This document summarizes a tax case involving Metropolitan International Schools (MIS) that was decided by the First-tier Tax Tribunal (FTT). The FTT ruled that MIS made a single supply of printed course materials rather than a supply of education. As a result, MIS's supplies were subject to VAT at the zero-rate rather than the standard rate argued by HMRC. The decision was an important win for MIS but may still be appealed by HMRC if they believe the FTT applied the wrong legal tests or factual findings.

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GRT100456
Summary
This is a case about whether a
taxpayer makes a single or a multiple
supply. MIS provides printed tuition
manuals which enables the readers
to learn a particular subject.
HMRC took the view that what was
being supplied was a single supply
of 'education' which was standard
rated.
MIS argued, and the Tribunal agreed
that, on the evidence, the customer's
motive was not to embark on a
course of learning which led to an
examination and qualification, but
to simply learn a subject from
reading the manuals.
As such, the supply of the manuals
was a single supply of printed
manuals which qualified for VAT at
the zero-rate.
15 October 2015
First-tier Tax Tribunal
The First-tier Tax Tribunal (FTT) has this week issued a very important decision for one of
Grant Thornton's own clients.
In the case of Metropolitan International Schools (MIS), the FTT has decided that, on the
evidence before it, what MIS supplied was a single supply of printed matter (the printed
course material). As a consequence of that finding, all of the supplies were liable to VAT at
the zero-rate.
HMRC contended before the Tribunal that what was being supplied was a course of
education and that as MIS was not an eligible body for VAT purposes, its supplies of such
education ought to have been liable to VAT at the standard rate.
Ultimately, the FTT accepted that the essential supply was the sale of the course manuals.
Whilst the 'student' had access to some tutor support and guidance, MIS contended that
these were ancillary to the main supply of manuals. In the vast majority of cases, students
simply learnt from reading these manuals and did not request such support. When they did,
they were referred back to the course manuals. In addition, the courses offered did not lead
to any form of examination or qualification. Students could, if they wished, sit an exam set
by third party bodies but this was not something that was provided by MIS. As such, the
FTT distinguished the earlier House of Lords Judgment in the case of the College of Estate
Management. In MIS, the FTT concluded that the student's motive was different in that,
when he entered into a contract with MIS, he was aware that MIS did not provide an
examination or qualification. As such, the FTT concluded that 'the customer's desired end
result was to educate himself entirely by studying the self contained manuals'. In light of
that conclusion, the FTT decided that there was a single supply of the manuals which was
zero-rated.
Comment – this is an impressive win for MIS. However, it is only an FTT decision (and as
such is only binding on the parties) which may be appealed by HMRC. To do so, HMRC
would have to argue that the FTT either applied the wrong legal tests or its findings of fact
were wholly unreasonable. Businesses with a similar fact pattern should benefit from this
decision and should consider making retrospective claims where appropriate.
Metropolitan International Schools
Case Alert
Contact
Stuart Brodie Scotland stuart.brodie@uk.gt.com (0)14 1223 0683
Karen Robb London & South East karen.robb@uk.gt.com (0)20 772 82556
Andrea Sofield London & South East andrea.sofield@uk.gt.com (0)20 7728 3311