Key Facts
- •Mediability Ltd, an advertising agency, is appealing VAT assessments from 2001-2004.
- •The appeals concern the VAT liability of advertising services supplied to Wilmslow PLC via Karacus Ltd, a Gibraltar-based company.
- •Mediability initially argued its services were outside the scope of UK VAT because they were supplied to Karacus Ltd in Gibraltar.
- •HMRC argued the economic reality was that the services were supplied to Wilmslow PLC in the UK, creating an artificial scheme to avoid VAT.
- •The case hinges on the 'economic reality' of the transactions and whether it constitutes an abuse of rights under EU law.
Legal Principles
Rule 8(3)(c) allows for striking out appeals with no reasonable prospect of success or as an abuse of process.
Tribunal Rules
The 'economic reality' test for determining the place of supply of services, prioritizing substance over form.
WHA v HMRC [2013] UKSC 24
Abuse of rights: A scheme is abusive if it's contrary to the purpose of legislation and has the essential aim of obtaining a tax advantage.
HMRC v Pendragon plc [2015] UKSC 37; Halifax plc [2006] STC 919
Findings in a previous case are not binding on a party who was not involved in that case, although they may be relevant evidence.
Hollington v F Hewthorn & Co Ltd [1943] KB 587
Outcomes
Appeals struck out.
No reasonable prospect of success due to lack of credible evidence to support Mediability's claims and clear evidence of a tax avoidance scheme.
Appeals also considered an abuse of process.
Re-litigation of the same issues already decided in a related case, constituting a collateral attack. Furthermore, it wasted court resources and was manifestly unfair.