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Strong roots
Key points
- Errol Willy Salons’ victory may be superseded by changes in legislation.
- HMRC claimed that Errol Willy had added too many additional services to the beauticians using his rooms – changing the character of the supply.
- The facts of the case were distinguishable from the facts in Byrom.
- The Mesto case provides the predominance test to apply in characterising a supply for VAT purposes.
I recently represented Errol Willy Salons Limited (Errol Willy) in an appeal in the First-tier Tribunal following HMRC’s decision to assess the company for VAT allegedly under-declared on income from room rentals. Happily the appeal was successful but the case demonstrates the scope of HMRC’s ambition to narrow the exemption which applies to land-related supplies.
The department’s pursuit of tax in this case coincided with the government’s recent call for evidence on the scope of the VAT exemption for land suggesting that the...
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