Weekly VAT News

Generic Maths Limited: Whether online maths product is a VAT exempt examination service – FTT

Generic Maths Limited (GM) considered that its ‘ConquerMaths’ product was a tool that provided assessments of a pupil’s maths ability, and as such was an ‘examination service’, and VAT exempt. HMRC considered that the product was an online revision/learning aid tool, and standard rated for VAT purposes since GM was not an eligible body, and assessed GM for the VAT on its supplies of the product. The FTT has agreed with HMRC, and held that the product was not a supply of examination services. The FTT considered that the correct test for determining the nature of GM’s supplies was an objective test, based on how they would be characterised by the typical consumer. On that basis, ConquerMaths was a teaching product designed to improve maths understanding, not an examination service. Furthermore, if the correct test was rather a functional test, the result would be the same. Although ‘examination services’ is wider than formal public examinations, it is not wide enough to encompass a product such as ConquerMaths. The FTT also found that HMRC’s assessment had been made using best judgement, and HMRC’s decision was reasonable and not arbitrary. The FTT dismissed GM’s appeal. (Contact: Nick Comer)

Align Technology Switzerland GmbH & Anor: Whether aligners are dental prostheses – FTT

The First-tier Tribunal has considered the classification of dental aligners for VAT purposes and whether they constitute dental prostheses within Items 2 and 2A of Group 7, Schedule 9, VATA 1994, and were therefore VAT exempt. Align Technology Switzerland GmbH and Align Technology BV (herein referred to together as ‘Align’) make removeable orthodontic appliances used to correct misaligned teeth (Aligners). Align treated its supplies of Aligners as VAT exempt as supplies of dental prostheses. HMRC considered that Aligners were not dental prostheses, and that supplies of Aligners should accordingly be standard rated. The VAT exemption applies where dental prostheses are supplied by a dentist or dental technician; Align does employ dental professionals registered in the UK. Prior to the hearing HMRC noted that they reserved the right to raise the issue of whether the supply was made by a dentist/dental technician in subsequent proceedings, such that the sole question in this hearing was whether Aligners constitute prostheses for VAT purposes. The FTT has held that Aligners are dental prostheses. The FTT considered the meaning of ‘prosthesis’ in everyday language, referring to English language and, in particular, specialist medical dictionaries, concluding that the word ‘prosthesis’ is not limited to replacements for a body part, but can include devices that improve bodily function. Accordingly, ‘dental prostheses’ include “orthodontic appliances used to move a person’s teeth”. The FTT also found that VAT exemption for the supply of Aligners would be consistent with the objectives of the exemption for dental prostheses, namely to ensure the affordability and accessibility of health-related products. The FTT also reviewed some EU VAT Committee working papers, but did not follow the Committee’s guidelines on this issue. The FTT allowed Align’s appeal. (Contact: Chris Cherrill)

Trade agreements

The government has announced that the UK and India have concluded talks on a new Free Trade Agreement. The main components of the deal include tariff reductions, agreement on rules of origin, customs and trade facilitation, access for some UK businesses to India’s government procurement market, and access for certain UK service suppliers to the Indian market. For a summary of the announcements and what they mean for business, see UK-India trade agreement: what do we know about the deal? The government has also announced an outline agreement with the United States on tariffs and trade. (Contact: Andrew Clarke)

VAT case calendar

On 19 May, the Upper Tribunal will hear the taxpayer and HMRC appeals against the First-tier Tribunal decision in Elphysic Ltd & Ors on mini umbrella company fraud.