© 2025 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
C5. Single or multiple supplies
GENERAL​
​
Presumption of separateness​
​
- Every supply must normally be regarded as distinct and independent
"[26] According to settled case-law, it follows from Article 2 of the Sixth Directive that every supply must normally be regarded as distinct and independent..."​(Purple Parking Ltd C-117/11)
​
- Supplies that are treated as single supply not similar to those supplies separately for fiscal neutrality purposes
​
"[47] That conclusion cannot be called into question by the argument advanced by the German Government and implicitly based on the principle of fiscal neutrality, according to which the supply of heating by an association of residential property owners to the property owners belonging to that association should be exempt from VAT in order to ensure equal treatment for VAT purposes between, on the one hand, the owners and tenants of single family homes not subject to VAT, who are respectively exempt from VAT, where they supply heat to themselves as property owners or where they simultaneously lease the house and the heating system, and on the other, the co-owners of properties subject to VAT, where the association to which they belong supplies them with heating.
[48] It is true that, according to established case-law, the principle of fiscal neutrality, which was intended by the EU legislature to reflect, in matters relating to VAT, the general principle of equal treatment (judgment of 29 October 2009, NCC Construction Danmark, C-174/08, EU:C:2009:669, paragraph 41 and the case-law cited), precludes in particular treating similar goods and supplies of services, which are thus in competition with each other, differently for VAT purposes (judgment of 14 December 2017, Avon Cosmetics, C-305/16, EU:C:2017:970, paragraph 52 and the case-law cited). Furthermore, it is apparent from the case-law of the Court that that principle must be interpreted as meaning that a difference in treatment for the purposes of VAT of two deliveries of goods or two supplies of services which are identical or similar from the point of view of the consumer and meet the same needs of the consumer is sufficient to establish an infringement of that principle (see, to that effect, judgment of 10 November 2011, Rank Group, C-259/10 and C-260/10, EU:C:2011:719, paragraph 36). However, it must be pointed out that the line of argument advanced by the German Government is based on a comparison of supplies of goods to two clearly distinct groups of consumers and that the fact that those groups are potentially treated differently is merely the consequence of the choice made by the persons belonging to those groups to own or not to own a dwelling in a building under co-ownership." (WEG C-449/19)
​
[39] It is clear from the paragraphs set out above that the principle of fiscal neutrality is concerned with ensuring that supplies of similar goods and services, which are thus in competition with each other, are treated the same way for VAT purposes. The CJEU clearly states, at para 39 of Purple Parking, that 'the treatment of several services as a single supply for the purposes of VAT necessarily leads to tax treatment different from that that those services would have received if they had been supplied separately … Accordingly, a complex supply of services consisting of several elements is not automatically similar to the supply of those elements separately'. This passage shows that the principle of fiscal neutrality is not a factor to be taken into account in determining whether a transaction consisting of more than one element should be regarded as a single supply or as several independent supplies. Further, para 40 indicates that the fact that the UK zero rates the supply of cold water is not relevant to the question whether the different elements provided by the Middle Temple are a single supply of services or several supplies." (HMRC v. Middle Temple [2013] UKUT 250 (TCC), Judges Sinfield and Gort)
​
Invoicing and pricing​
​
- Invoicing and pricing arrangements not determinative
"[57] In the case of supplies in connection with a party catering business such as that at issue in the main proceedings in Case C‑502/09, it may be noted inter alia that the existence of a single transaction is independent of whether the caterer issues a single invoice covering all the elements or issues a separate invoice for the supply of the food (see, to that effect, CPP, paragraph 31; Levob Verzekeringen and OV Bank, paragraph 25; and Everything Everywhere, paragraph 29)." (Bog C-497/09)
​
"[25] The fact, highlighted in the question, that separate prices were contractually stipulated for the supply of the basic software, on the one hand, and for its customisation, on the other, is not of itself decisive. Such a fact cannot affect the objective close link which has just been shown with regard to that supply and that customisation nor the fact that they form part of a single economic transaction (see, to that effect, CPP, paragraph 31)" (Levob C-41/04)
​​
"[29]...But, as Lord Hope of Craighead said in the British Telecommunications Plc case, at p1385, the fact that a price for the supply in question can be separately identified is not determinative." (Benyon v. HMRC [2004] UKHL 53)
​
"On the authorities it is clear that the fact that one "package price" is charged without separate charge for individual supplies being specified does not prevent there being two separate supplies for VAT purposes. In my opinion the fact that separate charges are identified in a contract or on an invoice does not on a consideration of all the circumstances necessarily prevent the various supplies from constituting one composite transaction nor does it prevent one supply from being ancillary to another supply which for VAT purposes is the dominant supply." (CCE v. British Telecommunications Plc [1999] UKHL 3)
​
Supplies by different taxable persons​
​
- Not possible to combine supplies by two suppliers under two contract to result in one supply
"[223] Other than the decisions of the CJEU in Bookit and National Exhibition Centre (and the decision of the Upper Tribunal in SilverDoor) all the authorities cited to us have decided that it is not possible to fuse supplies by two suppliers into a single supply for VAT purposes. This was acknowledged by Mr Southern when he cited the decisions of the courts in Wellington Private Hospital, Nell Gwynn, and Telewest. We would also add Lower Mill v HMRC [2010] UKUT 463 (TCC)...
