Goodshelter Holdings Limited v Her Majesty's Revenue & Customs

Facts

Goodshelter Holdings Ltd was a company whose shares were owned by Mr M L Brown and his family, and of which he was a director. It carried on business from freehold premises in Tunbridge Wells, part of which it occupied and part of which it let, and it owned a residential property, a factory and, until sold as a going concern, commercial premises in Tonbridge, none of which had been opted to tax; it also had a small trade selling vacuum cleaners. Goodshelter employed Mr Brown at a salary of £132,000 a year and held a 9 per cent shareholding in each of Easycarton Ltd, which owned the intellectual property rights in a milk carton opening system, and Intercarton Ltd, the worldwide licensee. Mr Brown was a director of both companies and spent, it was not in dispute, 75 per cent of his working time on that project. Following a visit by an officer of the Commissioners in August 2003, the Commissioners assessed Goodshelter on 10 November 2003 for VAT of £12,872 plus interest of £1,104, disallowing input tax as not directly attributable to taxable supplies. Goodshelter appealed, contending that it had made taxable supplies of Mr Brown's management services to Easycarton for a consideration.