American Express Services Europe Ltd v HM Revenue & Customs

On a VAT appeal confined to points of law, the appellate court may determine the correct legal outcome on the tribunal’s primary findings, but should be slow to disturb factual findings or a multi-factorial value judgment.

For VAT purposes, several elements form a single supply where, viewed objectively from the typical customer’s perspective, they constitute one indivisible economic supply which it would be artificial to split. Separate internal teams, cost centres or outsourcing arrangements do not necessarily create separate supplies.

Place-of-supply exceptions must be applied according to their terms. Services connected with immovable property require a sufficiently direct connection with identified property. The professional-services exception does not extend to management or executive functions merely because they involve expertise, advice or information.

American Express Services Europe Ltd appealed against a decision of the London Value Added Tax and Duties Tribunal, released on 16 July 2008, which had upheld HMRC’s VAT assessment for services supplied to its United States parent, American Express Travel Related Services Company Inc.

The services concerned the management and strategic oversight of the American Express group’s European, Middle Eastern and African real estate operations. The appellant argued that there were multiple supplies, or alternatively that the supplies fell within the exceptions for services connected with immovable property or professional services under Article 9(2) of the Sixth Directive.

The central issues were whether the arrangements constituted one supply or several supplies, and where the supply or supplies were made.

1. The appeal was dismissed. The appeal was confined to points of law. The tribunal’s primary findings of fact were not to be reopened unless they were insupportable on Edwards v Bairstow principles. Its inferences should not be disturbed where they fell within the range of possible inferences. The court could nevertheless determine the correct legal outcome on the facts found.
2. Under the Levob test, elements supplied to a customer constitute a single supply where they are so closely linked that, viewed objectively and from an economic perspective, they form an indivisible economic supply which it would be artificial to split. The analysis must consider all the circumstances of the transaction from the customer’s perspective. The absence of a predominant or ancillary element does not prevent a single supply.
3. Applying that test, the five streams of activity were economically linked. The overall payment was not apportioned by cost centre. Oversight was unified, the teams shared information and responsibility, and their functions overlapped. The customer looked to Amex Europe to formulate and execute an integrated real-estate strategy. Internal organisation into separate teams and the possibility of outsourcing did not alter the economic character of the supply. The result was one indivisible economic supply.
4. Article 9(2)(a) did not apply. The services were connected with immovable property only loosely. They did not concern identified properties through a direct transactional, constructional or operational relationship. Amex Europe acted as an intermediate management and advisory tier, while local units dealt directly with the properties.
5. Article 9(2)(e), third indent, did not apply. The listed professional services are defined by the services habitually supplied in those professions, not by the supplier’s professional label. Amex Europe took executive and management decisions, approved transactions, directed local units and pursued strategic policy. Those functions went beyond consultancy, the supply of information, accountancy or similar professional services. The supply therefore fell within Article 9(1), with the place of supply at the supplier’s establishment.

High Court (Chancery Division): appeal from the London Value Added Tax and Duties Tribunal’s decision released on 16 July 2008. The tribunal had upheld HMRC’s assessment dated 21 January 2003. The appeal was dismissed.