[224] We agree with Mr Donmall that the decisions of the CJEU in both Bookit and National Exhibition Centre must be given careful analysis. Although the decisions were not based on the doctrine of abuse of rights, the background to both cases was tax avoidance, where the supplier group sought to recharacterise part of the consideration payable for tickets as a (VAT exempt) card processing charge. We agree with Mr Donmall that the CJEU's decision is based on the principle that the charges incurred in the process used by a supplier to structure receipt of payments forms part of the consideration for the supply. We consider, and find, that the CJEU was making no wider statement of principle.
...
[227] We find that neither Bookit nor National Exhibition Centre have altered the general principle that it is not possible to combine supplies by two suppliers under two contracts to result in one supply for VAT purposes. We find that the supplies of land made by the Lessors and the supplies of Maintenance Services made by the MTCs are separate." ​(Places for People Homes Limited v. HMRC [2025] UKFTT 1417 (TC), Judge Aleksander)
​
ANCILLARY SUPPLIES
​
Identifying ancillary supplies​
​
- Supplies that does not constitute for customers an end in itself but a means of better enjoying the principal service
"[27] Furthermore, in certain circumstances, several formally distinct services, which could be supplied separately and thus give rise, separately, to taxation or exemption, must be considered to be a single transaction when they are not independent (see Case C‑425/06 Part Service [2008] ECR I‑897, paragraph 51; RLRE Tellmer Property, paragraph 18; Case C‑461/08 Don Bosco Onroerend Goed [2009] ECR I‑11079, paragraph 36; and Everything Everywhere, paragraph 23).
[28] Such is the case particularly where one or more elements are to be regarded as constituting the principal supply, while other elements are to be regarded, by contrast, as one or more ancillary supplies which share the tax treatment of the principal supply. In particular, a supply must be regarded as ancillary to a principal supply if it does not constitute for customers an end in itself but a means of better enjoying the principal service supplied (see, inter alia, CPP, paragraph 30; Case C‑34/99 Primback [2001] ECR I‑3833, paragraph 45; RLRE Tellmer Property, paragraph 18; Everything Everywhere, paragraphs 24 and 25; and Bog and Others, paragraph 54). " ​(Purple Parking Ltd C-117/11)
​
- Ancillary means subservient, subordinate to something else
"[30]..."Ancillary" means (as Ward LJ rightly observed at [2004] STC 1471, 1482, para 39) subservient, subordinate and ministering to something else. It was an entirely apposite term in the discussion in British Telecommunications (where the delivery of the car was subordinate to its sale) and in Card Protection Plan itself (where some peripheral parts of a package of services, and some goods of trivial value such as labels, key tabs and a medical card, were subordinate to the main package of insurance services)..." (College of Estate Management v. HMRC [2005] UKHL 62)
​
- Will normally account for a small part of the price
"[11]...Not surprisingly, in Commissioners of Customs and Excise v Madgett and Baldwin (C-308/96 and C-94/97) [1998] ECR I-6229, 6259, para 24, the Court envisaged that the ancillary supply would account for a small proportion of the price of the transaction as a whole and would not constitute for customers an aim in itself, but a means of better enjoying the principal service supplied by the trader..." (College of Estate Management v. HMRC [2005] UKHL 62)
​
Effect of being an ancillary supply​
​
- Apply the VAT treatment of the principal supply
"[11] ... By contrast, as the Court indicated in Card Protection, at para 30, an element is properly to be regarded as ancillary where it is not the principal supply but is accessory to it and so shares the tax treatment of the principal supply..." (College of Estate Management v. HMRC [2005] UKHL 62)
​
Examples: ancillary​
​
- Delivery is ancillary to supply of car
