In PKS Arachchige v HMRC (CA – 8 November) a retailer failed to account for VAT on sales of phonecards. HMRC issued an assessment charging tax on his supplies (except where VAT had been paid at source by the service provider under VATA 1994 Sch 10A para 3(3)). The retailer appealed contending that the effect of the VAT (Place of Supply of Services) Order SI 1992/3121 article 21(1) was that the supplies fell to be treated as if they had been supplied where the supplier of the telecommunications service was based and were thus outside the scope of UK VAT. The CA unanimously rejected this contention and dismissed the appeal. Etherton LJ held that the supply of the phonecards was the supply of a service rather than simply a supply of a ‘right to services’. Applying the principles laid down by Arden...
