetings. No part of the further consideration is attributable to the Handbook and insert which has already been supplied or to the other printed materials already supplied. That Member already has the Handbook and thus only attends to obtain the services provided at the further meeting and the further printed materials. It was not suggested by Mr Mantle for Customs that the further printed material was ancillary to the services. Since the weekly leaflets are on good quality paper with substantial content and the monthly magazine "Irresistible!" runs to 34 pages, we consider that they could not be supplied separately "without a substantial effect on the package price charged", see Madgett & Baldwin at [26].

The issue therefore is whether they are so closely linked to the services provided at the Meetings that they form objectively a single indivisible supply which it would be artificial to split, see Levob at [22]. The weekly leaflet is clearly not indivisible from weighing-in and from any encouragement given by the Leader on weighing-in. Nor is it indivisible from interaction with other Members. At some meetings the Leader's talk and discussion focus on the week's leaflet, but that depends on the Leader and the talk may have nothing to do with the leaflet. If the talk brings in the weekly leaflet it can only touch on parts of it. We do not consider that the printed material is indivisible from the services provided at the meetings. If the word "economic" in [22] of Levob is relevant to a case such as this, it seems to us that it can only be in the sense of being indivisible in a practical business sense. We can see no reason why it would be impractical to charge separately for the weekly and monthly leaflets magazine just as a charge is made for Weight Watchers magazine. Nor can we see anything artificial in the separation.

In our judgment it is also impossible to say that there are single indivisible supplies at the first meeting. We do not accept Mr Milne's submission that the fact that Weight Watchers At Home obtained the same materials separately is conclusive, although it is a relevant factor. It cannot be said that the Handbook and printed materials would be of no use without the services provided at the meeting. At Home customers have no meeting. Nor do we consider that it can be said that the services provided at the first meeting as a whole would be of no use without the Handbook. Until 2003 there was no Handbook although there was a series of booklets. We qualify the last sentence but one by the words "as a whole" because the orientation talk which is directed to the programme set out in the Handbook would be of no use without the Handbook. In addition to concluding that there are not single indivisible supplies at the first meeting, we consider that there is nothing artificial about splitting them.

Our conclusion is that there were mixed supplies both at the first meeting and thereafter. We observe that the apportionment will not however be the same since the zero-rated content of the initial meeting is clearly greater. The appeal is allowed. The Appellant is entitled to costs. Any application under Rule 29 must be made within 3 months.

THEODORE WALLACE

CHAIRMAN

RELEASED: 8 March 2007

LON/05/400