Genuine Care Homecare Services Ltd v The Commissioners for HMRC

Introduction

1. The appellant (GCHS) appeals against: (1) two assessments, one for a long first period to 03/19 and one for the periods 05/19 to 02/21 (inclusive) under s73(1) Value Added Tax Act 1994 ( VATA 1994 ); and (2) a failure to notify penalty under Schedule 41 Finance Act 2008 . Background

2. GCHS registered for VAT on 17 March 2019, with an effective date of 1 April 2019. Its main business activity was the provision of domiciliary care in patients’ homes. GCHS had not previously registered for VAT because it was CQC registered and so these supplies were exempt from VAT. The VAT registration on 1 April 2019 was requested because GCHS had begun to provide consultant advice and training within the care sector.

3. An Error Correction Notice (ECN) was submitted by GCHS dated 1 April 2021 in respect of over-recovered input tax on the basis that the claims for input VAT incurred on purchases had not correctly followed the partial exemption rules.

4. In 2015 GCHS began to work with a Slovak entity (Atena). During the acquisition of GCHS by another company (Trinity) in 2021, advisers noted that GCHS may not have correctly accounted for VAT in respect of its business relationship with Atena. As noted below, two Atena entities were involved at various times; this background refers to Atena in general to provide context. Trinity’s advisers had formed the view that Atena were providing staff to GCHS and that GCHS should have accounted for this supply under the reverse charge mechanism.

5. GCHS’ adviser disagreed and, on 7 June 2021, GCHS submitted a non-statutory clearance request to HMRC for confirmation that GCHS should be accounting for VAT on the basis that it was an undisclosed agent in the provision of domiciliary care services, such that they were deemed to have received exempt care supplies from Atena and to have made onward exempt care supplies to patients.

6. HMRC responded to the clearance request on 16 September 2021, with their initial view that it was most likely that Atena were making a standard rated supply of staff to GCHS and that GCHS were the entity that were contractually, and as a matter of economic and commercial reality, making the welfare supplies. The Atena entity making the supply was VAT registered in Slovakia and making a business to business supply to GCHS, with a deemed place of supply in the UK. The correct VAT treatment was, therefore, that GCHS should operate the reverse charge mechanism in respect of supplies from Atena and recover the VAT self-charged as input tax using a partial exemption method.

7. Following correspondence and discussion, HMRC issued the assessment for the periods 05/19 to 02/21 on 6 April 2023, together with an assessment in respect of the ECN. The decision to issue this assessment was upheld on review on 31 July 2023. GCHS appealed this assessment to the Tribunal on 29 August 2023. Also on 6 April 2023, HMRC concluded that GCHS should have registered for VAT at an earlier date. Their VAT registration was therefore backdated and a return issued for the resulting new long first period from 1 November 2016 to 31 March 2019. Although GCHS did not directly appeal this decision, the return for this new long first period was submitted as a nil return because GCHS contended that it was only making exempt supplies.

8. The assessment for 03/19 was issued on 18 October 2023. This was also upheld on review on 18 January 2024 and appealed to this Tribunal on 4 February 2024.

9. A failure to notify penalty was issued on 11 January 2024. This was also upheld on review although the amount was amended to correct an arithmetic error on 19 March 2024 and appealed to this Tribunal on 3 April 2024.

10. We had witness statements and oral evidence from Officer Huffadine for HMRC and from Ms Maslen for GCHS. Ms Maslen was the former owner and director of GCHS; she was acting with Trinity’s permission in this matter due to issues arising from the acquisition of GCHS by Trinity. Relevant law

11. All references are to the Value Added Tax Act (VATA) 1994 unless otherwise stated and are set out as relevant and as at the relevant time. In respect of the supplies

12. S4 - Scope of VAT on taxable supplies (1) VAT shall be charged on any supply of goods or services made in the United Kingdom, where it is a taxable supply made by a taxable person in the course or furtherance of any business carried on by him. (2) A taxable supply is a supply of goods or services made in the United Kingdom other than an exempt supply.

13. S7A - Place of supply of services (1) This section applies for determining, for the purposes of this Act , the country in which services are supplied. (2) A supply of services is to be treated as made— (a) in a case in which the person to whom the services are supplied is a relevant business person, in the country in which the recipient belongs, and (b) otherwise, in the country in which the supplier belongs. (3) The place of supply of a right to services is the same as that in which the supply of the services would be treated as made if made by the supplier of the right to the recipient of the right (whether or not the right is exercised); and for this purpose a right to services includes any right, option or priority with respect to the supply of services and an interest deriving from a right to services. (4) For the purposes of this Act a person is a relevant business person in relation to a supply of services if the person— (a) is a taxable person within the meaning of Article 9 of Council Directive 2006/112/EC, (b) is registered under this Act , (c) is identified for the purposes of VAT in accordance with the law of a member State other than the United Kingdom … and the services are received by the person otherwise than wholly for private purposes …

14. S8 - Reverse charge on supplies received from abroad. (1) Where services are supplied by a person who belongs in a country other than the United Kingdom in circumstances in which this subsection applies, this Act has effect as if (instead of there being a supply of the services by that person)— (a) there were a supply of the services by the recipient in the United Kingdom in the course or furtherance of a business carried on by the recipient, and (b) that supply were a taxable supply. (2) Subsection (1) above applies if— (a) the recipient is a relevant business person who belongs in the United Kingdom, and (b) the place of supply of the services is inside the United Kingdom, and, where the supply of the services is one to which any paragraph of Part 1 or 2 of Schedule 4A applies, the recipient is registered under this Act . … (4A) Subsection (1) does not apply to services of any of the descriptions specified in Schedule 9.

15. S47 - Agents etc. (3) Where services … are supplied through an agent who acts in his own name the Commissioners may, if they think fit, treat the supply both as a supply to the agent and as a supply by the agent.

16. Schedule 9 (Exemptions) Group 7 - Health and Welfare Item 9 - The supply by … (b) a state-regulated private welfare institution or agency … of welfare services and of goods supplied in connection with those welfare services Note 6 (6) In item 9 “welfare services” means services which are directly connected with— (a) the provision of care, treatment or instruction designed to promote the physical or mental welfare of elderly, sick, distressed or disabled persons … and, in the case of services supplied by a state-regulated private welfare institution, includes only those services in respect of which the institution is so regulated. Note 8 (8) In this Group “state-regulated” means approved, licensed, registered or exempted from registration by any Minister or other authority pursuant to a provision of a public general Act, other than a provision that is capable of being brought into effect at different times in relation to different local authority areas. Here “Act” means— (a) an Act of Parliament; (b) an Act of the Scottish Parliament; (c) an Act of the Northern Ireland Assembly; (d) an Order in Council under Schedule 1 to the Northern Ireland Act 1974 ; (e) a Measure of the Northern Ireland Assembly established under section 1 of the Northern Ireland Assembly Act 1973 ; (f) an Order in Council under section 1(3) of the Northern Ireland (Temporary Provisions) Act 1972 ; (g) an Act of the Parliament of Northern Ireland. In respect of time limits

17. S73 - Failure to make returns etc. (1) Where a person has failed to make any returns required under this Act (or under any provision repealed by this Act ) or to keep any documents and afford the facilities necessary to verify such returns or where it appears to the Commissioners that such returns are incomplete or incorrect, they may assess the amount of VAT due from him to the best of their judgment and notify it to him … (6) An assessment under sub section (1 ) …above of an amount of VAT due for any prescribed accounting period must be made within the time limits provided for in section 77 and shall not be made after … (b) one year after evidence of facts, sufficient in the opinion of the Commissioners to justify the making of the assessment, comes to their knowledge …

18. S77 - Assessments: time limits and supplementary assessments. (1) Subject to the following provisions of this section, an assessment under section 73 … shall not be made— (a) more than 4 years after the end of the prescribed accounting period or importation or acquisition concerned… (4) In any case falling within subsection (4A), an assessment of a person (“P”), or of an amount payable by P, may be made at any time not more than 20 years after the end of the prescribed accounting period or the importation, acquisition or event giving rise to the penalty, as appropriate (subject to subsection (5)). (4A) Those cases are … (c) a case involving a loss of VAT attributable to a failure by P to comply with a notification obligation…. In respect of penalties

