The Upper Tribunal has given judgment in the Coalingrove Ltd case. This was concerned with one of those typically bizarre questions that always seem to form the subject of VAT litigation – whether a veranda could be zero rated along with a caravan. The tribunal found for the taxpayer, allowing their appeal meaning the veranda was to be seen as part of a single supply of caravan with veranda. This case may have some interesting implications from a charity and membership VAT perspective.

One immediate point of interest is the Courts view on the nature of zero rating. These are allowed in the UK under a provision that states the UK can keep zero rates that applied in 1991 but not extend them. This is sometimes called the stand still provision. It means incidentally that when a zero rate is removed it cannot be reinstated – which is why when the domestic fuel zero rate was removed under John Major the incoming Labour Government could only introduce a 5% VAT rate in its place.

In the Coalingrove case HMRC argued that the zero rate had to be applied as it would have been in 1991 and could not be extended. This was before the important case concerning single and multiple supplies called Card Protection Plan. The HMRC argument was that under a 1991 analysis of the single/multiple supply position the veranda and caravan would have been separate supplies. The Upper Tribunal dismissed this approach completely. “it is the content and not the historical approach’ that matters’. Here the current single/multiple supply tests were what mattered. This may well help in arguments against HMRC attempting to restrict the scope of the zero rate by arguing things were different in 1991. I certainly have one case running where it may be very helpful.