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ECJ finds in favour of Brockenhurst College

15th May 2017
VAT Consultant
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Les Howard

I was pleasantly surprised to see the ECJ depart from the AG’s opinion in Brockenhurst College, and find in favour of the taxpayer. The ECJ upheld the decisions of the UK First Tier and Upper Tier Tribunals (see [2013] UKFTT 153 & [2014] UKUT 46).

The question was whether meals made by catering students, and sold in the restaurant which was part of the college could be treated as ‘closely related services,’ and therefore be exempt from VAT. The AG disliked the fact that the recipients of the supplies were not the students, but the ECJ ruled that this is not relevant. The Court of Appeal put five questions to the ECJ. Its decision is at [2015] EWCA Civ 1196.

The ECJ re-framed the Court of Appeal’s questions slightly, and made two main points:

  • The supply of services in question was essential to the education provided (paras 28-34). The Court noted that the College’s training restaurant was tantamount to a student classroom. It referred to a European Commission statement that students benefit from preparing meals and performing table service in a real-life setting. The Court was satisfied that the services at issue were essential to guaranteeing a high quality of education.
  • The supply of services in question must not be made in competition with similar supplies made by commercial organisations (the ‘fiscal neutrality’ question) (paras 35-41). The Court noted that the restaurant was open only to persons on a mailing list, and was not open to the general public. Further, if less than 30 covers were booked, the sitting was cancelled.

Prices charged were only 80% of the cost of the meals. Therefore, the College did not intend to obtain additional income from the services provided. The Court was therefore satisfied that the College was not making supplies in competition with commercial restaurants.

The same principles applied to dramatic performances delivered by drama students.

The Court appears not to have directly addressed the AG’s question as to the identity of the recipient of the supplies. The Court of Appeal had asked whether it was relevant that the students were involved in the making of the supplies rather than being recipients of those supplies. The Court of Appeal also asked whether it was relevant that the supplies were not consumed by the students but by members of the public, who were not in receipt of the services of education. These questions were subsumed in the ‘fiscal neutrality’ argument.

The decision is here:

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By JosephChen
19th Oct 2018 13:13

Good article. Seems to have seen something similar on

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