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The taxpayer operated a chain of opticians. It made two kinds of supply for VAT purposes.
It supplied customers with goods, e.g. spectacles, and services, e.g. eye-testing. The supplies of goods were standard rated, while the services were zero rated.
Thus it was partially exempt for VAT. In 2001, the taxpayer agreed with Customs a special method of calculating the apportionment.
However, the department later told the taxpayer that it wished to withdraw that method because it did not produce fair and reasonable results.
The taxpayer appealed. The tribunal agreed with HMRC that the special method was unsuitable. The taxpayer appealed to the High Court, saying the tribunal had erred in law.
The court found that the tribunal had been clearly right, given the evidence produced before it.
The taxpayer’s appeal was dismissed.
