© 2025 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
M3. Identity of recipient
PRINCIPLES
Summary
"[22] So far as this decision is concerned, the case law relating to the identification of the recipient of a supply of goods or services gives rise to the following applicable principles:
(1) in identifying whether a person has received a supply, it is necessary first to consider the rights and obligations to which the arrangement in which the supply has been made gives rise as a matter of contract - in other words, was there a contractual obligation on the part of the supplier to supply the goods or services in question to that person - and then to consider whether, taking account of all the circumstances, the contractual analysis reflects the economic and commercial reality of the arrangement - see AirTours Holidays v The Commissioners for Her Majesty's Revenue and Customs [2016] 4 All ER 1 ("AirTours") at paragraphs [20], [21], [48] and [49], WHA v The Commissioners for Her Majesty's Revenue and Customs [2013] UKSC 24 ("WHA") at paragraphs [27] to [39] and The Commissioners for Her Majesty's Revenue and Customs v Newey (trading as Ocean Finance)(Case C-653/11) ("Newey") at paragraphs [40] to [45];
(2) the labels which the parties to an arrangement have used to describe their arrangement "cannot be conclusive and may often be of little weight" – see Secret Hotels2 Ltd (formerly Med Hotels Ltd) v The Commissioners for Her Majesty's Revenue and Customs [2014] UKSC 16 ("Secret Hotels2") at paragraph [32] and, although contractual terms constitute a factor to be taken into account, they sometimes do not wholly reflect the economic and commercial reality of the transactions - see Newey at paragraph [52]) and Airline Placement Ltd v The Commissioners for His Majesty's Revenue and Customs [2025] UKFTT 894 at paragraph [87];
(3) a clear example of circumstances where the contractual relationship is not determinative is where "[the] contractual terms constitute a purely artificial arrangement which does not correspond with the economic and commercial reality of the transactions" - see AirTours at paragraph [49], referring to Newey at paragraph [45];
(4) however, purely artificial arrangements are just one example of circumstances where the contractual relationship does not reflect the economic and commercial reality of the arrangement. They are not the only example of such circumstances - see U-Drive Limited v The Commissioners for Her Majesty's Revenue and Customs [2017] UKUT 112 (TCC) ("U-Drive") at paragraph [36];
(5) in each case, regard must be had to all the circumstances in which the transaction or combination of transactions takes place - see U-Drive at paragraphs [32(4)] and [37] - and what is needed is a careful and sensitive analysis having regard to the economic and commercial reality of the transaction taken as a whole - see AirTours at paragraphs [44] to [46], citing the judgments of Lord Reed and Lord Hope in The Commissioners for Her Majesty's Revenue and Customs v Aimia Coalition Loyalty UK Ltd [2013] UKSC 15 sub nom The Commissioners for Her Majesty's Revenue and Customs v Loyalty Management UK Ltd [2013] STC 784 at paragraphs [66], [67] and [110] ("Aimia");
(6) it follows that each case is required to be determined in accordance with its own specific facts - see AirTours at paragraph [59], Aimia at paragraph [68] and U-Drive at paragraph [45];
(7) the mere fact that a person has paid the consideration for a supply does not mean that that that person has received the supply. The payer may simply have paid what has been described in various cases as "third party consideration" for a supply made to someone else - for example, because it is discharging an obligation owed to the recipient of the consideration or to a third party - see Aimia at paragraph [67], WHA at paragraphs [56] to [60] and U-Drive at paragraph [44]; and
(8) in analysing the relevant arrangement, the principle of fiscal neutrality should be borne in mind although that is not a fundamental principle or a rule of primary law but merely a principle of interpretation to be applied concurrently with, and as a limitation on, the strict interpretation of exemptions in the VAT legislation - see AirTours at paragraphs [52] and [53].
