Customs & Excise Commissioners v. Plantiflor Ltd., [2002] UKHL 33, [2002] 1 WLR 2287, [2002] STC 1132', [2002] BTC 5413 (HL)

The taxpayer, which sold horticultural products by mail order, indicated in its catalogue that customers would pay an additional charge to cover the costs of postage and packing, and stated "we will then advance all postage charges to Royal Mail on your behalf." There was a separate supply consisting of the delivery of the bulbs from the taxpayer to the Royal Mail under a distinct contract between those two parties. However, under the contract between the customer and the taxpayer, arranging the delivery was ancillary to making the bulbs available; and what the customer wanted and what the taxpayer agreed to provide was bulbs delivered to the home. Accordingly, in reality, the sum paid by the customer was for one supply of delivered bulbs.

The taxpayer, which sold horticultural products by mail order, indicated in its catalogue that customers would pay an additional charge to cover the costs of postage and packing, and stated "We will then advance all postage charges to Royal Mail on your behalf."

After finding that there in fact was only one supply involved (of delivered bulbs) Lord Slynn went on to find that, even if there were two supplies, the portion of the money received by the taxpayer for postage constituted part of the consideration received by it for the supply of the bulbs. The argument that the taxpayer received that portion as agent for the Royal Mail was contrary to the terms of the agreement between it and the Royal Mail, which made it clear that the Royal Mail was to deliver parcels for the taxpayer, i.e., there was no link between the Royal Mail and the customer.