Hairdressers' supplies

The taxpayers owned two separate hairdressing salons. Self-employed hairdressers worked from the salons using the various facilities provided in return for certain payments.

The VAT tribunal held in both cases that the supplies by the taxpayers to the hairdressers did not include the 'leasing or letting of immovable property' within the exception in VATA 1994 Sch 9 Part 2 group 1 item 1. Further if the supplies did fall within the exception they should be characterised as single supplies of hairdressers' facilities and should be standard rated.

The taxpayers appealed.

The High Court judge ruled that the exemption did not apply to a licence to occupy land which was only one element of a package of supplies. He said that the various facilities provided to the hairdressers were a single indivisible economic supply which it would be artificial to split. The facilities were closely interdependent...