[23] Given their relevance in terms of their facts to the issues which arise in relation to the Disputed Fuel Supplies, we should also refer at this point to two decisions of the Court of Justice of the European Union (the "CJEU") where the above principles were applied in the context of the use of fuel cards to pay for supplies of fuel - namely, Auto Lease Holland BV v Bundesamt für Finanzen (Case C-185/0) ("Auto Lease Holland") and Vega International Car Transport and Logistic-Trading GmbH v Dyrektor Izby Skarbowej w Warszawie (Case C-235/18) ("Vega"). In both of those cases:
(1) fuel had been provided to the holder of a fuel card (A) on the basis that another person - the lessor in the case of Auto Lease Holland and the parent company in the case of Vega – (B):
(a) had the primary obligation to the fuel supplier to discharge the debt arising from the fuel purchase; but
(b) did not have the right to decide when, where and how the fuel was supplied; and
(c) did not ultimately bear the cost of the fuel; and
(2) the CJEU declined to analyse the arrangement as involving a supply of fuel by the fuel supplier to B followed by an onward supply of fuel by B to A. Instead, it held that the supply of fuel had been made by the fuel supplier to A and that the only supply made by B to A had been a supply of credit - see Auto Lease Holland at paragraphs [31] to [37] and Vega at paragraphs [23] to [51]." (D Nuttall UK Limited v. HMRC [2025] UKFTT 1600 (TC), Judge Beare)
- Contract is the most useful starting point, test against reality
"[47] This approach appears to me to reflect the approach of the Supreme Court in the subsequent case of WHA Ltd v Revenue and Customs Comrs [2013] UKSC 24; [2013] STC 943 where at para 27, Lord Reed said that “[t]he contractual position is not conclusive of the taxable supplies being made as between the various participants in these arrangements, but it is the most useful starting point”. He then went on in paras 30 to 38 to analyse the series of transactions, and in para 39, he explained that the tribunal had concluded that “the reality is quite different” from that which the contractual documentation suggested. Effectively, Lord Reed agreed with this, and assessed the VAT consequences by reference to the reality. In other words, as I said in Secret Hotels2 Ltd v Revenue and Customs Comrs [2014] STC 937, para 35, when assessing the VAT consequences of a particular contractual arrangement, the court should, at least normally, characterise the relationships by reference to the contracts and then consider whether that characterisation is vitiated by [any relevant] facts." (Airtours Holidays Transport Limited v. HMRC [2016] UKSC 21)
- Have regard to all circumstances where multiple contracts involved
"[30] Where the question at issue involves more than one contractual arrangement between different parties, this Court has emphasised that, when assessing the issue of who supplies what services to whom for VAT purposes, "regard must be had to all the circumstances in which the transaction or combination of transactions takes place" – per Lord Reed in Revenue and Customs Commissioners v Aimia Coalition Loyalty UK Ltd [2013] 2 All ER 719, para 38. As he went on to explain, this requires the whole of the relationships between the various parties being considered." (HMRC v. Secret Hotels2 Ltd [2014] UKSC 16)
- Fact that T was obliged to pay for service and had an interest in its provision may raise expectation it is recipient but cannot override contract
"[35] By contrast, factor (ii), the fact that Airtours, rather than the Institutions, was to pay PwC for the services, can fairly be said to raise a prima facie expectation in a reader of the Letter that PwC would owe a duty to Airtours to provide those services. However, it is not, at least of itself, a particularly powerful point. So long as the Institutions wanted the services, PwC would have been obliged to them to provide them. And, if the Institutions no longer wanted the services, there is no reason to think that Airtours would still have wanted them, especially as it would have had to pay for them. And it is not as if Airtours was agreeing to pay for work which would not be done: payment was to be in arrears except for the £200,000 “retainer”.
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[37] As for factor (i), Airtours’ interest in having a Report produced for the Institutions, I accept that it means that one would not be at all surprised if PwC’s contractual obligation to supply the Services to the Institutions extended to Airtours, but it does not in any way compel such a conclusion as a matter of commercial sense, logic or law. Like factor (ii), it does no more than raise a prima facie expectation in the reader of the Contract." (Airtours Holidays Transport Limited v. HMRC [2016] UKSC 21)
- Did paying party receive something in return for its payment?
