Q&A: Contract law position in VAT planning

The Upper Tribunal (UT) has published its decision in TalkTalk Telecom Ltd [2024] UKUT 00284 (TCC). It highlights the importance of checking a client’s contract law position before moving ahead with VAT planning.

What was the case about?

The UT has heard an appeal by TalkTalk Telecom Ltd (TT) against an assessment raised by HMRC of over £10m going back to 2015.

The case arose because between January and April 2014 TT sought to rely on the provisions of VATA 1994 Sch 6 para 4 (which has since been amended).

Readers who are ‘woke’ to VAT will be aware that Sch 6 deals with valuation rules and para 4 is no exception. In its previous incarnation which applied until 30 April 2014 (so over a decade ago) the rules permitted a somewhat strange outcome.

To summarise if the...