The Commissioners for HMRC v The Prudential Assurance Company Limited
[2023] UKUT 54 (TCC)
The Prudential Assurance Company Limited v The Commissioners for HMRC
26 March 2024
[2024] EWCA Civ 300
Court of Appeal
Two companies were in a VAT group, meaning transactions between them were tax-free. One company left the group, then billed the other. The court decided that the tax rules apply at the time of the bill, not when the work was done, so the tax was due.
Key Facts
- •Prudential (appellant) and Silverfleet were members of a VAT group.
- •Silverfleet provided investment management services to Prudential.
- •Silverfleet left the VAT group before invoicing Prudential for performance fees.
- •The dispute concerns whether VAT is payable on the performance fees.
- •The First-tier Tribunal (FTT) ruled in favor of Prudential, but the Upper Tribunal (UT) reversed the decision.
Legal Principles
Intra-group supplies are disregarded for VAT purposes.
Section 43(1)(a) of the Value Added Tax Act 1994 (VATA 1994)
Continuous supplies of services are treated as supplied at the time of invoice or payment.
Regulation 90 of the Value Added Tax Regulations 1995 (VAT Regulations)
Time of supply rules determine when, but not whether, VAT is chargeable.
B J Rice & Associates v Customs and Excise Commissioners [1996] STC 581
The time of supply rules can affect the nature of a supply, not just the timing.
Customs and Excise Commissioners v Thorn Materials Supply Ltd [1998] 1 WLR 1106; Svenska International plc v Customs and Excise Commissioners [1999] 1 WLR 769; Royal & Sun Alliance Insurance Group plc v Customs and Excise Commissioners [2003] UKHL 29
A VAT group is treated as a single taxable person.
Article 11 of Council Directive 2006/112/EC; Case C-85/11 European Commission v Ireland
Outcomes
Appeal dismissed.
The Court of Appeal held that Regulation 90 of the VAT Regulations determines the time of supply, and since Silverfleet was not a member of the VAT group at that time, section 43 of VATA 1994 did not apply. The court found that the time of supply rules have consequences beyond just timing and that B J Rice is no longer binding precedent.
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