"[59] That conclusion is also consistent with the guidance given in Customs and Excise Commissioners v Redrow Group plc [1999] 1 WLR 408. When Lord Hope of Craighead posed the question at p 412, "Was something being done for him for which, in the course or furtherance of a business carried on by him, he has had to pay a consideration …?", and Lord Millett asked at p 418, "Did he obtain anything – anything at all – used or to be used for the purposes of his business in return for that payment?", those questions are to be understood as being concerned with a realistic appreciation of the transactions in question (Aimia, para 66). So understood, it is plain that WHA did not obtain anything in return for the payment to the garage which was used for the purposes of its business. On the contrary, as the tribunal found and the Court of Appeal confirmed, and as I have explained at paragraphs 42 and 53, WHA's business was the making of the payment." (WHA Limited v. HMRC [2013] UKSC 24)
- In Redrow it was significant that the estate agents were instructed and paid by Redrow, not simply that it got a benefit
"[66] I would at the same time stress that the speeches in Redrow should not be interpreted in a manner which would conflict with the principle, stated by the Court of Justice in the present case, that consideration of economic realities is a fundamental criterion for the application of VAT. Previous House of Lords authority had emphasised the importance of recognising the substance and reality of the matter (Customs and Excise Commissioners v Professional Footballers' Association (Enterprises) Ltd [1993] 1 WLR 153, 157; [1993] STC 86, 90), and the judgments in Redrow cannot have been intended to suggest otherwise. On the contrary, the emphasis placed upon the fact that the estate agents were instructed and paid by Redrow, and had no authority to go beyond Redrow's instructions, and upon the fact that the object of the scheme was to promote Redrow's sales, indicates that the House had the economic reality of the scheme clearly in mind. When, therefore, Lord Hope posed the question, "Was something being done for him for which, in the course or furtherance of a business carried on by him, he has had to pay a consideration …?", and Lord Millett asked, "Did he obtain anything – anything at all – used or to be used for the purposes of his business in return for that payment?", those questions should be understood as being concerned with a realistic appreciation of the transactions in question."(HMRC v. Aimia Coalition Loyalty UK Limited [2013] UKSC 15)
Co-ownership
- Co-owning spouse entitled to deduct to the extent used for business purposes by that spouse
"[58] Therefore, the answer to the second question must be that where a marital community which does not have legal personality and does not itself carry out an economic activity within the meaning of the Sixth Directive places an order for a capital item, the co-owners forming that community are to be regarded as recipients of the transaction for the purposes of the directive.
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[74] In the light of all of those considerations, the answer to the third question must be that where spouses forming a community by marriage purchase a capital item, part of which is used exclusively for business purposes by one of the co-owning spouses, that spouse is entitled to deduct in respect of all the input VAT attributable to the share of the item which he uses for the purposes of his business, in so far as the amount deducted does not exceed the limits of the taxable person’s interest in the co-ownership of the item." (HE C-25/03)
Third-party consideration
- Businesses do not usually pay suppliers unless they are the recipient, but the possibility cannot be ruled out
"[67] Reflecting the point just made, it is also necessary to bear in mind that consideration paid in respect of the provision of a supply of goods or services to a third party may sometimes constitute third party consideration for that supply, either in whole or in part. The speeches in Redrow should not be understood as excluding that possibility. Economic reality being what it is, commercial businesses do not usually pay suppliers unless they themselves are the recipient of the supply for which they are paying (even if it may involve the provision of goods or services to a third party), but that possibility cannot be excluded a priori. A business may, for example, meet the cost of a supply of which it cannot realistically be regarded as the recipient in order to discharge an obligation owed to the recipient or to a third party. In such a situation, the correct analysis is likely to be that the payment constitutes third party consideration for the supply." (HMRC v. Aimia Coalition Loyalty UK Limited [2013] UKSC 15)
- Where person who pay supplier is not entitled, under contracts, to receive any services, no right to reclaim input unless does not reflect reality
"[50] From these domestic and Court of Justice judgments, it appears clear that, where the person who pays the supplier is not entitled under the contractual documentation to receive any services from the supplier, then, unless the documentation does not reflect the economic reality, the payer has no right to reclaim by way of input tax the VAT in respect of the payment to the supplier." (Airtours Holidays Transport Limited v. HMRC [2016] UKSC 21)
