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L Ltd offered a rapid weight loss system whereby individuals ate food substitute instead of food.
In addition, counselling and advice was provided. The issue before the court was whether there were two separate supplies, i.e. one of food and one of support services, or whether there was only one single composite supply.
The VAT tribunal held that there were two separate supplies, so HMRC appealed.
Disagreeing with the tribunal, the High Court judge ruled that it would be artificial to split the transaction into separate elements of food packs and support services.
The typical customer bought the combination of food packs and support services.
Economically it would not make sense for the customer to pay separately for the two supplies.
It was a single supply of services and would therefore be standard rated.
