Bangla Lounge (Harborne) & Anor v The Commissioners for HMRC
[2024] UKFTT 831 (TC)
Queenscourt Limited v The Commissioners for HMRC
3 June 2024
[2024] UKFTT 460 (TC)
First-tier Tribunal
KFC's meal deal dips are taxed as part of the hot food, not separately. The tax office can take back wrongly repaid tax, even if they made a mistake earlier, unless it's really unfair to them. The court decided it wasn't unfair in this case, despite KFC arguing they'd changed their business plans because of the tax issue.
Key Facts
- •Queenscourt Limited (Queenscourt) supplied dip pots as part of KFC takeaway meal deals.
- •Initially, Queenscourt treated dip pots as part of a single standard-rated supply, then submitted error correction notices to reclaim VAT.
- •HMRC initially repaid VAT but later issued recovery assessments under s 80(4A) VATA.
- •Queenscourt appealed, arguing dip pots were a separate zero-rated supply, and/or that recovery assessments were invalid due to legitimate expectation or estoppel by convention.
- •The appeals involved a total tax amount of under £3 million and 17 related cases.
- •HMRC's late raising of a jurisdictional challenge regarding legitimate expectation led to applications for relief from sanctions and permission to rely on new points.
Legal Principles
Whether a supply of multiple items in a single transaction is a single or multiple supply for VAT purposes.
European Court of Justice (ECJ) case law, Card Protection Plan and Levob.
Principles for determining single vs. multiple supplies, including consideration of the typical consumer and the element of choice.
HMRC v The Honourable Society of Middle Temple [2013] UKUT 0250 (TCC)
Validity of recovery assessments under s 80(4A) VATA.
Value Added Tax Act 1994 (VATA), sections 80(4A), 80(4AA).
Jurisdiction of the First-tier Tribunal to consider arguments based on legitimate expectation.
Various cases including KSM Henryk Zeman Sp Z.o.o. v HMRC [2021] UKUT 182 (TCC), David Beadle v HMRC [2020] EWCA Civ 562, R v Inland Revenue Commissioners, ex parte MFK Underwriting Agencies Limited [1990] 1 WLR 1545.
Principles of estoppel by convention.
Tinkler v HMRC [2021] UKSC 39
Outcomes
Appeal dismissed.
The supply of dip pots as part of a takeaway meal deal is a single standard-rated supply of hot food, not a separate zero-rated supply. The recovery assessments were valid, and neither legitimate expectation nor estoppel by convention prevented HMRC from recovering the wrongly credited tax.
HMRC granted permission to argue lack of Tribunal jurisdiction to consider legitimate expectation.
While HMRC seriously breached Rule 25(2) of the Tribunal Rules, the jurisdictional point was fundamental and could be addressed without significant prejudice to Queenscourt.
Queenscourt granted permission to rely on estoppel by convention.
The argument had reasonable prospects of success, could be addressed within the hearing time, and any potential prejudice to HMRC was outweighed by the interests of justice.
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