19. Schedule 41 Finance Act 2008 1 A penalty is payable by a person (P) where P fails to comply with an obligation specified in the Table below (a “relevant obligation”) … obligations to notify liability to register and notify material change in nature of supplies made by person exempted from registration. 20 - Reasonable excuse (1) Liability to a penalty under any of paragraphs 1, 2, 3(1) and 4 does not arise in relation to an act or failure which is not deliberate if P satisfies HMRC or (on an appeal notified to the tribunal) the tribunal that there is a reasonable excuse for the act or failure. (2) For the purposes of sub-paragraph (1)— (a) an insufficiency of funds is not a reasonable excuse unless attributable to events outside P's control, (b) where P relies on any other person to do anything, that is not a reasonable excuse unless P took reasonable care to avoid the relevant act or failure, and (c) where P had a reasonable excuse for the relevant act or failure but the excuse has ceased, P is to be treated as having continued to have the excuse if the relevant act or failure is remedied without unreasonable delay after the excuse ceased. Whether the assessments were made in time Assessment for the periods 05/19 to 02/21

20. The decision in respect of these periods was issued on 6 April 2023. As noted above, the time limits for assessment of VAT are set out in s73(6) and s77 VATA 1994 : this generally allows HMRC to raise assessments within four years of the end of the relevant VAT period, subject to a requirement that the assessment be made no later than twelve months after evidence of facts, sufficient in the opinion of HMRC to justify the making of the assessment, comes to their knowledge. The assessment was therefore issued within the four year time limit, but the question for the Tribunal was whether it had been raised within one year of the date on which HMRC had evidence of facts, sufficient in their opinion, to raise the assessments.

21. Mr Moll contended that HMRC had sufficient evidence to raise the assessments more than one year before the assessments were raised and that they were therefore out of time to do so. In support of this, he noted that the record of transactions on which the assessments were based had been provided more than a year before the assessments were made in April 2023 and that the assessments were made on the basis that there was a supply of staff, which had been HMRC’s view as set out in correspondence over a year before the assessments were made. He contended that a letter sent by Officer Huffadine on 28 April 2022 made it clear that HMRC had enough evidence by then, as that letter stated that the officer did not consider that a meeting between the parties would serve any purpose. Mr Moll contended that this showed that Officer Huffadine had formed an opinion as to the tax position, and that this opinion was in itself a relevant fact for the purposes of establishing the point at which HMRC had sufficient evidence of facts.

22. HMRC contended that the assessments were made in time, as Officer Huffadine’s evidence was that he considered that he did not have enough evidence in September 2022, when there had been a meeting between HMRC and GCHS. Following the meeting he had emailed GCHS in October 2022 and set out the remaining outstanding information required by HMRC to fully understand GCHS’s operation and the reasons why he considered the information necessary. The information was provided by GCHS during November 2022, with the last information being provided on 1 December 2022.

23. Officer Huffadine’s evidence was that he required the requested information in order to reach a decision as to the VAT liability on the supplies made by Atena. His evidence was that, although there was a concern that Atena were providing staff, HMRC wanted to properly understand the relationship in order to determine what the tax treatment of the supply should be. The evidence requested and provided included considerable detail as to the way in which Atena and GCHS operated. It was not until he received this information that he considered that he had sufficient evidence to reach a decision. GCHS also provided documentation including: (1) Atena Health Service Provider Agreement (2) GCHS Consent & Care Agreement (3) GCHS invoice for care services involving an Atena employee (4) Corresponding Atena invoice (5) GCHS Service User Handbook (6) Due Diligence report (VAT section) prepared for Trinity

24. The email on 1 December 2022 set out GCHS’ understanding of the interaction between the co-operation agreement and the other documents between GCHS and Atena. Discussion

25. The burden is on the appellant to show that the assessment was made outside the relevant time limits; it then moves to HMRC to displace the case put forward by the appellant.

26. GCHS did not dispute that they were asked for information following the meeting in September 2022 and provided it during November 2022. There was no contention that they had previously provided this information. The letter of 28 April 2022 which was contended to show that HMRC had enough evidence stated that a meeting may not serve any purpose “unless further information/evidence is provided” and included an annex which set out documentary evidence which HMRC required in order to assess GCHS’ contentions as to the appropriate tax treatment. The letter also states that HMRC wish to give GCHS an opportunity to provide the evidence to support their position. We do not agree that this letter means that HMRC have sufficient evidence of facts: we consider that the letter indicates that, although HMRC have formed a preliminary view that GCHS may not be correct as to the tax position, they have not been provided with enough evidence to be able to properly consider GCHS’ view on the tax position and are requesting that information. The fact that transaction figures were supplied to HMRC is not, alone, enough evidence for an assessment: in these circumstances, the transaction figures are not sufficient to establish the appropriate tax treatment of a transaction.

27. Although the enquiry did not alleviate HMRC’s concerns regarding the tax treatment of Atena supplies to GCHS, that does not mean that HMRC must have had sufficient evidence to raise an assessment at a date when they were still requesting evidence from GCHS in order to be able to evaluate GCHS’ contentions as to the tax position. We do not consider that it is necessarily unreasonable for HMRC to require, and evaluate when received, evidence from a taxpayer in support of that taxpayer’s stated view of their tax position before making an assessment. The fact that HMRC could, if the taxpayer failed or refused to provide evidence, raise an assessment in the absence of such evidence does not mean that they must have been satisfied that they had enough evidence of facts prior to the date that the taxpayer either refuses or fails to provide the evidence.

28. We consider that Officer Huffadine’s evidence was clear and reliable: that he did not have enough evidence to decide on the correct tax treatment of Atena’s supplies until 1 December 2022. We do not think that it was unreasonable of him to request evidence and information in support of Atena’s position. Considering the nature of the evidence supplied during November 2022 and the response of 1 December 2022, we consider that this was a reasonable position to take, following the principles in Wednesbury ( [1948] 1 KB 223 ). We find that the facts which justified in the making of the assessment, in Officer Huffadine’s opinion, included the factual evidence put forward by GCHS. It was not until GCHS provided the requested evidence that he was able to evaluate their view of the tax position and reach a decision as to the correct tax treatment of the supplies in order to raise an assessment.

29. We find that HMRC were not satisfied that they had sufficient evidence to raise an assessment until 1 December 2022, and that this was a reasonable position for them to take. As this assessment was raised in April 2023, we find that the assessment was raised within the required time limits and so was validly raised. Assessment in respect of the ECN

30. GCHS sent the ECN to HMRC dated 1 April 2021 for the VAT periods 05/19 to 11/20. The ECN was stated to have been submitted because the partial exemption rules had not been applied correctly and that input VAT attributable to exempt supplies had been deducted in error. The ECN stated that “vatable sales are insignificant so all purchase VAT has been removed”.

31. The ECN stated that the amount due to HMRC as a result was £36,885.66. This was the amount assessed by HMRC on 6 April 2023.

32. GCHS contended that HMRC had all of the information needed to raise the assessment when the ECN was submitted and therefore, as the assessment was raised more than a year later, it was raised out of time.

33. HMRC contended Officer Huffadine had requested more information to understand the calculations in order to check whether the amounts were correct. It was not until GCHS had responded that he was satisfied that he had enough evidence to raise the assessment. As the assessment was raised within twelve months of this date, it had been raised in time.

34. Officer Huffadine’s evidence in the hearing was that he had made enquiries in respect of the ECN because, if GCHS was making taxable supplies, they should have been recovering some input tax. He had considered that he needed to contact GCHS for information as to how the error had come about, as the description on the ECN appeared nonsensical. Discussion

35. Officer Huffadine had emailed GCHS on 14 February 2022 asking for information with regard to the ECN and in particular what the VAT input tax amount referred to, and why it had been reduced to nil for each period. GCHS had replied on the same day, explaining that the company should not have reclaimed VAT as taxable supplies were de minimis. Officer Huffadine requested more information on 18 February 2022, including an explanation as to why GCHS had changed its position; the lack of input tax claimed indicated either that no taxable supplies had been made or that the VAT treatment of the supplies had been reconsidered and concluded to be exempt. He asked for more details.

