IANSYST LIMITED v THE COMMISSIONERS FOR HER MAJESTY’S  REVENUE & CUSTOMS [2016] UKFTT 372 (TC)

Iansyst Limited had appealed against a decision by HMRC that supplies of mobile phones and tablets with a software package pre-installed (“Capturatalk”) do not qualify for zero-rating for the purposes of VAT. The Court was asked to determine whether the mobile devices supplied were “designed solely for use by a handicapped person”

The relevant zero-rating provisions are found in Group 12 of Schedule 8 to VATA 1994 which allows for zero-rating of certain drugs, medicines and aids for the handicapped. Specifically, zero-rating is allowed under Item 2(g) for: The supply to a handicapped person for domestic or his personal use, or to a charity for making available to handicapped persons by sale or otherwise, for domestic or their personal use, of …equipment and appliances not included in paragraphs (a) to (f) above designed solely for use by a handicapped person.

The Court found that, looking at the package as a whole at the time of supply, the supply of a mobile device with Capturatalk pre-installed would meet the requirements of a piece of equipment designed solely for use by a handicapped person, and should therefore be zero-rated for VAT purposes (provided the conditions of supply in the pre-amble to Item 2 are also met). For completeness, the court noted that HMRC’s submission that the Capturatalk software was itself not designed solely for use by handicapped persons was not relevant to the question at hand. The question related to the supply of a package of a mobile device with Capturatalk installed.