Single or multiple supply?

The taxpayers operated ice skating rinks. Customers could choose to hire skates only – and use them at a different venue; pay for admission only; or buy a package at a single price consisting of admission and skate hire – skating with skates. This was complicated by the fact that the hire of skates by children is zero rated (VATA 1994 Sch 8 group 16 item 1) but the admission charge is standard rated. 

HMRC argued that the skate hire and admission package was a single supply but the taxpayer said it was two separate ones.

The First-tier Tribunal found for the taxpayer. It said the individual constituents of a skating with skates package could be and were bought on their own. 

HMRC appealed.

The Upper Tribunal said the First-tier Tribunal had taken the wrong approach and its decision contained an error of law. The conclusion that there were two separate supplies...