Brit College Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 07 December 2018 |
| Neutral Citation | [2018] UKFTT 707 (TC) |
| Date | 07 December 2018 |
| Court | First-tier Tribunal (Tax Chamber) |
[2018] UKFTT 0707 (TC)
Judge Kevin Poole
Noel Tyler of VATAngles Consultancy Limited appeared for the appellant
Caroline Sinclair, office of the General Counsel and Solicitor to HMR Revenue and Customs, appeared for the respondents
Procedure – Application for stay of proceedings and application to strike the appeal out in part – Full findings of fact and reasons for granting the stay and refusing the strike out application – R & C Commrs v RBS Deutschland Holdings GmbH [2008] BVC 16, R & C Commrs v Fairford Group plc (in liquidation) [2014] BVC 529 and Three Rivers District Council v Governor and Company of the Bank of England (No 3) [2003] 2 AC 1 applied.
The First-tier Tribunal (FTT) considered whether to grant application for a stay of proceedings.
Brit College Ltd appealed a decision of HMRC that it is not an eligible body for the purposes of the education exemption. The original appeal was made in 2015. One reason that the case has been ongoing for so long is that the appellant's representative changed in the course of the dispute. Another reason is that similar issues are being addressed in a separate case.
In 2017 the Court of Appeal released its decision in the case of SAE Education Ltd v R & C Commrs [2017] BVC 37. Brit College applied to the Tribunal to amend its grounds of appeal in the light of HMRC's win in this case. SAE Education Ltd then appealed to the Supreme Court. Following this appeal, Brit College applied to the Tribunal for a stay in proceedings pending the Supreme Court's decision and for permission to, again, amend its grounds of appeal.
HMRC opposed the College's application and also argued that at least part of the appeal should be struck out on the grounds that it stood no realistic chance of success.
The FTT concluded that the adequacy or otherwise of the College's evidence should be properly considered at a Tribunal hearing. Although there were cases where it was clear that an appellant's case would not succeed, in considering such applications the Tribunal should be wary of conducting a “mini trial” of the documents without access to oral or written statements.
The FTT further concluded that as the Supreme Court decision was expected soon (the case was listed for 30 October 2018) and would be of material assistance in relation to Brit College's appeal, a short delay pending the release of this judgement would enable all issues to be considered in a single hearing.
The decision demonstrates the approach of the Tribunal to stays in proceedings and applications to amend grounds of appeal. It will be useful to other taxpayers engaged in long running disputes with HMRC where similar issues are being dealt with in other cases before the courts.
[1] These proceedings are chiefly concerned with the issue of whether the appellant was at the material times a college of a university in accordance with Note (1) to Group 6 of Schedule 9, Value Added Tax Act 1994 (“VATA94”), though a further point in issue is whether the UK legislation correctly implements the EU Directive.
[2] The appellant's grounds of appeal were amended to remove one ground of appeal following the decision of the Court of Appeal in SAE Education Ltd v R & C Commrs [2017] BVC 37 (“SAE”).
[3] Permission to appeal the decision of the Court of Appeal in SAE to the Supreme Court was subsequently granted. As a result, the appellant in these proceedings applied on 7 August 2018 for permission to amend its grounds of appeal to re-introduce the ground which had earlier been dropped.
[4] At the same time, the appellant applied for these proceedings to be stayed pending the outcome of the Supreme Court hearing in SAE, which at that time was known to be listed for 30 October 2018.
[5] In response, HMRC applied on 24 August 2018 for a Direction that part of the appellant's case should be struck out, and resisted the application for a stay.
[6] Following further correspondence as set out below in more detail, on 25 October 2018 I made a Direction which granted the stay and refused HMRC's application for the partial striking out of the appeal. I also made Directions for the future conduct of the appeal following the issue of the Supreme Court's decision in SAE.
[7] By email dated 31 October 2018, HMRC requested full findings of fact and reasons for the decisions embodied in my Directions dated 25 October 2018. This document sets out those findings and reasons.
[8] This appeal was commenced by notice of appeal received at the Tribunal on 5 May 2015. The basis of HMRC's decision to assess was supposedly set out in an email, in which it had been stated that “[g]enerally, commercial providers of higher education such as your organisation are not regarded as eligible bodies”; SAE was cited as a case in which the issue had been addressed. The grounds of appeal were that “[t]he decision-making officer has based his decision on the fact that the Appellant is a commercial business (i.e. profit-making) and has not considered the manor [sic] in which it trades, or the close links with universities.”
[9] After HMRC had sought to stay proceedings behind another case Finance and Business Training Ltd v R & C Commrs under reference A3/2014/0428 (which application was resisted by the appellant), that case was decided by the Court of Appeal (under reference [2016] BVC 6) on 19 January 2016 and accordingly the application for a stay became otiose and HMRC were required to deliver their statement of case, which they did on 31 March 2016.
[10] The Tribunal issued standard case management directions on 15 April 2016 to progress the matter to a hearing. Compliance was initially satisfactory, but the appellant was late in serving its witness evidence, as a result of which the appeal was apparently ready for listing only in September 2016. The appellant applied for a stay in November 2016 for the appeal to be considered through ADR, to which HMRC consented and the appeal was accepted into ADR as a result of which matters before the Tribunal came to a halt until 27 July 2017, when HMRC delivered an amended statement of case. In this document, they argued that “HMRC find support for the decision in the Court of Appeal case of Finance and Business Training Ltd v R & C Commrs [2016] BVC 6, the judgment of which is binding, whereas the First-tier Tribunal decision in SAE is not”. They also argued that the present appeal could be distinguished from SAE on factual grounds.
[11] The Tribunal issued new case management directions on 10 August 2017, but shortly afterwards it appears the appellant's then representative went into liquidation, which caused a hiatus. The current representative was appointed in November 2017 and there followed a period of delay for familiarisation with the case and taking instructions.
[12] On 2 January 2018 the new representative submitted an application to amend the grounds of appeal, in...
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