Religious supply

The taxpayer was an Australian charity that was part of the Scientology religion. It was registered for VAT in the UK making exempt supplies of education as well as some taxable ones. Courses were prepared by the organisation’s Californian counterpart and supplied under a contract known as an ecclesiastical services agreement.

A question arose as to the nature of the services: they were outside the scope of VAT before 1 January 2010 after which they were treated as being supplied in the UK.

To the extent the supplies were standard rated the taxpayer had to account for them under the reverse charge. The charity was partially exempt meaning it would be unable to recover all VAT.

The matter proceeded to the First-tier Tribunal. The taxpayer said there was a single supply by the Californian charity of educational services that were exempt under VATA 1994...