VAT: Another single/multiple supply case caught in the net

This article first appeared in our Summer 2016 Rural Business Update. Download the full publication here.

A recent VAT tribunal involving a trout fishery has thrown more light upon the VAT liability of multiple supplies, a complex area of VAT law. Stocks Fly Fishery, in Lancashire, argued that they were supplying a multiple offer of standard rated fishing rights and a zero rated supply of food.

Many cases have been brought in front of the courts to decide on whether certain supplies should be classified as single or multiple supplies, and these are vitally important for the companies involved. For instance, there have been cases on delivery charges, financial advice, airport car parking, and card protection services to name but a few.

Case

Stocks Fly Fishery provide customers with sport fishing with the opportunity to take the fish away, if a premium is paid. They offer their customers two different types of ticket: a ‘catch and release’ sporting ticket with which any fish caught must be returned to the reservoir; or a more expensive “take ticket” which allows the angler to take home the fish they catch up to a limit.

The main issue in this case was whether the supply of fish for consumption was a separate supply from the supply of sport fishing, and whether a “take ticket” could be split into two separate supplies of sporting right (subject to VAT at 20%) and food for consumption (subject to VAT at 0%). Stocks argued that the price differential between the two tickets was the element subject to zero-rating.

Decision

The VAT tribunal determined that the essential feature of the supplies with both types of tickets is fishing, and that the primary motive of purchasing a ticket is to fish for sport. They were not persuaded that the dominant purpose of anyone purchasing the “take ticket” was for food consumption. At the point a “take ticket” is purchased it is not a sale of fish as there is no guarantee fish will physically be caught. There is, therefore, no distinct separate charge solely for fish; only one single charge which includes the right to fish and the chance of catching them.

The VAT Tribunal therefore found that the right to fish was the principal supply for VAT purposes, and the right to take home caught fish should be regarded as ancillary. Consequently, in this case there is a single supply of fishing which should be subject to 20% VAT.

Relevance

It is always important to determine whether bundles of supplies should be regarded as a single supply (principal and ancillary supplies), or distinct multiple supplies which ought to be treated separately for VAT purposes.

This case illustrates further development of a complex legal issue that will continue to be a concern for VAT-registered organisations. If you have a query regarding single and multiple supplies please get in touch with Iain Masterton at iain.masterton@chiene.co.uk or 0131 558 5800.