36. On 18 May 2022, GCHS produced a partial exemption calculation which calculated that £26.20 of VAT could be reclaimed. This was calculated on the basis of the ratio of taxable supplies to total supplies, without any allocation of expenses to the supplies to which they related. It is not clear when this calculation was provided to HMRC; it was attached to an email to GCHS from their accountants, dated 18 May 2022. The review letter indicates that it was sent to HMRC on 24 May 2022 although no correspondence of that date appears to be in the bundle.

37. On 8 August 2022, Officer Huffadine wrote again, stating that it was clear from the ECN that VAT had been recovered when it should not have been, and that this was something which would need to be discussed at the meeting which was to be had between the parties. There was no further reference in the bundle to evidence or explanations being provided with regard to the ECN.

38. On balance, we accept Officer Huffadine’s evidence that he needed to investigate the ECN details as the explanation provided did not appear to accord with the partial exemption rules, and that he was not satisfied that he had enough evidence of facts to issue an assessment more than twelve months before the date on which the assessment was issued.

39. Considering the evidence before us, we consider that such further enquiries were reasonable, following Wednesbury principles, given the uncertainty as to why the error had arisen. We consider that the earliest date at which he would have had enough information to raise the assessment was sometime after 18 May 2022 when GCHS provided the calculation referred to above. As that would have been within twelve months of the date on which the assessment was raised, the assessment was raised within the relevant time limits and so was validly raised. Assessment for the period 03/19

40. This assessment was raised on 18 October 2023 following submission by GCHS on 28 June 2023 of a return for the period from 1 November 2016 to 31 March 2019, as a result of the backdating of GCHS’ VAT registration. HMRC had issued this return for the long VAT period to 03/19 following the assessment issued on 6 April 2023 and had advised that the correct amount of VAT to be included in the return was £62,431 on the same basis as the assessment for the periods 05/19 to 02/21, that GCHS was liable under the reverse charge mechanism to account for VAT on supplies received from Atena in this period.

41. As GCHS considered that they had only made exempt supplies, they completed the return as a nil return. HMRC therefore raised the assessment for this period in the amount of £62,431.

42. HMRC contended that, as this assessment involved a loss of tax due to a failure to notify a liability to be registered for VAT, the relevant time limit for raising the assessment was extended to twenty years by virtue of s77(4) , (4A)(c) VATA 1994 . GCHS did not make any particular submissions as to this in either their skeleton argument or the hearing. In their notice of appeal, they contended that HMRC could not use the twenty year time limit to avoid its delays in making decisions, as they contended that a decision and assessments could have been issued within the four year normal period but HMRC had failed to do so. In their review request letter to HMRC, they maintained they were not required to register for VAT at an earlier date as they were making only exempt supplies and considered that the Atena supplies were not subject to a reverse charge and so had completed the assessment as a nil return. The review was then requested on the basis that the assessment had been made out of time, as it was made more than four years after the end of the relevant accounting period.

43. The assessment was raised because GCHS had not registered for VAT when they began to receive supplies from Atena which, for reasons set out below, were subject to the reverse charge. It was not disputed that the level of the supplies received were in excess of the registration threshold and so required GCHS to register for VAT. Once GCHS were supplied with a return and advised of the amount that should be declared on that return, they maintained that they were not liable to register at the earlier date and so completed the return on a nil basis.

44. In the circumstances, considering the evidence before us, we find that this is a case falling within s77 (4A)(c) VATA 1994 : that is, it is a case involving a loss of VAT attributable to GCHS’s failure to comply with a notification obligation. The assessment was made because the return was submitted as a nil return due to GCHS continuing to maintain that they were not liable to be registered for VAT (as stated in their review request letter); this is, in our view, sufficient for this to be a case of an assessment involving a loss of VAT attributable to GCHS’ failure to comply with a notification obligation.

45. We find that the relevant time limit for issue of the assessment was therefore twenty years from the end of the relevant accounting period; the assessment was clearly issued before the expiry of that time limit and was therefore validly issued.

46. Having concluded that the assessments were validly issued, we now consider the substantive issues before us. Whether there was a contract between Atena and the service user such that the place of supply was outside the UK and so the supplies were outside the scope of UK VAT

47. Mr Moll contended that, for each service user, there was a contract for care between Atena and that service user. Atena was therefore making a supply of welfare services to a consumer in the UK and, under the general rules as to the place of supply of services to consumer, the place of supply was Slovakia. He contended therefore that there was no liability to VAT for GCHS in respect of Atena’s supplies as they were outside the scope of UK VAT. In such case, it was contended that GCHS supplied only support services, which were supplied to Atena with the place of supply being Slovakia as these would be business-to-business services and therefore also outside the scope of UK VAT.

48. HMRC contended that there was no contract for care between Atena and the service user; Atena’s contract was with GCHS and GCHS contracted with the service user. They contended that this was supported by the documentation and Ms Maslen’s reference in oral evidence to the service user being a client of GCHS and not Atena. Discussion

49. It is long-established in case law that the starting point for determining the nature of a supply is the contractual position, where contracts are available.

50. The bundle included the following relevant documents: (1) the initial ‘co-operation agreement’ between Atena and GCHS; (2) GCHS’s standard terms and conditions and agreement with service users (part of the “service user handbook”); (3) GCHS standard consent to care form (and example completed form); (4) example completed GCHS consent to care and treatment form; (5) example completed Health Care Service Providing Agreement with Atena; (6) Atena order form for live in care completed by GCHS Co-operation agreement

51. This document was dated 27 October 2015. Ms Maslen’s evidence was that this was largely negotiated by a former director who had since left GCHS, sometime prior to its acquisition by Trinity. She had not been particularly involved in the discussions, as her work was principally focussed on care management. There was no evidence that any advice had been taken prior to signing the agreement.

52. The agreement appears to have been prepared by Atena; it is in parallel text in Slovak and English. The English version seems to be a direct translation of the Slovak text and so was presumably provided by Atena. GCHS put forward no evidence as to the accuracy of the translation, but neither was it disputed by HMRC.

53. GCHS is defined in the agreement as “intermediary”; the other party is Atena-Personal Consulting s.r.o, defined as “administrator”. The agreement states that GCHS is “looking for the clients and is taking care of them” (clause 2), and that its services are contracted for by the clients directly.

54. Clause 4 states that Atena will “ensure by [its] own qualified personnel the provision of domiciliary activities as well as assistance in the household for the clients intermediated by [GCHS]”. Given the poor translation, we consider that this clause could apply equally to a supply of staff as to a supply of services as it is unclear who the contract contemplates to be providing the services.

55. GCHS also commits (clause 7) to ensure that Atena employees will have suitable working conditions. Clause 3 states that GCHS will provide a description and details of the service user. Other clauses relate to confidentiality of data, termination provisions, confirmation that GCHS could not redeploy any Atena employees and neither could Atena engage directly with service users. Clause 9 (which is incomplete in English) states that copies of contracts (in context, presumably contracts for each engagement) will be sent from Atena to GCHS.

56. We find that there is nothing in this agreement which supports the contention that there was an intention that Atena would contract directly with service users. It is, at best, neutral on the point. GCHS documents to service users

57. Standard terms and conditions with service users (1) The agreement between GCHS and the service user (and their advocate) is set out at pages 12 to 16 of the handbook. (2) Under this agreement, GCHS agrees to provide the cares services set out in the service user plan to the service user (1.1). A fee is stated, and bank holidays are stated to be charged at double time. Invoices are provided monthly in advance and to be paid within 14 days. (3) The first month of the agreement is an assessment period and the agreement may be terminated by 2 days’ notice on either side during this period. Thereafter, the contract can be terminated on one month’s notice. The contract may be terminated early by GCHS in certain circumstances. (4) Service users may not engage GCHS employees directly during the period of the contract or within two years of the end of the contract. (5) GCHS provides insurance to cover accidental and other damage to the service user’s personal effects.

58. Standard consent to care and treatment form (1) This form sets out the specific details of care or treatment to be provided to an service user for which consent is required (eg: administration of medication, dealing with personal care needs, and contact with other relevant medical and care professionals).

59. Standard consent to care form (1) The service user signs to confirm that GCHS may provide support with prescribed medication and that “as an individual using [GCHS] services this form provides authorisation for the care team from [GCHS] to provide [the service user] with the care and support described and outlined in [their] personalised care plan”. The service user confirms that they understand how to contact GCHS to discuss their care and support.

