Vital supplier

The taxpayer one of the four inns of court owned land in the Temple London on which it let most of the buildings and had opted to tax the land under VATA 1994 Sch 10 para 2.

Historically the taxpayer owned a network of underground pipes that carried water to the chambers of the inn. Thames Water made a supply on a metered basis to the taxpayer which in turn supplied its tenants.

The supply of cold water is zero rated for VAT under Sch 8 group 2 item 2. The taxpayer did not account for VAT on the amount it charged to its tenants.

HMRC decided the supply together with the leases of land formed a single supply chargeable to VAT at the standard rate. The taxpayer argued there were two separate supplies: the standard-rated supply of land and the zero-rated supply...