The issue was deciding the place of supply of the appellant's services. The appellant contended that her acting services were cultural, artistic or entertainment activities which fell within art. 9(2)(c) of EC Directive 77/388, the sixth VAT directive, and which were, therefore, outside the scope of UK VAT. The commissioners argued that the appellant's acting services were not cultural, artistic or entertainment activities, because she was supplying those services in connection with a film rather than a live performance. Thus, the services were supplied where she had her permanent address, namely the UK, and were subject to VAT.

In 2004, the appellant, a professional actor, entered into a contract to perform a leading role in the film Perfect Creature. The contract required the appellant to provide acting services in New Zealand, where the film was to be made. These included taking part in rehearsals, wardrobe fittings, filming and post-production activities such as attending premieres and promotional events. The appellant arrived in New Zealand for the filming in May 2004 and remained there for three months. The commissioners ruled that the place of supply was determined by art. 9(1) of the sixth directive and that the services were taxable in the UK where the appellant resided. An assessment was duly issued in the sum of £18,616, plus interest.

It was accepted that there were no fundamental differences between the practical and legal arrangements for an actor's supply of services in respect of a film or stage production. In each case, the actor would have an agreement with a production company to which he or she would assign the performance rights to enable it to sell the production to distribution companies or theatres. The only real difference for an actor between film and stage work was that in the former, the actor performed to the camera while in the latter, there was a live audience.

The appellant contended that there was no essential distinction between film acting and theatrical acting.

Both services were clearly ‘cultural, artistic or entertainment activities’ within the meaning of art. 9(2)(c) of the sixth directive. The commissioners submitted that the appellant's acting services were not cultural, artistic or entertainment activities because she was supplying those services in connection with a film. In the commissioners' view, an actor playing a role in a film was not actually taking part in a cultural, artistic or entertainment event. Thus, art. 9(1) determined the place of supply of the appellant's services, which was where she had her permanent address, namely the UK.

The tribunal allowed the actor's appeal.

1. Article 9(1) did not have precedence over art. 9(2)(c), the wording of which should not be construed restrictively. The correct approach was to consider whether the facts of the appeal were covered by art. 9(2)(c); if not, they would fall within the scope of art. 9(1).
2. There was no distinction between supplies of acting services for a film and for the theatre. In both cases, the actor employed skills to perform roles and supply services to a production company. The commissioners' application of a contextual interpretation of acting services to decide whether they were cultural artistic or entertainment activities undermined the principle of legal certainty.
3. The commissioners' assertion that art. 9(2)(c) only applied to acting services when the place of supply coincided with the place of the final consumer negated the very structure of the specific regime of that article and rendered otiose the key determining criterion of the regime which was the place where those services were physically carried out.
4. On a construction of the ordinary meaning of the words in art. 9(2)(c), the place of the appellant's supplies of acting services was New Zealand. The services related to cultural, artistic and entertainment activities and they were physically carried out in New Zealand.
5. The tribunal's findings met the requirements of legal certainty and produced a rational solution in that the appellant's supplies were subject to the taxation regime of the country in which the recipient of those services was established. This avoided distortion of competition and provided no incentive for the appellant to move her place of business from the UK which would have been the case if the provisions of art. 9(1) had determined the place of supply.
6. The provisions of art. 9(2)(c) applied to the appellant's supply of acting services to the New Zealand production company. Accordingly, the place of supply of those services was New Zealand where the services were physically performed. There was no legal basis for the assessment under appeal and it was duly discharged.

No. 20,454