" In my view here if the transaction is looked at as a matter of commercial reality there was one contract for a delivered car: it is artificial to split the various parts of the transaction into different supplies for VAT purposes. What B.T. wanted was a delivered car; the delivery was incidental or ancillary to the supply of the car and it was only on or after delivery that property in the car passed. The fact that delivery could have been arranged differently under a separate contract between B.T. and the transporter or by B.T. collecting the car itself does not mean that when there is a contract for a delivered car the two supplies must be kept separate. Of course B.T. had the option to make other arrangements as is argued but the fact is that B.T. did it this way as part of one contract and in my view as part of one supply." (CCE v. British Telecommunications Plc [1999] UKHL 3)
​
Examples: not ancillary​
​
- Printed material/book not ancillary to supply of education - it is the main means by which education provided
"[11] ... After all, the tribunal found as a fact that the average student was expected to spend about 94% of his time using the printed materials. Taken together, the remaining elements, including face-to-face teaching and sitting examinations, counted for only 6% of the average student's time. Supplying the printed materials for the students to study was therefore, by far, the main method by which the College provided them with an education...In the present case, however - leaving aside any allocation of a proportion of the price - it would be highly artificial, to say the least, to describe the printed materials as nothing more than a means for the students the better to enjoy the education supplied by the College. In reality, those materials were the means by which the students obtained most of their education." (College of Estate Management v. HMRC [2005] UKHL 62)
​
- Pharmaceuticals are not ancillary to medical care
"[30] Pharmaceuticals are not ancillary to medical care which requires the use of medication; again, they are of central and indispensable importance; nevertheless there is a single supply of services (Beynon)." (College of Estate Management v. HMRC [2005] UKHL 62)
​
COMPLEX SUPPLIES
​
Identifying complex supplies
​
- Transaction that it would be artificial to split/comprising single supply from economic point of view
"[26] According to settled case-law, it follows from Article 2 of the Sixth Directive that every supply must normally be regarded as distinct and independent. However, a transaction which comprises a single supply from an economic point of view should not be artificially split, so as not to distort the functioning of the VAT system (see, inter alia, CPP, paragraph 29; Levob Verzekeringen and OV Bank, paragraph 20; Case C‑111/05 Aktiebolaget NN [2007] ECR I‑2697, paragraph 22; judgment of 2 December 2010 in Case C‑276/09 Everything Everywhere, not yet published in the ECR, paragraphs 21 and 22; and judgment of 10 March 2011 in Joined Cases C‑497/09, C‑499/09, C‑501/09 and C‑502/09 Bog and Others, not yet published in the ECR, paragraph 53)." ​(Purple Parking Ltd C-117/11)
​
"[12] ... The question is whether, for tax purposes, these are to be treated as separate supplies or merely as elements in some over-arching single supply. According to the Court of Justice in Card Protection, at para 29, for the purposes of the directive the criterion to be applied is whether there is a single supply "from an economic point of view". If so, that supply should not be artificially split, so as not to distort (altérer) the functioning of the value added tax system. The answer will accordingly be found by ascertaining the essential features of the transaction under which the taxable person is operating when supplying the consumer, regarded as a typical consumer. Since the 1994 Act has not adopted any different mechanism to give effect to this aspect of the directive, the same approach must be applied in interpreting the provisions of the Act. The key lies in analysing the transaction." (College of Estate Management v. HMRC [2005] UKHL 62)
​
Whether it would be artificial to separate elements
​
- Look at what is contracted to be supplied/paid for
"[58] Accordingly, my starting point is the G&F contract. The contractual terms cannot by themselves be determinative of the VAT analysis, but may be conclusive unless inconsistent with the underlying economic and commercial reality. One would naturally expect the predominant part of a supply to be what the supplier has promised to supply and what the consumer has promised to pay for..." (HMRC v. Gray & Farrar International LLP [2023] EWCA Civ 121, Simler LJ)
​
- Would the typical consumer consider it was purchasing multiple elements or a single overall service?
