Value Added Tax Act 1994: sections 24, 26 and 43. Value Added Tax Regulations 1995: regulation 101. Whether section 43 of the VAT Act 1994 allows the actual intention of the VAT group representative as to economic activity and as to taxable supplies could be matched to the deemed supply of services to the group representative. Held: no. Whether services received and paid for by an acquiring company for a takeover, and for fundraising associated with the takeover, are services used or to be used for the purpose of any business carried on or to be carried on by the acquiring company via the acquired company for the purposes of section 24 of the VAT Act 1994, and whether taxable supplies to be made by the acquired company can be relied on as taxable supplies of the acquiring company for the purposes of section 26 of that act. Applied: BAA Limited v HMRC [2013] EWCA Civ 112; MVM Magyar Villamos Művek Zrt v Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatóság [2017] EUECJ C-28/16_O; Beteiligungsgesellschaft Larentia + Minerva mbH & Co. KG v Finanzamt Nordenham (C-108/14), [2015] EUECJ C-108/14, [2015] STC 2101, ECLI:EU:C:2015:496, EU:C:2015:496, [2015] BVC 33 and Finanzamt Hamburg-Mitte v Marenave Schiffahrts AG (C 109/14), [2015] EUECJ C-108/14; Kretztechnik AG v Finanzamt Linz [2005] EUECJ C-465/03; HMRC v Frank A Smart & Son Ltd [2019] UKSC 39. Held: (a) the fundraising was a purpose of the takeover and was a purpose of the acquiring company; (b) the taxable supplies, and the economic activity, of the acquired company could in principle be relied on by the acquiring company to satisfy sections 24 and 26 and regulation 101; (c) but the funds raised were used to acquire assets in the form of entities that would be customers of the acquired company; (d) the use of those acquired assets for that purpose did not bring the acquired company’s taxable supplies and its economic activity (or intention as to both) within the authorities that enabled such supplies and such activity to be relied on as “downstream” taxable supplies and “downstream” economic activity of the acquiring company. Frank Smart distinguished on the facts: the assets acquired with the funds raised in Frank Smart were assets that would be used by the acquiring body for its own economic activity whereas in the present case the assets acquired with the funds raised were to be used as consumers of the acquired company’s taxable supplies.
Source: bailii.org
