On May 19, 2026, the Upper Tribunal (UT) released its decision in the case of Queenscourt Ltd, [2026] UKUT 00195 (TCC). The case provides an interesting perspective on the contentious area of single vs. multiple supplies for VAT purposes. However, it potentially raises more questions than it answers.

Background

For VAT purposes, the question of single or multiple supplies is important when determining the VAT treatment of a transaction, where two or more elements are supplied together. In a single supply, the transaction is treated as one item for VAT purposes, with (normally) a single VAT rate. This often occurs where there is a predominant item to which the other items are ancillary. In a multiple supply, each element of the transaction is subject to its own VAT rate. This question of single vs. multiple supply, therefore, determines how much VAT is due on transactions with multiple elements, and was central to the Queenscourt decision.

The Queenscourt case concerned the VAT treatment of KFC takeaway meal deals. The meal deals included items that would always be standard rated in their own right, such as fried chicken and fries. They could also include items that would be zero-rated when sold separately, such as yoghurts, coleslaw, cookies, milkshakes, and ‘dip pots’ of sauce.

Having originally treated the meal deals as a standard rated single supply, the taxpayer formed the view that they were, in fact, multiple supplies from a VAT perspective. In its view, this meant that the VAT due on the meal deals should be reduced to reflect the zero-rated items.

HMRC accepted this contention in respect of the cookies and yoghurts. However, they rejected it for the dip pots on the basis that they were ancillary to the supply of hot food.

The First Tier Tribunal decided that the dip pots were part of a single supply of standard rated hot food and dips. Queenscourt appealed this decision to the UT.

The UT Decision

The UT found that it is not possible for two or more elements of a single transaction to form a single supply for VAT purposes if there are other elements of the transaction that constitute separate supplies.

To put it another way, if a transaction is a multiple supply, then every element of that supply must be treated separately for VAT.

This gives rise to the question of how far a transaction has to be broken down into its constituent parts. For example, a supermarket meal deal of a drink, sandwich, and bag of crisps would clearly be a multiple supply. It might, therefore, be expected that each of these three items would be subject to VAT in its own right. However, the zero-rated sandwich would come in packaging which would be standard rated if supplied separately. We would normally take the view that this is a single supply of a sandwich to which the packaging is ancillary. However, the UT decision seems to tell us that this is not permissible in the context of an overarching multiple supply, which appears to suggest that every multiple supply must be broken down into its most basic constituents.

As a result, it would be unsurprising if HMRC appealed the decision.

Implications for Other Businesses

Clearly, fried chicken and other fast-food retailers should consider making claims to HMRC where they provide dip pots in similar circumstances that they have been treating as standard rated.

There will also be other businesses which sell packages or bundles of goods or services as multiple supplies, where they have been treating certain items as ancillary to other items. In these cases, consideration should be given to whether treating these ancillary items as separate supplies in their own right (as per Queenscourt) would change their VAT treatment. This could give rise to potential claims for overpaid VAT, where the ancillary item is zero-rated in its own right.

If you would like to discuss this case in more detail, please get in touch with one of us, or your usual A&M tax contact.