60. We find that none of the GCHS documentation makes any reference to Atena or contains any indication that the services might be provided by someone other than GCHS. Indeed, the agreement between GCHS and the service user specifically states that GCHS agrees to provide the services. Atena order form

61. This document was completed by GCHS setting out details of the care needed by a service user. It provides no assistance as we consider that the contents would be required in order for Atena to establish who might be an appropriately qualified person regardless of whether they were to be supplied as staff or to be the means by which services were to be supplied. Health Care Service Providing Agreement

62. This document is in a similar form to the co-operation agreement: it is in Slovak and English in parallel and the English appears to be a direct translation of the Slovak. Again, we had no evidence as to the accuracy of the translation, but neither was it disputed by HMRC.

63. The Atena entity named is Atena-Solutions s.r.o, which is defined as the “service provider”. GCHS is defined as the “orderer”. The orderer and the service provider are then defined as the “parties”.

64. GCHS (as orderer) is stated to order the provision of services as an authorised representative of a named individual (defined as the “patient”; to avoid confusion, we will continue to refer to such persons as a “service user”).

65. This last point was the main basis on which Mr Moll contended that the agreement was made between the service user and Atena, with GCHS signing on behalf of the service user, such that there was a direct contract for the supply of services between Atena and the service user. He contended that the co-operation agreement set out a framework under which GCHS would introduce service users to Atena so that Atena could supply them with welfare services and that the Health Care Service Providing Agreement was the contract between Atena and service user resulting from such introduction.

66. We do not agree with this contention: the evidence showed that all contact with Atena was by GCHS alone, and Mr Moll accepted that service users were never advised that their care services might be provided by an entity other than GCHS and that, where a Atena staff member was involved in their care, the service user was unaware that the staff member had not been directly engaged by GCHS.

67. There was also no evidence that GCHS had any power to sign contracts on behalf of a service user. It was accepted that GCHS did not obtain any formal authorisation such as power of attorney to sign a contract on behalf of a service user.

68. Mr Moll suggested that there was implied consent to such as GCHS would ask service users whether they minded being cared for by a “foreign employee”.

69. We do not agree that authorisation to enter into a contract on behalf of a person can be implied by the person agreeing to such a question. We take judicial note of the formal requirements involved in the provision of a power of attorney by an individual or the obtaining of deputyship for a vulnerable individual from the Court of Protection. Obtaining consent from a service user as to care being provided by a foreign employee cannot be sufficient to be regarding as authorising GCHS to sign a contract with a third party on behalf of the service user and thereby binding the service user to contractual terms with a party that they have no knowledge of. We note that, although she was not giving evidence at the time, Ms Maslen appeared to agree that GCHS did not have power to sign contracts on behalf of service users.

70. Mr Moll also suggested that the agreement was governed by Slovak law which might have a different approach that would permit GCHS to sign on behalf of a service user. There was no evidence or statutory provision put forward to support this and we consider that it is highly unlikely that the Slovak legal system permits quite such a casual approach to what amounts to a power of attorney.

71. Accordingly, we find on the evidence before us and on the balance of probabilities that there was no contract made directly between Atena and the service user. We find that the contractual arrangements were, in each case, firstly between Atena and GCHS and secondly between GCHS and the service user. Atena’s supplies could not, therefore, be treated for VAT purposes as a business-to-consumer supply of services with the place of supply in Slovakia. Whether GCHS were acting as an undisclosed agent for Atena and should be treated as receiving exempt welfare supplies

72. In the alternative, if Atena were not contracting directly with service users, Mr Moll contended that GCHS entered into contracts in its own name with service users as undisclosed agent for Atena. He contended that this did not change the VAT position as there would still be an exempt supply of welfare services being made to GCHS by Atena in these circumstances, not a supply of staff.

73. Mr Moll contended that this was supported by HMRC’s internal manuals, particularly VTAXPER37950, which notes that the “involvement of an undisclosed agent does not alter the supply position of the underlying services which continues to be a supply between the person actually providing the services and the person receiving them. There is also a further supply of services by the agent to their principal …”

74. Mr Moll contended that the supply therefore remained a supply from Atena to the service user. However, we note that this is a statement of the legal position in the UK and not the VAT position.

75. As stated above, s47(3) VATA 1994 provides that as relevant that: “Where services … are supplied through an agent who acts in his own name the Commissioners may, if they think fit, treat the supply both as a supply to the agent and as a supply by the agent.”

76. The HMRC manual quoted above states that this treatment is compulsory in cross-border supplies.

77. Mr Moll accepted that for VAT purposes, if GCHS were acting as undisclosed agent for Atena, then there was a supply made by Atena to GCHS and also a supply made by GCHS to the service user for VAT purposes. He also accepted that the supply made by Atena to GCHS was a business-to-business supply and that the place of supply was therefore in the UK and that these supplies were potentially within the reverse charge provisions.

78. HMRC contended that GCHS were contracting with Atena in their own name for the supply of staff which were then used to fulfil GCHS’ onward supplies, and that they were not acting as an undisclosed agent for Atena. Whether a deemed supply of welfare services to GCHS would be an exempt supply under the reverse charge provisions

79. Given the point accepted by Mr Moll, that acting as an undisclosed agent would mean that the supply from Atena would be a business-to-business supply taking place in the UK, we have considered first what the VAT treatment of such a supply would be, as Mr Moll contended that GCHS had no liability under the reverse charge provisions in respect of welfare services which would be deemed to have been received from Atena if GCHS were acting as an undisclosed agent.

80. He argued that this was because the reverse charge provisions meant that GCHS would be treated as making the supplies to itself and that, as GCHS was CQC registered, this meant that the services would therefore be treated for VAT purposes as supplied by a UK state-regulated entity and so were exempt from VAT even though Atena was not UK state-regulated.

81. Mr Moll did not refer to the legislation in making this submission but stated that there was nothing in case law that addressed the point. Consideration of the relevant statutory provisions make it clear that the contention is not sustainable.

82. The provisions of s8 VATA 1994 are set out above. It was not disputed that s8(2) applied: GCHS was a relevant business person, registered for VAT in the UK, the supply was from a non-UK entity which was not registered for VAT in the UK and, as the contended for supply of services was within the general rules on the place of supply of services to a business, the place of supply was the UK.

83. Applying the legislation in this context, a service is entirely excluded from the reverse charge provisions if it is an exempt supply of services ( s8 (4A)); s8(1) does not fall to be considered in such a case. Whether or not a supply is exempt from VAT is therefore to be established before any of the reverse charge provisions in s8(1) are applied.

84. The relevant service in this case would be welfare services Item 9 of Group 7 provides that welfare services are only within Schedule 9 (and therefore exempt from VAT) if provided by (as relevant in this case) a state-regulated private welfare institution. Note 8 to Group 7 provides that “state-regulated” means regulated by the UK. Atena were not UK state-regulated and therefore a supply of welfare services made by them could not be an exempt supply of welfare services for the purposes of UK VAT and so could not be a service of a description specified in Schedule 9 VATA 1994 .

85. Welfare services provided by Atena would not, therefore, be excluded from the reverse charge provisions by s8 (4A). S8(1) (a) would therefore apply and GCHS would be treated for VAT purposes as if they had supplied such welfare services themselves. This was the basis of Mr Moll’s submissions.

86. However, his submissions overlook the fact that s8(1) (b) also applies and deems such a self-supply to be taxable.

87. The effect of s8 is that a reverse charge in respect of welfare services cannot be made exempt by virtue of a recipient’s CQC registration: for welfare services to be exempt from VAT such that there is no reverse charge, the services must be exempt without taking into account the self-supply aspect of the reverse charge provisions because any such self-supply will be deemed to be taxable.

88. We find therefore that, if GCHS received supplies of welfare services from Atena (whether directly or as undisclosed agent), GCHS would be required to account for VAT on those services under the reverse charge as if they had made a supply of taxable services. The supply to GCHS by Atena would not be exempt from VAT and would not be rendered exempt under the reverse charge by GCHS’ CQC status.

89. It should be noted that this is entirely consistent with the principle of fiscal neutrality: if GCHS had received welfare services from a UK entity that was not CQC regulated, those services would have been subject to VAT.

