The Prudential Assurance Company Limited v The Commissioners for HMRC
[2024] EWCA Civ 300
The Commissioners for HMRC v The Prudential Assurance Company Limited
6 March 2023
[2023] UKUT 54 (TCC)
Upper Tribunal
Two companies were in a special tax group. One did work for the other, but got paid after leaving the group. The taxman said they owed VAT on the late payment because they weren't in the special group when the payment happened. The court agreed.
Key Facts
- •Silverfleet Capital Ltd (SCL) provided investment management services to Prudential Assurance Company Ltd (Prudential).
- •SCL and Prudential were in the same VAT group when the services were rendered.
- •Performance fees were invoiced and paid after SCL left the VAT group.
- •Prudential argued the payments were outside the scope of VAT due to VAT grouping rules.
- •HMRC argued the payments were liable to VAT because the time of supply was after SCL left the group.
Legal Principles
VAT is charged on the supply of services for consideration within the territory of a Member State.
Article 2(1)(c) of the Principal VAT Directive (PVD) and Section 1(1) VATA 1994
Time of supply for continuous services is determined by when payment is received or a VAT invoice is issued.
Regulation 90 of the Value Added Tax Regulations 1995 and Section 6 VATA 1994
Supplies between members of a VAT group are disregarded for VAT purposes.
Section 43(1)(a) VATA 1994
The business of a VAT group member is treated as carried on by the representative member.
Section 43(1) VATA 1994
Outcomes
HMRC's appeal was allowed.
The time of supply rules (Regulation 90) determined that the services were supplied when invoiced, after SCL left the VAT group. Therefore, the VAT grouping rules (Section 43(1)(a)) did not apply, and VAT was due.
Prudential's appeal to the First-tier Tribunal was dismissed.
The First-tier Tribunal erred in its interpretation of the interaction between the time of supply rules and the VAT grouping provisions. It incorrectly relied on the case of *BJ Rice*, which was distinguishable on its facts.
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