HMRC internal manual

VAT Business/Non-Business Manual

VBNB72200 - Legal history: cases about the making of taxable supplies for a consideration


Please note that the following material is not a full summary of the case - it merely highlights the principle referred to in the appropriate section of this manual.

Apple & Pear Development Council 1988 STC 221

Commercial growers had to register with the Apple & Pear Development Council and pay a compulsory annual charge to it. The European Court held that, for a supply of services to be for consideration, there must be a direct link between the service provided and the consideration received.

The evidence in this case showed that there was no relationship between the level of benefits that individual growers got from the Council’s services and the amount of the mandatory charges that they had to pay. The compulsory annual charges did not constitute ‘consideration’ and the Council was not making supplies of services for consideration.

Institute of Chartered Accountants in England & Wales 1999 STC 398

The Institute of Chartered Accountants in England and Wales provides advantages to facilities to its members. Those activities are covered by section 94(2) of the VAT Act 1994. It is also a recognised professional body and a recognised supervisory body.

HMRC ruled that the services the Institute performed in the course of its supervisory activities were not supplied by way of business. The Court held that the relevant supplies were not of a kind commonly made by those who seek to make profit from them, nor were they predominantly concerned with the making of taxable supplies for a consideration.

The Court held that the predominant concern of the supervisory activities was to the implementation through statutory policy of protecting the public interest through self-regulation and that charging fees for investigative and monitoring services is not the predominant concern or characteristic of the activities.

Lord Slynn observed that “performing a licensing function on behalf of the State was not a business”. The Court further held that it is not merely enough to point to the fact that there is a supply of services in return for a money payment and some loose economic connection but the activities must be of an economic character.