90. For the reasons set out above, it therefore makes no difference for VAT purposes whether GCHS acted as an undisclosed agent or were the direct recipients of Atena supplies. In either case, there was a business-to-business supply by Atena to GCHS which took place in the UK for VAT purposes and GCHS were required to account for VAT on that supply under the reverse charge mechanism. As the supply from Atena was not exempt, regardless of whether it was for welfare services or for staff, GCHS were therefore required to account for VAT in the UK on the supply received. Nevertheless, as the point was put to us, we conclude that there is no evidence that GCHS were acting as an undisclosed agent for Atena. Neither the co-operation agreement nor the health care service providing agreement clearly points to GCHS being an agent for Atena; although the co-operation agreement describes GCHS as an intermediary, it also states that GCHS contracts with clients directly. The health care service providing agreement contains no indication that GCHS was acting as an agent of Atena. We therefore conclude that GCHS contracted with Atena for supplies on its own behalf.

91. This is enough to dismiss the appeal against the assessments: the supplies made by Atena were made to GCHS and, for VAT purposes, it makes no difference whether Atena supplied GCHS with welfare services or with staff. The reverse charge provisions apply in either case and the supply is not exempt from UK VAT. There was no contention that the quantum of VAT would be different if the supply were one of services rather than staff. However, as the parties made submissions and argued the points, we have considered below the nature of Atena’s supplies. Whether Atena made supplies of staff or supplies of welfare services

92. HMRC contended that the reality of the contractual arrangements was that Atena were providing staff. They argued that this was supported by Ms Maslen’s reference in oral evidence to Atena providing staff and that it was also supported by the text of Ms Maslen’s query to HMRC on 18 March 2021, in which she requested advice on the application of the reverse charge, stating that the contract with Atena was for the supply of care staff to the UK, and described Atena as an employment agency.

93. Mr Moll noted that the case of Secret Hotels2 Ltd [2014] UKSC 16 (at para [30]) made it clear that where the issues involved more than one contractual arrangement between different parties, all of the circumstances needed to be considered in order to establish the nature of the supplies between the parties. In this context (at [32]) “When interpreting an agreement, the court must have regard to the words used, to the provisions of the agreement as whole, to the surrounding circumstances in so far as they were known to both parties, and to commercial common sense.”

94. Mr Moll contended that the contracts made it clear that Atena were supplying welfare services and not staff, and that the economic reality of the arrangements supported this. Discussion

95. We considered the cases which the parties relied upon in submissions as providing guidance for determining the nature of a supply, which take any contract between the parties as the starting point and then consider the economic reality of the arrangements in the light of the contract. We note the submissions as to Secret Hotels2 , and we also note that, at [33], the Supreme Court noted that ”The subsequent behaviour or statements of the parties can, however, be relevant, for a number of other reasons … they may be relied on to establish that the written agreement represented only part of the totality of the parties’ contractual relationship.”

96. We have described most of the documentation briefly above, in connection with our analysis as to whether or not the documentation supported the contention that there was a contract between Atena and the service user. We turn to that documentation again as part of our consideration of the nature of the supplies between the parties.

97. Firstly, we consider that it is clear that the documentation between GCHS and the service user describes the provision of welfare services by GCHS to the service user. It is the documentation between GCHS and Atena that needs to be considered to establish the nature of the arrangements between Atena and GCHS. Co-operation agreement

98. We set out above the basic facts of this agreement, noting that it has apparently been provided by Atena and that the English text appears to be a direct translation of the Slovak text set out in parallel.

99. As already noted, GCHS is defined in the agreement as “intermediary”; the other party is Atena-Personal Consulting s.r.o, defined as “administrator”. Mr Moll stated in the hearing that this Atena entity was an employment agency.

100. The agreement states that Atena is to “ensure by [their] own qualified personnel the provision of domiciliary activities as well as assistance in the household for [service users] intermediated” by GCHS. GCHS are not permitted to redeploy any Atena employees; such employees are only fulfilling duties detailed in the procurement order for assigned services. Atena will maintain records of workers; GCHS agrees to keep confidential any employee data provided to them. Atena will deal with all tax and social insurance reporting. GCHS are ensure that posted employees of Atena have suitable working conditions. Slovak law is stated to govern, although apparently only in respect of this clause as the provision as to governing law is not separately stated. The contract can be terminated at any time and without cause, although “duties commenced” before termination will be provided until the contract (presumably the individual contract for those duties) expires. Following termination, Atena are not permitted to place employees directly with GCHS clients for former clients, nor are GCHS permitted to engage any of Atena’s employees or former employees.

101. This agreement is accepted by GCHS to have been made with an employment agency. There is nothing in the document to suggest that the employment agency has power to subcontract to others. Whilst the agreement states that the employment agency will use its own personnel to ensure the provision of care activities, it is not clear whether this is meant to indicate that they will provide staff to enable another entity (that is, GCHS) to provide care or whether it was meant to indicate that an Atena employment agency would somehow provide care services. Order for live-in care

102. This document was stated to be completed by GCHS in respect of each relevant service user. The form has a logo for “Atena employment agency” on the top left of each page; it does not otherwise state who the form is to be provided to. The form sets out who is making request (GCHS), the carer requirements (gender, particular skill requirements such as cooking and household management, driving licence, age), the care period and start date, name, location and date of birth of the proposed service user, written details of required services, health issues, mobility aids used, whether night care required, details of the service user’s residence and also details of accommodation available for the caring personnel.

103. We consider that this document is neutral: it does nothing more than provide details of the care which will be involved. This is information which would be required in order for an Atena entity to establish suitable staff, regardless of whether those staff are then provided to GCHS or used to provide welfare services. Health Care Service Providing Agreement

104. As already noted, this document is in a similar format to the co-operation agreement: it is in Slovak and English in parallel and the English appears to be a direct translation of the Slovak. This is a much more extensive document than the co-operation agreement. It was stated to be provided by Atena for each service user after an order for live-in care form was provided.

105. The Atena entity named is Atena-Solutions s.r.o, which is defined as the “service provider”. Mr Moll contended that this was a care services provider, and that this was supported by the invoices from Atena-Solutions which stated “Social work services in accordance with Section 30 of Act no. 222/2004 Coll. Are VAT free with respect to regulations”. He also contended that this was confirmed by inspection of the Slovak central register of social providers, although the only reference to this in the bundle was what appeared to be a screenshot of an unknown website which included reference to Atena-Solutions s.r.o. as providing nursing services to a target group of post-retirement individuals and those with severe disabilities or an “adverse medical condition”. The date of entry onto the central register is stated to be 04/25/2019.

106. The services to be provided are “services to [service user] in home care area and [help] with every day activities”. These are to be provided by an Atena employee. Atena would provide a replacement in case of employee illness, to be provide no later than two weeks after notification of illness. No fee would be due for days when service is not provided.

107. Atena would replace an employee if GCHS was not satisfied with their performance; such replacement was to be provided within one month of receiving a complaint. If replacement or additional personnel were required in respect of a service user, GCHS was required to order them from Atena. Changes in care activities required mutual agreement. GCHS was to inform Atena immediately if the service user’s health condition changed such that the care requirements exceeded domiciliary care. GCHS was not to issue instructions to Atena employees or engage them for GCHS’ own work; Atena employees could not be redeployed by GCHS. GCHS agreed that Atena employees would not carry out any duties other than those specified in work schedules issued by Atena. GCHS was required to arrange transport for the Atena employee from a place of arrival (envisaged as airport or train station) and also to the place of departure at the end of the contract. This was to be provided at GCHS’ own expense. Atena would be responsible for transportation costs of employees to the place of arrival and from the place of departure. GCHS were required to provide Atena’s employees with a minimum level of accommodation and also to pay for Atena employees’ day to day living costs, as well as paying for any equipment needed for the provision of health care to a service user.

