Halifax v HMRC (Indirect Tax) (European Court of Justice)

The long-awaited judgment in the Halifax case was delivered by the European Court on 21 February 2006 alongside judgments in the related University of Huddersfield and BUPA cases.

All three cases concerned arrangements that were made in order (so it was contended by HMRC) to obtain a tax advantage in the form of an enhanced entitlement to deduction of input tax.

In the BUPA case, the arrangement consisted of a prepayment scheme. In its judgment, the Court concluded that a prepayment does not give rise to a chargeable event for VAT purposes where a lump sum is paid for goods referred to in general terms in a list that may be altered at any time by agreement between buyer and seller and the buyer may at any time resile from the purchase agreement and recover the unused part of the prepayment.

The judgments in Halifax and Huddersfield contain important rulings on what amounts to a supply for VAT purposes. In Halifax, the Court goes on to consider the application of the abuse of rights principle to arrangements designed to obtain a tax advantage.

Paul Lasok QC represented Halifax.

Christopher Vajda QC and Mario Angiolini represented HMRC.

To view our Halifax-related articles, please click here and here.

To view the judgment, please click here.

For more information on the members involved, please click below:
Paul Lasok QC