Fanfield Ltd & Anor v Revenue & Customs [2011] UKFTT 42 (TC) (11 January 2011)

Fanfield Ltd & Anor v Revenue & Customs [2011] UKFTT 42 (TC) (11 January 2011)

Interest earned on bank deposits by both companies is outside the scope of VAT as it does not arise in the course or furtherance of their business and is not a direct, permanent, and necessary extension of their core business activities; therefore, such interest does not form part of relevant turnover for Flat Rate Scheme calculations.

Citation
[2011] UKFTT 42
Parties
First Appellant: Fanfield Limited; Second Appellant: Thexton Training Limited; Respondents: The Commissioners for Her Majesty’s Revenue and Customs (VAT)
Jurisdiction
United Kingdom
Judgment Date
11 January 2011
Procedural Posture
Appeal / Final Judgment
Outcome
Appeals allowed
Legal Topics
Flat Rate Scheme, Relevant Turnover, Exempt Supplies, Bank Interest
Tax Law VAT Flat Rate Scheme Relevant Turnover Exempt Supplies Bank Interest

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Parties

Fanfield Limited

First Appellant

Thexton Training Limited

Second Appellant

The Commissioners for Her Majesty’s Revenue and Customs (VAT)

Respondents

Procedural Posture

Appeal / Final Judgment

Legal Issues

  1. 1 Whether bank interest earned by companies constitutes an exempt supply under VAT Act 1994 Schedule 9 Group 5 Items 2 and 8
  2. 2 Whether bank interest forms part of relevant turnover for Flat Rate Scheme calculations
  3. 3 Whether bank interest arises in the course or furtherance of business for VAT purposes

Ratio Decidendi

Interest earned on bank deposits by both companies is outside the scope of VAT as it does not arise in the course or furtherance of their business and is not a direct, permanent, and necessary extension of their core business activities; therefore, such interest does not form part of relevant turnover for Flat Rate Scheme calculations.

Court Disposition

Appeals allowed

Orders

  • Interest on bank deposits is not to be included in relevant turnover for Flat Rate Scheme calculations.
  • Assessments for VAT on bank interest are set aside.