108. GCHS were required to pay Atena a daily fee which would increase (non-linearly) in the event of an increase in the UK national minimum wage. The Atena employee was described as being entitled to the national minimum wage “for the provision of the services for” GCHS. GCHS were required to pay the fee even if Atena could not provide a service, if Atena were not responsible for the failure to provide the service. GCHS was to pay an additional 50% of the fee for worked bank holidays. The fee would also change if the service user’s health changed within parameters set out in the agreement. The fee would also be increased by 20% if the contract was terminated with two months of commencement, and GCHS would also be liable in those circumstances to reimburse Atena for the transportation costs of employee to the place of arrival and from the place of departure, subject to a cap. Atena were required to invoice GCHS at the end of each month in arrears. GCHS were required to notify Atena of any dispute in respect of the invoice within three working days of receipt.

109. If GCHS provided training to Atena’s employees, GCHS could claim a capped amount from Atena as contribution towards that training. The contribution would be payable 90 days after the Atena employee started providing services to the service user. The payment was contingent on the Atena employee working for at least 60 days and GCHS were also required to provide a certificate or similar to Atena confirming that the training had been successfully completed.

110. Atena accepted no liability for any damages arising from failure by a service user to follow medical advice, or a service user undertaking activities that had negative consequences for their treatment. Atena would also accept no liability for any damage caused by its employee if GCHS were to provide the employee with a car.

111. The contract could be terminated without cause by provision of a notice of termination. In the alternative, notice could be given by providing a copy of a death certificate for the service user. The termination would take effect from the date specified in the notice, but required at least three days’ notice. GCHS was prohibited from engaging any Atena employees within two years of the end of each contract regarding a service user; GCHS was also prohibited from redeploying an Atena employee and further prohibited from engaging other businesses to provide similar services to those provided by Atena.

112. Overall, the document appears to be based on an agreement prepared by Atena-Solutions for use when they might be engaged directly by a ‘patient’ or their attorney/deputy rather than contracting with another care services provider such as GCHS: although the details of ‘orderer’ require details of a corporate ID, at various points the agreement makes reference to “the appointed guardian” of the orderer (GCHS), and the orderer’s date of birth, which seems more consistent with an expectation that the orderer is an individual (such as an attorney or deputy for a patient) rather than a company. It also includes requirements for GCHS to notify Atena of matters which would not be within GCHS’ knowledge (such as significant changes in health of the ‘patient’) if they were not responsible for (or at least very regularly involved with) the care of the service user; further, if Atena were providing services, we would expect this notification to come from the Atena employee. The statement that the carers will be subject to tax in Slovakia is not consistent with an arrangement whereby they work in the UK.

113. We do not consider that this agreement shows that the supply by Atena is one of services: the provisions could also be interpreted as a supply of staff. It is poorly drafted, at least in English and we were not provided with any evidence to indicate that the Slovak text was any better. The prohibition on instruction of staff by GCHS is at odds with Ms Maslen’s evidence below and the visit schedules referred to below; the requirement that GCHS arrange accommodation and transportation for the relevant staff is also more consistent with the provision of staff to GCHS rather than the provision of welfare services. There is no reference to any indemnity insurance being maintained by Atena, nor to Atena having any involvement in the preparation or content of care plans for a service user, both of which we consider would be required if the supply by Atena was one of services. Other documents

114. We were provided with Atena invoices, GCHS invoices and carer “visit schedules” all for care provide during April 2019.

115. The Atena invoices were addressed to GCHS from Atena-Solutions. The invoices all included the wording “We invoice you in accordance with contract … posting of healthcare assistant for April 2019”. The invoice provided details of the carer and the related costs. No reference to the service user was set out in the invoices. Atena involved monthly in arrears.

116. GCHS invoiced service users (or their attorney/deputy) for care: the invoices set out the care costs but did not state the name of the carer involved or mention Atena in any way. GCHS invoiced monthly in advance.

117. The bundle contained a number of “visit schedules” which set out details of the days and times to be worked by a particular carer, with the name of the relevant service user and the address. These were produced by GCHS: the copies in the bundle were for the individuals named on the provided Atena invoices.

118. Correlating these documents, we note that GCHS invoiced the service users in advance for considerably higher amounts than they were invoiced by Atena in arrears, although in correspondence there was a statement that GCHS did not mark up Atena costs. For example, Atena invoiced GCHS £1,738.56 in respect of LEL in April 2019. The visit schedule showed that LEL was the carer for ME. GCHS invoiced ME £4,571.40 for April 2019. Atena invoiced £685.68 for April 2019 in respect of AIV; AIV was listed as the carer for NJ; GCHS invoiced NJ £5,520.00 for April 2019. Witness evidence

119. We considered Ms Maslen to be a credible witness, giving evidence to the best of her ability within her range of knowledge. Ms Maslen was not directly involved with the discussions with Atena at the outset of the relationship as her son and the company’s chartered accountant had taken charge of negotiations. Neither of these remained with GCHS and did not give evidence. Ms Maslen was also the owner of GCHS at the relevant time and in this capacity signed the cooperation agreement with Atena.

120. Ms Maslen’s witness statement evidence was that the relationship with Atena began in 2015, and that Atena stated that they were an employment agency and could introduce individuals to GCHS’ clients in return for a commission. We note that none of the documents provided indicate that Atena would be paid any commission by GCHS. We also note that the evidence was that GCHS clients had no knowledge of Atena’s involvement: this indicates that, whatever might have been Ms Maslen’s understanding in 2015, Atena did not introduce individuals to GCHS’ clients.

121. Ms Maslen’s evidence was that she needed to make sure that whatever was agreed complied with CQC requirements as she was GCHS’ registered care manager; she described this as meaning that she was legally responsible for the care provided as well as all GCHS staff and Atena staff. Ms Maslen explained that she had discussed Atena with CQC and was told that, as long as GCHS did the same as they did for their own staff, including introductions, training and checks, then there would not be a problem. In context, and noting Ms Maslen’s other evidence as set out below, we consider that it is more likely than not that Ms Maslen at this time considered, and so described to CQC, the relationship as one of the provision of staff to GCHS by Atena. She understood that it was necessary to be registered with CQC to provide the relevant welfare services in the UK.

122. Ms Maslen’s evidence was that GCHS undertook all assessments of service users and created the relevant care plan, and identified appropriate staff, as they needed to ensure that they had an “appropriately qualified and trained live in carer” to provide the service. If Atena were to be engaged, she would prepare a separate assessment for Atena who would then provide details of a carer that they considered suitable, together with their training certificates. A ‘Teams’ conversation with the carer would be arranged and, if all parties were in agreement, the arrangement would proceed. Atena would then provide a contract (the health care service providing agreement). GCHS’ files were colour coded depending on whether or not Atena were involved.

123. GCHS undertook DBS checks and provided induction training for Atena employees, together with any additional training needed for a particular service users care needs. Ms Maslen stated that this was all required to ensure that GCHS complied with CQC requirements.

124. Supervision of the live-in care was undertaken by GCHS on a monthly basis, following GCHS’ policies and procedures, in the same way regardless of whether the carer was provided by Atena or directly engaged by GCHS. GCHS would check make sure that carers were receiving their breaks or check if they needed something. Ms Maslen stated that she would have to call Atena if the relevant employee needed a break or additional funds. Carers were required to maintain logs and information documentation in case the service user required medical attention; the evidence indicated that these documents were all provided by GCHS.

125. Although Ms Maslen was consistent stating that the Atena employees were not “her” staff, her evidence indicated that she considered them to be staff within GCHS’ control to a significant extent in respect of the provision of care. As noted above, she considered that she was legally responsible for Atena staff under her CQC registration, and her evidence was that she was responsible for the care being provided by Atena staff.

126. GCHS’ enquiry to HMRC on 18 March 2021 stated that GCHS had a contract with a “Slovakian Employment Agency (Atena) for the supply of care staff”. Ms Maslen’s evidence was that care provided by Atena would be under “her” guidelines and so would be the same as that provided by GCHS’ employees. She described the relationship as “getting people over to fulfil the contract” with a service user. She would ensure she had the Atena staff paperwork for the service user that she was “going to use [the particular Atena worker] for”.

127. Ms Maslen stated that she could not redeploy an Atena employee: if a service user died, she would have to provide the carer with alternative accommodation until flights home could be arranged. Although Ms Maslen considered she did not have direct control over Atena staff, she nevertheless removed an Atena employee from a service user’s home over a safeguarding incident and then contacted Atena. GCHS had to rehouse the employee until Atena arranged transport for the employee and had to cover the care provision with their own staff. As noted above, GCHS also provided ‘visit schedules’ to Atena staff which set out their working days and hours. Considering all of the evidence

128. The agreements were not, in our view, sufficient to establish the nature of the relationship between the parties given that the two agreements were not entirely consistent with each other and the economic and commercial reality of the arrangements between the parties subsequently differed in material aspects from the terms of the agreements.

