The ECJ decided on 21 February 2006 that the Sixth Directive does not grant a taxable person any right to deduct input VAT, where the transactions giving rise to the deduction constitute abusive practices.

The decision involved three conjoined cases, Halifax PLC and Others, BUPA Hospitals Ltd and Others, and University of Huddersfield v Commissioners of Customs & Excise. In a second element of the decision, the ECJ found that if VAT is to be chargeable where payments are made on account but without the supply having taken place, it is necessary for the goods or services to have been precisely identified.

The full judgment is reproduced in our Report of Tax Cases below.