When looking at mixed supplies, the courts now adopt the ‘economic indissolubility’ test. In essence, you look to see what the main purpose was and whether the various parts are economically distinct, or whether they are, in fact, indissoluble (in which case a single supply is being made). This can be illustrated by a recent case involving the registration fee for being involved in a pre-school programme. The fee covered the enrolment of the child in the club; accident insurance; and a membership pack (DVD, T-shirt, etc). In the past, HMRC had accepted that this was a multiple supply, with 30% being standard rated, and the rest being zero rated or exempt. However, HMRC then changed their policy and argued that the whole of the fee was a standard-rated supply. The taxpayer appealed, but lost in the High Court. In its view, the main purpose of the payment was to register the child within the pre-school class. It would be artificial to separate the other benefits from the overriding reason for paying the registration fee. In short, under the ‘economic indissolubility’ test there was a single, not a multiple, supply. Needless to say, this is an important decision for all businesses that are involved in mixed supplies and it seems clear that HMRC are taking a tougher attitude in those situations. Tumble Tots v HMRC [2007] EWHC 103 (Ch) noted in [2007] The In-House Lawyer April p53. © Practical Lawyer