129. The invoices from Atena were addressed to GCHS and were for the provision of an individual carer, with no references as to the service user; the costs, which were based on UK minimum wage, were considerably lower than the amounts invoiced by GCHS to the service user in turn, which we consider indicates that GCHS were taking (and being remunerated for) the risks (and regulation) involved with providing the care services to the service user. This is consistent with the supply from Atena being one of staff rather than a supply of welfare services.

130. This is also consistent with Ms Maslen’s evidence as to needing to ensure that the supervision of care was provided according to GCHS’ policies and procedures, to ensure that GCHS was compliant with CQC requirements. It was also consistent with Ms Maslen’s description of the arrangement as being one with an employment agency for the supply of care staff when contacting HMRC in March 2021.

131. Mr Moll cited cases such as Medacy ( [2019] UKFTT 576 (TC) ) and Archus Trading ( [2020] UKFTT 0061 (TC) ) as well as Mainpay ( [2022] EWCA Civ 1620 ) and Isle of Wight ( [2025] UKFTT 1114 (TC) ) in support of his contentions that Atena were providing services. We do not consider that the decision in Isle of Wight is of any particular assistance; that decision concludes specifically that the provision of a locum medical practitioner is exempt from VAT because that VAT exemption applies to the provision of a person of a defined type (medical practitioner) and not to any supply of services which that person might undertake (at [87] onwards). It does not provide any particular assistance in determining whether Atena made a supply of welfare services or a supply of staff, since the exemption in this case requires a supply of services and not a supply of a person of a defined type.

132. These cases consistently confirm that there is no particular bright line between a supply of staff and a supply of services and that each case needs to be considered on its facts. The focus in these cases is principally on which entity controls how the services are provided.

133. The evidence put to us was principally in the negative: that GCHS could not redeploy staff or employ them directly. We consider that these are neutral in deciding as to the nature of the supply as these would not be unusual terms in either the provision of services or the provision of staff.

134. In this case, the level of care required was defined by GCHS and GCHS provided training to ensure that Atena staff followed GCHS’ guidelines in the provision of care, to ensure the quality of care provided. The care plans were stated to be drawn up by GCHS; there was no evidence that Atena (or their staff) could change the care plan if they thought something else would be more suitable to a particular service user. There was no evidence that Atena took any responsibility for the provision of care to a service user. This is contrast to the position in Medacy , for example, where Medacy had significant input into how the pharmacists (in that case) would structure their day to complete relevant tasks, and into how the tasks were undertaken.

135. There was no evidence that Atena exercised any control over the services; there was no evidence that they made any decisions as to how their staff would work, or when they would work. The only evidence of hours set, as noted above, is in the visit schedules which were drawn up by GCHS. Although Ms Maslen stated that she needed to contact Atena if staff needed a break, in context this appeared to mean a significant break (such as a holiday) rather than to a short break within a working day - indeed, Ms Maslen stated that she would ensure as part of her supervision that the staff were taking their regular breaks. We also consider that the requirement for GCHS to contact Atena in these circumstances is consistent with Atena providing staff; if Atena were providing services, we consider that it is more likely that the carers would contact Atena themselves in these circumstances.

136. It was stated that GCHS could not give instructions to Atena staff but, as noted above, this was in an agreement (the health care service providing agreement) which was not particularly well drafted and is at odds with the evidence that GCHS assessed and devised the care plans which were to be followed, and provided Atena staff with visit schedules. On the balance of probabilities and on the evidence before us, we find that GCHS were the entity which controlled the care services to be provided to a service user.

137. Ms Maslen’s evidence as a whole also indicated to us that during the period in which GCHS and Atena were involved (noting also the description of the supply which was given to HMRC in the query made by GCHS in March 2021) she considered that Atena staff were supplied to GCHS and that those staff were used by GCHS to provide welfare services to services users; it was not consistent with GCHS engaging Atena to provide welfare services.

138. Considering all of the evidence before us, we find that the supply made by Atena was one of staff and not a supply of welfare services.

139. As already noted above, this is a supply on which GCHS were required to account for VAT under the reverse charge mechanism. Whether GCHS had a reasonable excuse for late registration

140. Mr Moll contended that GCHS had a reasonable excuse for any failure to notify, if they were required to notify HMRC at an earlier date, because GCHS had believed that the supplies from Atena were not subject to UK VAT.

141. Mr Moll was contended that this belief was reasonable in the circumstances. He contended that Atena had consistently advised GCHS that their supplies were exempt from VAT and that the reverse charge mechanism did not apply; Atena had stated that they had taken UK VAT advice on the point. He also contended that GCHS had no reason to doubt this, as this put Atena on the same footing as a UK domestic care agency for VAT purposes. Once it became aware that there may be doubts about the VAT treatment, GCHS had sought specialist advice and had made a non-statutory clearance request to HMRC as two specialist advisers had reached different conclusions on the same set of facts. Ms Maslen had also contacted HMRC to request advice when she became aware that there might be doubts. Mr Moll contended that this meant that GCHS had a reasonable excuse, as it had sought advice as soon as doubts were raised.

142. HMRC contended that GCHS’ belief did not amount to a reasonable excuse; reliance on incorrect advice was not automatically reasonable and GCHS had not provided any evidence to show that they had taken reasonable care to verify their VAT obligations before they were advised that there might be a problem. Discussion

143. Having concluded that GCHS should have accounted for VAT on the supplies from Atena under the reverse charge mechanism, it follows that they were required to register for VAT at an earlier date than they in fact did and so there was a failure to notify HMRC that they should have been registered for VAT. It was not disputed that HMRC were entitled to raise a penalty in respect of this failure. GCHS contended that they were not liable to the penalty because they had a reasonable excuse for the failure.

144. In deciding whether or not GCHS has a reasonable excuse for its failure, it was not disputed that we should follow the four stage approach set out by the Upper Tribunal in Christine Perrin [2018] UKUT 156 [81]: “(1) First, establish what facts the taxpayer asserts give rise to a reasonable excuse (this may include the belief, acts or omissions of the taxpayer or any other person, the taxpayer’s own experience or relevant attributes, the situation of the taxpayer at any relevant time and any other relevant external facts). (2) Second, decide which of those facts are proven. (3) Third, decide whether, viewed objectively, those proven facts do indeed amount to an objectively reasonable excuse for the default and the time when that objectively reasonable excuse ceased. In doing so, it should take into account the experience and other relevant attributes of the taxpayer and the situation in which the taxpayer found himself at the relevant time or times. It might assist the FTT, in this context, to ask itself the question “was what the taxpayer did (or omitted to do or believed) objectively reasonable for this taxpayer in those circumstances?” (4) Fourth, having decided when any reasonable excuse ceased, decide whether the taxpayer remedied the failure without unreasonable delay after that time (unless, exceptionally, the failure was remedied before the reasonable excuse ceased). In doing so, the FTT should again decide the matter objectively, but taking into account the experience and other relevant attributes of the taxpayer and the situation in which the taxpayer found himself at the relevant time or times.”

145. We note that a reasonable excuse has to persist throughout the period of failure; as noted in Perrin , if the reasonable excuse ceases it must be remedied without unreasonable delay.

146. We also note that paragraph 20(2)(b) Schedule 41 Finance Act 2008 states that reliance on another person is not a reasonable excuse unless the taxpayer took reasonable care to avoid the relevant act or failure. Facts asserted as giving rise to a reasonable excuse

147. In this case, the facts asserted as giving rise to a reasonable excuse are that Atena had advised GCHS that their supplies were exempt from VAT and that the reverse charge mechanism did not apply, and that Atena had obtained UK VAT advice to confirm this.

148. In correspondence with HMRC after the penalty letter was issued, GCHS contended that they had a reasonable excuse because it had formed the opinion, based on contractual agreements and how Atena worked with GCHS, that the supplies were outside the scope of VAT.

