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Wrong test

27 November 2012
Issue: 4381 / Categories: Tax cases , VAT
CRC v European Tour Operators Association, Upper Tribunal (Tax and Chancery Chamber)

The taxpayer trade association submitted in June 2008 a voluntary disclosure of VAT overpaid in respect of membership subscriptions which the organisation said should be exempt from VAT under VATA 1994 Sch 9 group 9 item 1(d).

HMRC rejected the claim.

The First-tier Tribunal allowed the taxpayer’s appeal; the taxman appealed to the Upper Tribunal which expressed concern about the “apparent logical gap in the reasoning of the First-tier Tribunal”.

The judge said the “primary purpose” test was objective rather than subjective and the First-tier Tribunal “erred in law” when it directed itself that the primary purpose of the association was “what its directors and members consider to be the most important matter it is seeking to achieve or doing in return for membership subscriptions”.

It was the stated objects and the actual activities of the taxpayer that were relevant. The subjective views of the...

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