Card Protection Plan Ltd v Customs and Excise Commissioners
Whether a transaction is a single supply or several supplies for VAT depends on its economic reality from the point of view of the typical customer, and an ancillary service is treated in the same way as the principal supply.
Facts
Card Protection Plan offered a plan to holders of credit cards, under which, in return for an annual fee, it registered their cards and provided a service of notifying the card issuers if the cards were lost or stolen, together with insurance against the losses which the cardholder might suffer, and other services such as replacement cards and emergency cash. Card Protection Plan argued that the supply was a single exempt supply of insurance. Customs and Excise argued that it was a single standard rated supply of card registration services. The House of Lords referred questions to the Court of Justice.
Legal principle
The Court of Justice held that, where a transaction comprises a bundle of features and acts, regard must be had to all the circumstances in which it takes place, to determine whether there are two or more distinct supplies or one single supply. Every supply must normally be regarded as distinct and independent, but a supply which comprises a single service from an economic point of view should not be artificially split. There is a single supply where one or more elements constitute the principal service, while the others are ancillary services which share the tax treatment of the principal service. A service is ancillary if it does not constitute for customers an aim in itself, but a means of better enjoying the principal service. It was for the national court to apply the test, and the House of Lords later held that the principal supply was insurance.
Related cases on vAT and indirect taxes
- Esso Petroleum Co Ltd v Commissioners of Customs and Excise [1976] 1 WLR 1
- Halifax plc v Customs and Excise Commissioners (2006) Case C-255/02
- Kittel v Belgian State (2006) Joined Cases C-439/04 and C-440/04
- Littlewoods Ltd v Revenue and Customs Commissioners [2017] UKSC 70
- Revenue and Customs Commissioners v Procter & Gamble UK [2009] EWCA Civ 407
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