In Harley-Davidson Europe Limited v HMRC [2017] TC06268, the FTT agreed with the taxpayer that the membership fees should be apportioned between zero-rated and standard rated supplies.
A number of owners of Harley-Davidsons subscribe to the Harley Owners Group, for a membership fee. Non-owners can also join as associate members for a fee.
HMRC took the view that all membership fees are standard rated, arguing that the fee was a single supply of membership and all benefits are ancillary.
The taxpayer appealed and the FTT allowed the appeal.
The membership fee gave the member the right to a number of benefits:
- Quarterly magazine
- Patches and pins
- Touring maps
- Membership card
- Membership guide
- Events calendar
- Leather folder
- Local chapter membership
- Access to various specialised websites
- Access to events and the Harley-Davidson Museum
- Various discounts, such as hotels.
The FTT found in favour of the taxpayer, treating the membership as Multiple supplies, for the following reasons:
- Supplies must normally be considered distinct and separate.
- If single supplies, from an economic point of view, are artificially split, it will be a single supply.
- To be one single supply there must be either:
- A dominant, principal supply and ancillary supplies to that principal supply, or
- Two elements which are so closely linked that they form a single indivisible economic supply.
- HMRCs contention that all benefits and rewards were ancillary to the membership status was not backed up through evidence.
- It would not be artificial to split the various benefits. They are not indivisible, and each benefit can clearly be enjoyed separately.
The supplies are multiple supplies and the membership fee could be apportioned between the various elements, allowing some of it to be zero-rated.
Link
External link: Harley-Davidson Europe Limited v HMRC [2017] TC06268
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