"[24] With regard to the dispute in the main proceedings, it is apparent, as held by the Gerechtshof te Amsterdam whose decision was the subject of the appeal in cassation pending before the referring court, that the economic purpose of a transaction such as that which took place between FDP and Levob is the supply, by a taxable person to a consumer, of functional software specifically customised to that consumer’s requirements. In that regard, and as the Netherlands Government has correctly pointed out, it is not possible, without entering the realms of the artificial, to take the view that such a consumer has purchased, from the same supplier, first, pre-existing software which, as it stood, was nevertheless of no use for the purposes of its economic activity, and only subsequently the customisation, which alone made that software useful to it." (Levob C-41/04)
​
"[64] The approach adopted by both the FTT and the UT involved an artificial dissection of the introduction service supplied by G&F of a kind warned against by the CJEU. To treat this service as comprising two distinct components, the provision of expert (consultancy) advice and the provision of information, was an error of approach. It did not reflect the economic or commercial reality of the transaction. Just as the characterisation of the supply of education with a view to a qualification is not to be determined by dissecting the single service into its component parts and then deciding whether the books and printed matter or the lectures and teaching predominates, there is no basis for thinking that the typical consumer using G&F's service would view the G&F service as supplying advice and/or providing information. That is not what is contracted for." (HMRC v. Gray & Farrar International LLP [2023] EWCA Civ 121, Simler LJ)
​
Complex supplies: examples
​
- Provision of books forming part of composite supply of education to achieve qualification
"[13] ... In my view, the tribunal were entitled to reach that conclusion on the basis of the findings which they made - especially their finding that the students took the courses in order to obtain the relevant qualification offered by the College. The transaction was therefore one which gave the students the opportunity, by successfully studying the printed materials and completing the other necessary steps, to obtain a valuable qualification. That was what the students were purchasing..." (College of Estate Management v. HMRC [2005] UKHL 62)
​
"[48]...College of Estate Management might be regarded as such a case: in the context of a single supply of education, the typical student purchased the courses in order to obtain the qualification offered by the College. Viewed by the student, the supply of books was part of that larger composite supply of education with a view to qualification, and could not be said to predominate for the purposes of the Mesto test, even if the provision of books was regarded as an important element of the single supply." (HMRC v. Gray & Farrar International LLP [2023] EWCA Civ 121, Simler LJ)
​
- Provision of a room forming part of composite supply of massage parlour services
"[48]...A similar analysis applies to Byrom (t/a Salon 24), where the supply was of "massage parlour services" to those offering their services to clients. An important element of the single supply was the provision of a room. But viewed from the perspective of the masseuse the provision of the room could not be said to predominate in the larger supply provided, which included toilet, changing and shower facilities, a seating and other areas for clients, bed linen and towels." (HMRC v. Gray & Farrar International LLP [2023] EWCA Civ 121, Simler LJ)
​​
But see in Byrom itself:
​
"[70] In the light of that conclusion, it is then necessary to categorise the resulting single supply viewed as a complex of elements (the provision of the licence and of the various services). In my judgment, the over-arching single supply is not to be treated as a supply of a licence to occupy land. The description which reflects economic and social reality is a supply of massage parlour services, one element of which is the provision of the room. That, in my judgment, is the correct conclusion even if, which for my part I think probably is the case, the provision of the room was, to the masseuse, the single most important element of the overall supply and, indeed, one predominating over the other elements taken together. This is a case where the tax treatment of the supply is self-evident once it is established that the other service elements are not ancillary to the provision of the licence." (Byrom v. HMRC [2006] EWHC 111 (Ch), Warren J)
​
- Catering
"In the present cases, in each of the disputes in the main proceedings, there is a combination of a supply of goods or several goods and a supply of various service elements, and the referring court considers that those supplies of goods and services form a single transaction for the purposes of VAT. There is nothing in the orders for reference or the observations submitted to the Court to show that that classification was not carried out in accordance with the above criteria." (Bog C-497/09)
​
- Matchmaking a single supply of introductions, not provision of advice and information
"[61] There can be no doubt that the typical consumer would regard the provision of introductions to prospective long-term partners as the qualitatively most important element of the service. Indeed, this was the UT's own conclusion at [90]. In light of the contract, this was the predominant element of the supply.
...
[65] In my judgment accordingly, the service provided by G&F was not a service habitually supplied by consultants or consultancy firms giving expert advice to a client. What it did was different. Nor was the service either data processing or the supply of information." (HMRC v. Gray & Farrar International LLP [2023] EWCA Civ 121, Simler LJ)
​
- Medical care including administering drugs
"[31]...In my opinion the level of generality which corresponds with social and economic reality is to regard the transaction as the patient's visit to the doctor for treatment and not to split it into smaller units. If one takes this view, then in my opinion the correct classification is that which the NHS has always taken of the personal administration of drugs to non-regulation 20 patients, namely that there is a single supply of services." (Benyon v. HMRC [2004] UKHL 53)
​
- Customised software is not a supply of original software plus service of modification
"[24] With regard to the dispute in the main proceedings, it is apparent, as held by the Gerechtshof te Amsterdam whose decision was the subject of the appeal in cassation pending before the referring court, that the economic purpose of a transaction such as that which took place between FDP and Levob is the supply, by a taxable person to a consumer, of functional software specifically customised to that consumer’s requirements. In that regard, and as the Netherlands Government has correctly pointed out, it is not possible, without entering the realms of the artificial, to take the view that such a consumer has purchased, from the same supplier, first, pre-existing software which, as it stood, was nevertheless of no use for the purposes of its economic activity, and only subsequently the customisation, which alone made that software useful to it." ​(Levob C-41/04)
​
- Single ticket providing access to multiple facilities
"[32] As regards the existence of a single complex supply in the main proceedings, it is necessary to examine whether the facilities in the aquatic park at issue form a whole so that access to the whole constitutes a single supply which it would be artificial to split. In that regard, if, as in this case, the only type of entrance ticket offered for the aquatic park gives access to all of the facilities, without any distinction according to the type of facility actually used and to the manner and to the duration of its use during the period of the entrance ticket’s validity, that fact constitutes a strong indication of the existence of a single complex supply." (Mesto C-18/12)
​