Following C & E Commrs v Leightons Ltd; C & E Commrs v Eye-Tech Opticians No. 1 [1995] BVC 192, HMRC accepted that the supply of spectacles by opticians is not one composite standard-rated supply of goods but two separate supplies:

(1)one a standard-rated supply of goods; and

(2)the other an exempt supply of the opticians’ services.

Consequently, many opticians obtained significant VAT refunds relating to several previous years. The Inland Revenue Interpretation IR Int. 122 (Inland Revenue Tax Bulletin, October 1995, p. 255), gave their view on the treatment of the refund for direct tax and is reproduced below:

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