Halifax plc etc v Commissioners of Customs and Excise: ECJ 21 Feb 2006

ECJ Sixth VAT Directive – Article 2(1), Article 4(1) and (2), Article 5(1) and Article 6(1) – Economic activity – Supplies of goods – Supplies of services – Abusive practice – Transactions designed solely to obtain a tax advantage.
The court set out the principle of abuse of right, saying: ‘in the sphere of VAT, an abusive practice can be found to exist only if, first, the transactions concerned, notwithstanding formal application of the conditions laid down by the relevant provisions of the Sixth Directive and the national legislation transposing it, result in the accrual of a tax advantage the grant of which would be contrary to the purpose of those provisions.
Second, it must also be apparent from a number of objective factors that the essential aim of the transactions concerned is to obtain a tax advantage. As the Advocate General observed in paragraph 89 of his opinion, the prohibition of abuse is not relevant where the economic activity carried out may have some explanation other than the mere attainment of tax advantages.’
. . And: ‘I am of the view therefore that the Community law notion of abuse, applicable to the VAT system, operates on the basis of a test comprising two elements. Both elements must be present in order to establish the existence of an abuse of Community law in this area. The first corresponds to the subjective element mentioned by the Court in Emsland [2000] ECR I-11569, but it is subjective only in so far as it aims at ascertaining the purpose of the activities in question. That purpose – which must not be confused with the subjective intention of the participants in those activities – is to be objectively determined on the basis of the absence of any other economic justification for the activity than that of creating a tax advantage. Accordingly, this element can be regarded as an element of autonomy. In fact, when applying it, the national authorities must determine whether the activity at issue has some autonomous basis which, if tax considerations are left aside, is capable of endowing it with some economic justification in the circumstances of the case.’

V Skouris, P
[2006] BVC 377, [2006] 2 WLR 905, [2006] 2 CMLR 36, [2006] STI 501, [2005] EUECJ C-255/02, Times 27-Feb-2006, [2006] Ch 387, [2006] ECR I-1609, [2006] BTC 5308, ECLI:EU:C:2006:121, [2006] STC 919, [2006] CEC 690
Cited by:
CitedOracle America Inc v M-Tech Data Ltd SC 27-Jun-2012
The appellant complained that the respondent had imported into the European Economic Area disk drives bearing its trade marks in breach of the appellant’s rights. The respondent had argued that the appellant had abused its position by withholding . .
CitedWeald Leasing Ltd v Revenue and Customs VDT 6-Feb-2007
VDT VAT – AVOIDANCE – Abuse of rights – Appellant associate of exempt trader purchasing assets to lease to separate company to lease on to exempt trader – Associate outside VAT group – Associate credited with . .
CitedHM Revenue and Customs v Weald Leasing Ltd ChD 16-Jan-2008
. .
CitedMinistero dell’Economia e delle Finanze v Part Service Srl ECJ 21-Feb-2008
ECJ Sixth VAT Directive Articles 11A(1)(a) and 13B(a) and (d) – Leasing – Artificial division of the supply into a number of parts – Effect Reduction of the taxable amount – Exemptions – Abusive practice . .
CitedWeald Leasing (Taxation) ECJ 26-Oct-2010
ECJ Opinion – Value added tax (VAT) – Sixth Council Directive 77/388/EEC – Concept of ‘abusive practice’ and ‘normal commercial operations’ – Transaction designed solely to obtain a tax advantage – Leasing and . .
CitedHM Revenue and Customs v Weald Leasing (Taxation) ECJ 2-Dec-2010
ECJ Sixth VAT Directive – Concept of ‘abusive practice’ – Leasing transactions effected by a group of undertakings to spread the payment of non-deductible VAT . .
CitedPendragon Plc and Others v HM Revenue and Customs CA 23-Jul-2013
The Revenue had imposed a penalty on the appellants saying that their arrangement for the sale and VAT taxation of demonstrator cars was, in European law terms. The taxpayer sought re-instatment of the First Tier Tribunal judgment in its favour.
CitedRevenue and Customs v Pendragon Plc and Others SC 10-Jun-2015
‘This appeal is about an elaborate scheme designed and marketed by KPMG relating to demonstrator cars used by retail distributors for test drives and other internal purposes. In the ordinary course, a car distributor will buy new cars for use as . .
CitedRevenue and Customs v The Rank Group Plc SC 8-Jul-2015
The question raised by this appeal is whether, during the period 1 October 2002 to 5 December 2005, the takings on a particular category of gaming machines operated by the appellants were subject to VAT. The answer depends on whether the takings . .
CitedRevenue and Customs v Secret Hotels2 Ltd SC 5-Mar-2014
The Court was asked as to: ‘the liability for Value Added Tax of a company which markets and arranges holiday accommodation through an on-line website. The outcome turns on the appropriate characterisation of the relationship between the company, . .

Lists of cited by and citing cases may be incomplete.


Leading Case

Updated: 09 November 2021; Ref: scu.238842