- Consequential benefit as a result of service being provided to third-party does not mean payer is receiving the supply
"[51] On this analysis, it appears to me that, subject to considering a further way in which Airtours’ case is put, it also fails on the second question. The Contract, consisting of the Letter and the Terms, did reflect the economic reality, and was not in any way an artificial arrangement. It is true that Airtours benefitted from the Contract, but the benefit which it was getting was not so much the Services from PwC, but the enhanced possibility of funding from the Institutions for its restructuring (a possibility which eventuated into reality thanks, to a substantial extent, to the Report). And it was to improve the prospects of such refinancing that Airtours was prepared to pay for the provision of the Report." (Airtours Holidays Transport Limited v. HMRC [2016] UKSC 21)
- Contracting with supplier for service to be provided to third party v. paying the consideration for an agreement directly between third-party & supplier
"[59] Finally, it is also said that the fact that PwC did not contract with Airtours to provide the Services to the Institutions is a very small point on which the present decision should turn. The answer to that was provided by Lord Reed in WHA Ltd, para 26, where he said that “decisions about the application of the VAT system are highly dependent upon the factual situations involved. A small modification of the facts can render the legal solution in one case inapplicable to another.”" (Airtours Holidays Transport Limited v. HMRC [2016] UKSC 21)
Third-party consideration: goods
- Goods supplied to the person who obtains them, even if financed by another
"[34] It is common ground that the lessee is empowered to dispose of the fuel as if he were the owner of that property. He obtains the fuel directly at filling stations and Auto Lease does not at any time have the right to decide in what way the fuel must be used or to what end.
[35] The argument to the effect that the fuel is supplied to Auto Lease, since the lessee purchases the fuel in the name and at the expense of that company, which advances the cost of that property, cannot be accepted. As the Commission rightly contends, the supplies were effected at Auto Lease's expense only ostensibly. The monthly payments made to Auto Lease constitute only an advance. The actual consumption, established at the end of the year, is the financial responsibility of the lessee who, consequently, wholly bears the costs of the supply of fuel.
[36] Accordingly, the fuel management agreement is not a contract for the supply of fuel, but rather a contract to finance its purchase." (Auto Lease Holland BV C-185/01)
- But fuel placed into employee's fuel tank and paid for by employer gave rise to supply to employer
"[14] It must accordingly be concluded that this deduction system must be applied in such a way that its scope corresponds as far as possible to the sphere of the taxable person' s business activity . Where, in such circumstances, article 17 ( 2 ) of the sixth directive restricts the taxable person' s right of deduction, as regards the value-added tax on supplied goods, to the tax due or paid "in respect of goods ... Supplied to him", the purpose of that provision cannot be to exclude from the right of deduction the value-added tax paid on goods which, although sold to the taxable person in order to be used exclusively in his business, were physically delivered to his employees .
[15] that interpretation is supported by the aim of the deduction system . As is stated in the second paragraph of article 2 of the first council directive (67/227/eec ) of 11 April 1967 on the harmonization of legislation of member states concerning turnover taxes ( official journal, english special edition 1967, p . 14 ), on each transaction, value-added tax, calculated on the price of the goods or services at the rate applicable to such goods or services, is to be chargeable after deduction of the amount of value-added tax "borne directly by the various cost components ".
[16] The answer to the question submitted by the hoge raad der nederlanden must therefore be that where an employer, who is a taxable person for the purposes of the rules on value-added tax, by agreement with one of his employees and another taxable person, the supplier, arranges for the latter to supply goods at the employer' s expense to the employee, who uses them exclusively for the purposes of the employer' s business, and the employer receives from the supplier invoices for those supplies charging him value-added tax in respect of the goods supplied, article 11 ( 1 ) ( a ) of the second directive and article 17 ( 2 ) ( a ) of the sixth directive on value-added tax must be interpreted as meaning that the employer may deduct the value-added tax with which he is so charged from the value-added tax payable by him." (Intiem C-165/86)
- Employer only receives supply where it arranges at its expense for fuel to be supplied to employee and fully reimburses
"[47] Also, under Article 5 of the Sixth Directive, the supply of goods means the transfer of the right to dispose of them as owner. It is clear that use by an employee of his own vehicle in connection with his employer's business cannot constitute a supply, in that sense, to his employer.