149. The submissions made by Mr Moll as to seeking specialist advice and seeking advice from HMRC when Trinity raised doubts cannot, in our view, be submissions as to the existence of a reasonable excuse: the facts giving rise to the reasonable excuse must be in place at the time of the failure. Seeking advice in 2021 cannot give rise to a reasonable excuse at the time when the failure commenced in 2016. We have therefore treated these submissions as relating to the question of whether any failure was remedied without delay when the reasonable excuse ceased. Whether facts asserted are proven

150. The bundle included a copy of an email from an Atena manager stating that “we are and have always been of the opinion that this activity (i.e. social services/caregiving services) is exempted from the application of VAT and our previous consultations with our British accountants/advisors would lead us to believe so, Throughout its history, ATENA has always provided its services as exempt from VAT and we had not had neither any issues nor any reasons to believe that our approach is incorrect. Therefore our opinion is that our services shall continue to be treated as exempt from VAT.” We were informed that Atena had since refused to respond to further requests in respect of VAT and had not provided any copies of advice received from “British accountants/advisors”.

151. This email is dated 22 April 2021, over five years after the start of the relationship between GCHS and Atena. The VAT information appears to have been sent in response to the concerns raised by Trinity as to the VAT treatment of Atena supplies. This email cannot have been relied upon by Atena at the outset of the relationship.

152. There was no evidence as to whether Atena had made similar representations at the start of the relationship; the email from Atena in April 2021 does not specifically state that they had provided GCHS with the same advice previously. Ms Maslen stated in her witness statement that Atena told her that there was no VAT due on their invoices and that no VAT was due in the UK.

153. Her evidence was also that she was not directly involved with negotiations with Atena to establish the relationship, and that her involvement was with respect to ensuring GCHS’ CQC compliance status. Her evidence was that the negotiations were conducted by a former director and a person from the company’s accountants; there was no evidence to indicate (nor was it contended) that the accountants had provided any advice as to the VAT status of the arrangements nor that GCHS had sought any such advice.

154. On the balance of probabilities, we conclude that Ms Maslen’s reference to being told by Atena that no VAT due was a reference to the email dated 22 April 2021, as there is no evidence of any earlier discussions of VAT and her evidence otherwise was that she was not directly involved with negotiations at the outset of the relationship.

155. Atena-Solutions’ invoices state that “Social work services in accordance with Section 30 of Act no. 222/2004 Coll. Are VAT free with respect to regulations”. This statement clearly relates to Slovak law only; it was not contended that GCHS had relied upon this as advice as to UK VAT. Ms Maslen noted that the invoices did not include UK VAT, but there was no evidence or submission that this lack of VAT in invoices was relied upon by GCHS. Ms Maslen stated in the hearing that she did not see the invoices when they were sent to GCHS, as these were dealt with by other people: when taken to invoices in the bundle, she could only comment that they looked like invoices and she recognised the names as being for the people Atena sent over.

156. The co-operation agreement contains no references to VAT. The health care service providing agreement entered into for each supply states, at clause 6, that “Services of [Atena-Solutions] are not VAT taxable according to current legal policy. If applicable law is amended; the customer shall pay the rate per day as agreed including VAT”.

157. We conclude that this shows that Atena made a statement as to their supplies not being subject to VAT, although it does not say whether there is in respect of UK VAT or Slovak VAT. There was no evidence that this statement was noticed or relied upon by GCHS.

158. On balance, we find that GCHS’ assertion that it had formed the opinion that the supplies were outside the scope of VAT is not proven prior to Trinity raising doubts. This cannot therefore provide a reasonable excuse for the failure to notify, given that the reasonable excuse has to be in place when the failure starts.

159. We find that the assertion that GCHS relied upon Atena’s advice is also not proven: although there was a single reference in the health care service providing agreement to services being outside the scope of VAT, and the invoices did not charge UK VAT, the only evidence that Atena’s assertions were relied upon is Ms Maslen’s statement which we consider relates to information provided by Atena some considerable time after the relationship began and supplies were made.

160. For the avoidance of doubt, our finding that the facts are not proven is not a reflection on Ms Maslen or GCHS: we consider that the facts put forward in support of the reasonable excuse were set out with considerable reliance on hindsight. On the evidence before us, we consider that it is more likely than not that GCHS simply did not consider the VAT consequences of receiving supplies from Atena until Trinity raised doubts as to the VAT status of those supplies. Whether the facts amount to an objectively reasonable excuse

161. That is enough to dispose of the appeal with regard to the penalty, as we have found that the facts relied upon are not proven. However, in case we are wrong on this, we have considered whether the facts put forward would amount to an objectively reasonable excuse.

162. The only facts which could be relied upon from the outset would be the statement in clause 6 of the health care service providing agreement and the lack of VAT in the invoices from Atena; we have found that the other contentions as to information from Atena all refer to events substantially later than the point at which Atena began to make the relevant supplies.

163. We note the test in Perrin : was what the taxpayer did (or omitted to do or believed) objectively reasonable for this taxpayer in those circumstances?

164. The wording of clause 6 of the health care service providing agreement does not make any reference to UK VAT; it simply states that the supply is not subject to VAT. This could equally be a reference to Slovak law and, given that the agreement is prepared by Atena, we do not consider that it would be objectively reasonable to conclude that the statement applies to UK VAT.

165. The invoices do not include VAT but the statement on those invoices as to exemption refers specifically to Slovak law. We do not consider that it would be objectively reasonable to conclude that a reference to VAT exemption under Slovak law provides any guidance let alone a conclusive statement as to the UK VAT position.

166. We consider that a taxpayer providing UK exempt welfare services, entering into arrangements with a foreign entity, would ensure that they understood the UK tax treatment of the invoices which they received. As noted, there was no evidence that any advice was sought by GCHS regarding VAT treatment. There was no evidence that GCHS had any internal expertise in VAT; Ms Maslen stated in the hearing that she didn’t understand laws regarding taxes.

167. Although GCHS eventually sought specialist advice, and made enquiries of HMRC, this was not until Trinity raised doubts as to the VAT position. As noted above, this advice and enquiries cannot provide GCHS with a reasonable excuse for the failure, nor does it amount to taking reasonable care to avoid the failure, to notify as this was considerably after the point at which GCHS should have notified HMRC of the VAT liability.

168. Therefore, even if the facts were proven, we find that they did not amount to a reasonably objective excuse as we do not consider that it would be objectively reasonable to rely on the references to VAT in Atena documents (given that they are a non-UK supplier without a UK presence) as being conclusive of the UK VAT treatment of supplies received. We also note that reliance upon Atena information could not be a reasonable excuse within para 20 of Schedule 41) as the failure to take advice means that GCHS did not take reasonable care to avoid the failure. For the avoidance of doubt, this is not a conclusion that a taxpayer must always take advice when relying on another person but that, in this case, there were no circumstances which meant that it would be reasonable (and would mean having taken reasonable care to avoid the failure) to rely on the references to VAT by Atena in the documents as providing any guidance as to the UK tax position for GCHS.

169. As we have concluded that there was no reasonable excuse for the failure to comply from the outset, the question of whether the failure was remedied without unreasonable delay once the reasonable excuse ceased does not need to be considered.

170. We find that GCHS had no reasonable excuse for the failure to notify HMRC of their liability to VAT and the penalty is valid. GCHS did not contend that the mitigation provided by HMRC was inappropriate and, having reviewed the mitigation, we see no reason to alter it. The quantum of the penalty is therefore also upheld. Conclusion

171. For the reasons set out above, we conclude that: (1) the assessments were all raised within the statutory time limits; (2) there was no contract between Atena and service users, so that Atena’s supplies could not be business-to-consumer supplies with a place of supply in Slovakia; (3) the supplies made by Atena were not exempt from VAT in the UK so that GCHS were required to account for VAT on those services under the reverse charge mechanism; (4) GCHS’ CQC registration could not render exempt a deemed self-supply under the reverse charge mechanism; (5) the supplies made by Atena were supplies of staff to GCHS; (6) there was no reasonable excuse for the failure to notify HMRC of GCHS’ VAT obligations in respect of Atena’s supplies.

172. We therefore uphold the assessments and the penalty (as amended on review) in full. The appeals are dismissed. Right to apply for permission to appeal

173. This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. Release date: 06 th FEBRUARY 2026