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HMRC internal manual

VAT Place of Supply of Services

Where performed services: ancillary services

The Tribunal in Sugar and Spice On Tour Catering (MAN/99/1053), (VTD 17698) considered the meaning of ancillary under Article 9(2)(c) of the Sixth VAT Directive (now Articles 53 and 54 of the Principal VAT Directive).

The Appellant provided catering services to bands and other musical artistes and their support crew whilst on tour in the UK, Europe and elsewhere in the world. It was accepted beforehand that the Appellant’s supply of catering was of services rather than of goods.

HMRC contended that the catering services were not ancillary to a where performed service, as in our view to be ancillary the services had to be essential and direct to the performance and its staging. In other words, if the ancillary service did not take place then the performance to which the ancillary service related could not itself take place. All the Appellant was doing was providing food and drink for the entourage, who would have had to have eaten anyway. Therefore the provision of the service was not ancillary to the performance.

However, in upholding the appeal the Tribunal referred to the ECJ decision in Dudda (C- 327/94) that since the supplier, Dudda, provided his services in the state in which they were physically carried out and the organiser of the event charged the final consumer VAT in the same state, the VAT charged on the basis of all those services, the cost of which was included in the price of the complete service paid for by the final consumer, should be paid to the state in which the service was supplied and not to the state in which the supplier of the service had established his business.

The Court held that the supply of Dudda’s service was ancillary to the event and was regarded as being performed in the same place.

In the present case the Appellant’s services were paid for by the promoter at each venue, and the promoter met their costs from income generated from ticket sales for the events, where the bands the Appellant was supplying its catering services to, performed. That was found to be the same as the circumstances with Dudda and therefore the Appellant in Sugar and Spice was supplying services ancillary to the events.