[48] Accordingly, neither the vehicle belonging to the employee nor the fuel consumed by that vehicle can be regarded as supplied to the taxable employer, within the meaning of Article 17(2)(a) of the Sixth Directive, simply because depreciation of the vehicle and fuel costs linked to such use give rise to partial reimbursement by the employer.
[49] The foregoing considerations thus clearly show that it is impossible to derive from the wording of Article 17(2)(a) of the Sixth Directive a right to deduct VAT in the circumstances referred to in Article 23 of the implementing decree of 12 August 1968." (Commission v. Netherlands C-338/98)
Intiem distinguished
"[51] It is apparent from paragraph 14 of that judgment that the Court held in Intiem that it was only as far as possible that the VAT deduction system laid down by the Sixth Directive had to apply in such a way that its scope corresponded to the sphere of the taxable person's business activity.
[52] It is in fact clear from paragraph 16 of that judgment that, while the Court was able to adopt an interpretation of Article 17(2)(a) of the Sixth Directive which had the effect of confirming that the deduction mechanism at issue in the main proceedings was consistent with that provision, that was so in particular because, in that case, the employer had arranged for goods to be supplied at his expense to his employees and he had consequently received from the supplier invoices charging him VAT in respect of the goods supplied.
[53] In such circumstances, the conditions for operation of Article 17(2)(a) of the Sixth Directive, and in particular the condition requiring a supply between taxable persons, were clearly satisfied, so that it was in fact possible to apply that provision.
[54] By contrast, with regard to the deduction mechanism at issue in the present case, it has been explained above that, since the condition requiring a supply between taxable persons is not fulfilled, it does not appear possible to reconcile that mechanism with the wording of Article 17(2)(a) of the Sixth Directive." (Commission v. Netherlands C-338/98)
Loyalty scheme
- Payment by scheme operator to redeemer was for supply of redemption services to it, not supply of goods to customer
"[77] As I have explained, however, there is another dimension to the case, which the Court of Justice was not requested to consider, and which it therefore left out of account. The appeal before this court is concerned with the claim of LMUK, a taxable person, to deduct input tax. LMUK's business is of an unusual character. Through the Nectar scheme, it provides collectors with a contractual right to obtain goods and services from redeemers in exchange for points. It is common ground before this court that that is a taxable supply, and that the taxable amount is the whole of the consideration which is received by LMUK. The counterpart of the right supplied to collectors is an obligation on the part of LMUK to procure that redeemers provide goods and services in exchange for points. The payments made to redeemers constitute the cost of fulfilling that obligation, and are therefore a cost of LMUK's business.
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[85] As the Court of Appeal pointed out, if the provision of goods or services by redeemers were treated as a taxable supply to the collector (other than to the extent to which any monetary consideration might be paid by the collector), the tax authorities would receive not only VAT on the amount received by LMUK for supplying the right to receive those goods and services, but also VAT on the amount which LMUK must pay to satisfy that right. If, on the other hand, the consideration paid by LMUK to the redeemers is regarded as the consideration for the supply of a service to LMUK (a service which encompasses the provision of goods and services to collectors), the tax authorities will still receive VAT from LMUK on the difference between the value of the supplies which it makes in the course of its business (ie its receipts from the supply of the right to receive such goods and services) and the value of the supplies which it receives for the purposes of that business (ie the cost to LMUK of satisfying that right). The tax authorities will thus recover VAT on the value added by the taxable transactions entered into by LMUK, taking the issue and redemption of points as a whole. That conclusion is in accordance with the basic principle of VAT." (HMRC v. Aimia Coalition Loyalty UK Limited [2013] UKSC 15)
INSURANCE AND WARRANTIES
- Insurer who is obliged to pay for cost of repairs does not receive supply of those repairs
"[2] MBI insurers normally undertake to indemnify the insured against the cost of repairs. Whether the garage invoices the insured, who is then reimbursed by the insurer, or invoices the insurer directly, in either case the garage's invoice will include VAT (provided the garage is registered for VAT, as is normally the case). In such circumstances, the cost of the repair is the cover which the insurer has contracted to provide to the insured under the insurance policy. It is not the cost of a service supplied to the insurer for the purposes of its business, and no possibility arises of the insurer being able to deduct the VAT element of the cost." (WHA Limited v. HMRC [2013] UKSC 24)
- Insertion of additional contractual parties between insured and insurer not affecting who received supply of repair services
"[56] As I have explained, under the contract of insurance NIG undertakes to the insured that it will meet the cost of the repair. It does not undertake to repair the vehicle. If NIG were to perform the contract by itself paying the garage, that would be an example of third party consideration within the meaning of article 11A(1)(a) of the Sixth Directive: that is to say, consideration for a supply which the person providing the consideration does not himself receive, but which he pays for, in this example, in order to discharge an obligation owed to the recipient of the supply. On this hypothesis, the garage supplies a service to the insured by repairing his or her vehicle, and NIG meets the cost of that supply because it has undertaken to the insured that it will do so, and has received premiums from the insured as the consideration for its giving that undertaking. In that situation, the breakdown is a risk: an event insured against. The cost of the repair is the cover: it is not the consideration for a service provided to the insurer.
