Age Concern Leicestershire & Rutland v Her Majesty's Revenue & Customs

Facts

The appellant, Age Concern Leicestershire & Rutland, is a registered charity which between July 1999 and March 2005 entered into a number of Service Level Agreements with Leicestershire County Council, Rutland County Council and the Primary Care Trusts of the two counties to provide, manage and develop a range of services for the elderly, including day centres, luncheon clubs, information and advice, community mental health, pathfinder and direct payments services. The charity had treated those supplies as exempt or outside the scope of VAT. With effect from 1 April 2005 it set up a wholly owned subsidiary, Age Concern Leicestershire & Rutland (Welfare Services) Ltd, assigned the agreements to it and agreed to act as the company's agent in delivering the services; the company had no staff, premises or resources of its own and the services were physically provided by the same people in the same places as before. The company, not being a specified body, charged VAT, and the charity's supply of staff and facilities to the company was treated as taxable, enabling greater recovery of input tax. The Commissioners initially considered whether the arrangement was abusive but did not pursue that enquiry. By a decision dated 7 June 2007 they determined that the supplies were exempt welfare services made to the elderly under Item 9, Group 7, Schedule 9 of the Value Added Tax Act 1994. The charity appealed, contending that its supplies were standard-rated.