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The taxpayer rented chairs from his salon to self-employed hairdressers. Each stylist had an area for his exclusive use but all had use of the general facilities such as wash basins and waiting area.

The VAT tribunal said that the taxpayer was supplying a grant of an interest in or right over land or of any licence to occupy land within the meaning of VATA 1994 Sch 9 part 2 group1 item 1 which implemented of the Sixth Directive.

Thus the supply was exempt from VAT. HMRC appealed.

The High Court said that the supply to self-employed hairdressers of rented chairs could not be categorised as the letting of immoveable property falling within the exemption in Article 13B(b).

Such lettings would normally be taken to entail a landlord and tenant in a relatively passive activity of an industrial or commercial kind.

However the tribunal had...