[57] The interposition of reinsurers does not alter that position. Neither, on the facts found by the tribunal, does the interposition of WHA. In economic reality, when WHA pays for the repairs it is merely discharging on behalf of the insurer (via the chain of contracts connecting it to NIG, through Viscount and Crystal) the latter's obligation to the insured to pay for the repair. WHA's role, in relation to the aspect of its business concerned with the payment of the garages, is to act as the paymaster of costs falling within the cover provided by the policies. The interposition of WHA does not, by some alchemy, transmute the discharge of the insurer's obligation to the insured into the consideration for a service provided to the reinsurer's agent." (WHA Limited v. HMRC [2013] UKSC 24)
FISCAL NEUTRALITY
- Insurer who is obliged to repair may receive supply of repair services (but generally not entitled to recover input)
"[3] In principle, however, an MBI insurer might undertake not to indemnify the insured in respect of the cost of repair, but to repair the insured's vehicle; and it could then arrange with a garage for the repair to be carried out, and pay the garage's bill. Even in such a case, however, the insurer would not be able to deduct the VAT element of the bill, since, even if the garage were regarded as supplying a service to the insurer for the purposes of its insurance business, the insurer would not be liable to account for any VAT in respect of that business, and would therefore not have received any VAT from which the tax paid to the garage could be deducted." (WHA Limited v. HMRC [2013] UKSC 24)
- Fiscal neutrality does not change the identity of the recipient of the supply
"[52] On behalf of Airtours, it is suggested that this conclusion is inconsistent with the notion of fiscal neutrality, as the consequence of Airtours’ appeal in this case failing is that VAT paid as output tax is not reclaimable as input tax. However, as Advocate General Sharpston observed in Finanzamt Frankfurt am Main V-Höchst v Deutsche Bank AG (Case C-44/11) [2012] STC 1951, para 60 in connection with exemptions, fiscal neutrality “is not a fundamental principle or a rule of primary law which can condition the validity of an exemption but a principle of interpretation, to be applied concurrently with - and as a limitation on - the principle of strict interpretation of exemptions”.
[53] In any event, as Mr Thomas says on behalf of the Commissioners, I would not accept the argument is well founded. It assumes that all output tax should, in principle, be reclaimable as input tax, no matter who was invoiced and who paid it, whereas article 168 (set out in para 17 above) clearly limits such a right to output tax “paid in respect of … supplies to him of services …”: therefore, where the services in respect of which he paid VAT were not supplied to the person who paid the VAT, no right to reclaim that output tax can arise. To put the point another way, fiscal neutrality cannot be invoked to invent a supply where there is none. Consistently with this, although the VAT Directives contemplate that the consideration itself may be paid by either the recipient of or a third party to the supply or a combination of the two (see para 15 above and HMRC v Loyalty Management UK Ltd, para 67, per Lord Reed), they also contemplate that VAT on a supply will be the subject of an invoice directed to the recipient of the supply (see the Principal VAT Directive, articles 220(1) and 226(5)) and will be potentially deductible by him once paid as input tax (article 168) - although it appears that, in this case, the Institutions, being largely exempt, would not have been able to deduct any input tax which had been invoiced to and paid by them." (Airtours Holidays Transport Limited v. HMRC [2016] UKSC 21)
MULTIPLE RECIPIENTS
- Apportion
"[81] We find this straightforward. In our judgment, Visual were not the sole recipient of the legal services. There were three Claimants. All three received legal services. Withers LLP are recorded as representing all three Claimants in the High Court and the Court of Appeal The settlement of £500,000 was to 'the Claimants' which included, but was not limited to, Visual.
