TaxSource Total

Here you can access and search summaries of relevant Irish, UK and international case law written by Chartered Accountants Ireland

The case summaries are displayed per year, per month and by case title with links to the case source

Healthcare Leasing Ltd

The issue was whether supplies by the appellant were made, or treated as made, in the UK.

The appellant was a company incorporated and legally constituted in Guernsey. It was resident in Guernsey, operated from premises in Guernsey and held directors’ meetings there. The company carried on the business of leasing dental equipment to dentists, predominantly in the UK. It registered for VAT in the UK as an overseas trader in order to recover VAT on the purchase of equipment and to account for VAT on the sales of such equipment.

The appellant entered into an agreement with a UK company called Gilt Finance and Leasing Ltd (GF), an entity related to the appellant but which was legally and commercially separate. The agreement provided that GF would supply various services: promotion and marketing; telephone support for customers; representation in the UK to ensure compliance with the Consumer Credit Act 1974; and any other incidental services that may be required. The agreement further provided that GF would not ‘conclude, agree or finalise a binding contract on behalf of or otherwise between Healthcare Leasing Ltd and any other party’. In October 2006, the contract was terminated and from that time the appellant operated in the UK market without an intermediary.

In a typical leasing transaction, a dentist looking to lease equipment would contact a broker to organise funding. If the broker selected the appellant, he would submit a proposal form to GF, which, after performing checks, would forward the proposal to the appellant in Guernsey. When the appellant was satisfied, it would issue an approval letter to the broker. The equipment would be ordered and installed at the dental practice and the broker would arrange for a leasing agreement to be signed by the dentist. Following checks on the documentation, the appellant would countersign the leasing agreement, authorise payment of the supplier's invoice and obtain title to the equipment. At the end of the lease, the equipment would usually be sold by the appellant with VAT on the sale being accounted for in the UK.

The commissioners issued a series of assessments to the appellant on the basis that the use and supply of equipment was in the UK by reason of having a fixed establishment there, namely GF. The commissioners pointed to the fact that the appellant and GF had common owners in the form of two directors, denoting a lack of independence. The source of funding for the transactions was in the UK and GF was the main point of control both of suppliers and brokers. In reality, maintained the commissioners, the appellant obtained and concluded deals in the UK through GF. In the opinion of the commissioners, GF did more than was required of it under the agreement and the only rational conclusion was that GF was the appellant's fixed establishment and that the leasing transactions were, therefore, subject to VAT in the UK.

The appellant argued that treating the supplies as made from Guernsey was both factually correct and rational. There was no fixed establishment of the appellant in the UK, but even if there was such an establishment, the supplies were not made from GF. At most, GF provided preparatory services; it did not make supplies of equipment leasing. The appellant urged the tribunal to discharge the assessments.

The tribunal allowed the company's appeal.

  1. In accordance with the judgment of the Court of Appeal in R & C Commrs v Zurich Insurance Co [2007] BVC 283, the principles established by the European Court of Justice in Berkholz v Finanzamt Hamburg-Mitte-Altstadt (Case 168/84) (1985) 2 BVC 200,178 were applicable and neither a more modern nor a different approach should be applied.
  2. The supplies were made by the appellant in Guernsey from its fixed establishment.
  3. The appellant had no fixed establishment in the UK. GF was not a fixed place of business of the appellant in the UK.
  4. An objective observer would consider it rational to treat the supplies as made from Guernsey. This accorded with the factual and economic reality of the situation and did not lead to any distortion of competition.

No. 20,260