Interpretation of VATA 1994, s 84(10)

The Metropolitan School provided distance learning courses. In a letter of 2000 HMRC had accepted that course fees should be apportioned on the basis that the school was making standard-rated supplies of educational services and zero-rated supplies of books. The letter warned that the method ‘could be reviewed at any time’. 

In 2009 after the House of Lords’ decision in CRC v College of Estate Management [2005] STC 1597 HMRC told the school its supplies were taxable. It said the school should account for VAT on all its supplies from September 2009. Further it refused to allow a transitional period so that the school could continue to use the approach agreed in 2000 for a run-off period in relation to contracts that it had entered into before 27 August 2009. 

The First-tier Tribunal held that the school made ‘entirely zero-rated supplies of books’ but the Upper Tribunal...