[82] Had it been necessary to decide this we would have found on the material before us, that Visual equally received the services with the other Claimants and so an apportionment of one third deduction against output tax would have been appropriate." (Visual Investments International Limited [2024] UKFTT 843 (TC), Judge Rudolf KC)
EXAMPLES
- Contract directly between banks and professional meant banks were recipients even though company was obliged to pay
"[31] Confining myself for the moment to the express words of the Contract, it appears to me that the Commissioners are correct, and there is no obligation on PwC, as a matter of contract, to Airtours to provide the Services whether to the Institutions or to Airtours. The position appears pretty clear if one confines oneself to the Letter: PwC’s obligation to provide the Services set out in the Appendix is owed solely to the Institutions, and Airtours is only a party for the purpose of agreeing to pay PwC’s fees, to provide PwC with an indemnity, and to acknowledge the cap on any damages for which PwC may be liable. The Terms are, without doubt, less clear, but there is nothing in them which supports the notion that they were intended to widen PwC’s duties beyond what was in the Letter. In any event, the notion that the Terms can give the meaning of “you” in the Letter any different meaning from that which it naturally has on the face of the Letter is fatally undermined by the fact that the Terms are contained in a standard form, and, even more, by the fact that “you” in the Terms clearly has different meanings in different places." (Airtours Holidays Transport Limited v. HMRC [2016] UKSC 21)
- Maintenance of common parts supplied to landlord (who retained ownership) not lessees
"[214] We find that the fact that a Lessee pays the MTC the rent for his flat, or notifies the MTC that a lift is broken is not a relevant factor in determining the direction of supply. Whilst the perception of a typical consumer is a relevant consideration, it is not determinative of the economic reality. And we note that in the case of a bilateral lease (where only the landlord and tenant are parties), a landlord of a substantial property might well engage a managing agent, and a tenant would pay rent and service charges to the managing agent (on behalf of the landlord) and it would be the managing agent to whom defects would be notified. Even though the tenant is paying his rent and service charge to the managing agent, and notifying the managing agent of any defects, there is no doubt that in these circumstances, the recipient of the managing agents' supplies is the landlord." (Places for People Homes Limited v. HMRC [2025] UKFTT 1417 (TC), Judge Aleksander)
- Economic reality overriding contract: maintenance supplies received by trucker hirer
"[63] It follows from the above that we prefer the Respondents' contractual analysis to the contractual analysis proposed by the Appellant. On this contractual analysis, when the Appellant entered into the AS24 Contract and the contracts with the repairs and maintenance providers, even though each of those contracts was entered into by the Appellant and the relevant provider of goods or services on a bilateral basis and ROBO was not a party to the relevant contract, the terms of the relevant contract were such that the Appellant was contracting with the provider in question not to provide goods or services to the Appellant itself but instead to provide goods or services to ROBO on terms that the Appellant would meet the cost of those goods or services.
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[67] However, in our view, taking into account all of the facts in this case, that was not the economic and commercial reality of the arrangement at all. On the contrary, that economic and commercial reality was that ROBO made its trucks available to the Appellant in return for the fixed payments and on the basis that the Appellant would continue to use the trucks in the course of its business in exactly the same way as it was doing before the arrangement with ROBO began (and would have continued to do if it had continued to own the trucks and have its own goods vehicle operator's licence.)" (D Nuttall UK Limited v. HMRC [2025] UKFTT 1600 (TC), Judge Beare)