Celtic Football and Athletic Company Ltd v Commissioners of Customs and Excise
| Jurisdiction | Scotland |
| Judgment Date | 19 May 1983 |
| Date | 19 May 1983 |
| Docket Number | No. 22. |
| Court | Court of Session (Inner House - First Division) |
FIRST DIVISION.
RevenueValue-added taxInput taxAssociation Football ClubPayment of hotel expenses of visiting football clubs in European Cup competitionContractual obligation under Union of European Football Association's RegulationsValue-added tax on hotel expensesClaim as input tax creditWhether "business entertainment"Finance Act 1972 (cap. 41), sections 3, 4Value Added Tax (Special Provisions) Order 1977 (S.I. 1977 No. 1796), articles 2 (2) and 9.1
The appellants, Celtic, a Scottish Association Football Club, belong to the Union of European Football Associations (U.E.F.A.) and take part in
European Cup competitions. They play football against foreign teams in Scotland and abroad. This is arranged by the U.E.F.A. In terms of the U.E.F.A. Rules Celtic was required to pay the hotel expenses of visiting teams playing in Scotland. Celtic claimed the tax payable on the hotel expenses of two of the opposing teams and the hotel expenses of match officials as input credit against their liability for value-added tax. The claim was disallowed by the Commissions of Customs and Excise. Celtic appealed to the Value-Added Tax Tribunal. The appeal was refused on the grounds that the services supplied to Celtic by the hotels had been used by them for the purposes of "business entertainment", that the visiting clubs were not "overseas customers" of Celtic's, and that the tax charged as therefrom included from credit under article 9 of the Value-Added Tax (Special Provisions) Order 1977. Celtic appealed to the Court of SessionHeld that "entertainment" for the purposes of article 9 meant hospitality which was provided free. The hospitality supplied to Celtic's foreign opponents was not provided free because the opponents had to provide hospitality to Celtic in return games abroad. The services supplied to Celtic were not used for the purpose of "business entertainment" within the meaning of article 9. Appeal allowed.
Associated Newspapers Group Ltd. v. FlemingELR [1973] A.C. 628 and Customs and Excise Commissioners v. Shaklee InternationalUNK [1981] S.T.C. 776 referred to.
Celtic Football and Athletic Club Limited, the appellants, were assessed by the respondents on 27th November 1981 in the sum of 722.09 being input tax claimed on business entertainment and output tax not accounted for on supply of hotel accommodation to foreign football teams and match officials. The appellants appealed to the Value-Added Tax Tribunal and a decision was made on 19th October 1982.
The decision was as follows: "The Celtic Football and Athletic Company Ltd. has appealed against an assessment by the Respondents dated 27th November 1981 in the sum of 722.09 being input tax claimed on business entertainment and output tax not accounted for on supply of hotel accommodation to match officials. The Club has appealed against this assessment. The assessment is based upon the following invoices (1) invoice dated 26th August 1980 for accommodating a Romanian football team at the Normandy Hotel, Glasgow, in which the value added tax amounted to 255.51; (2) an invoice dated 27th August 1980 for the cost of accommodating a referee, two linesmen, and a representative of the Union of European Football Associations, in which the value added tax amounted to 40.78; (3) an invoice dated 4th October 1980 for the cost of a meal supplied to a Hungarian team at the North British Hotel, Edinburgh, in which the value added tax amounted to 22.72; and (4) an invoice dated 4th October 1980 for the cost of accommodating the said team at the North British Hotel, Glasgow, in which the value added tax amounted to 403.08. The Appellants have conceded that they are liable to make payment to the Respondents in the sum of 22.72 arising from item (3). The Appellants are members of the said Union of European Football Associations, through which competitions are organised involving various European clubs. The competition involves both home and away games, and in relation thereto the said Union's Rules provide:
Article 18.
1. Each club shall retain its receipts and shall bear all the organisation expenses, including accommodation and subsistence of the visiting team (a maximum of 60 full boards and 60 night's lodgings) in a first-class hotel. The visiting club shall pay its own travelling expenses. In case of a match being transferred for any reason whatsoever, the Organising Committee shall decide who shall bear possible additional expenses resulting thereform for the visiting team.
2. The organising club or its Association shall take at its charge the expenses for travelling, accommodation, board and lodging of the match officials.
Counsel for the Appellants conceded that they were not entitled to repayment of the input tax in relation to item (3) above because the charge arose out of a voluntary entertaining of the visiting team. The position was quite different in relation to the other items, where the Appellants had a contractual duty under article 18 of the said Union's Regulations to pay for the accommodation and subsistence of the visiting team and of the referee, linesmen, and Union representative. He referred to the Value-Added Tax (Special Provisions) Order 1977 (which was in operation at the time of the said invoices). Article 9 thereof provides: Tax charged on the supply to a taxable person of goods or services used by him for the purpose of business entertainment shall be excluded from any credit under sections 3 and 4 of the Act unless the entertainment is provided for an overseas customer of his and is of a kind and on a scale which is reasonable, having regard to all the circumstances.
Business entertainment is defined in article 2 as: entertainment (including hospitality of any kind) provided by a taxable person in connection with a business carried on by him. Counsel for the Appellants submitted that there was no element of entertainment or hospitality in relation to the accommodation of the teams and officials because the services used were required to fulfil a contractual obligation imposed by a third party, namely the said Union. He distinguished Commissioners of Customs and Excise v. Shaklee InternationalUNK [1981] S.T.C. 776. In that case a taxpayer sold their products by means of distributors, who attended meetings for training purposes and were provided with food and accommodation. The Court of Appeal held that the supplies of meals and accommodation were made for the purpose of entertaining the distributors in the ordinary and natural meaning of the word and were made in connection with the taxpayer's business. The supplies therefore constituted business entertainment within article 2 (2) above quoted. Counsel pointed out that in that case the supplies were purely voluntary and not a result of a contractual provision. Where, as in the present case, food and accommodation is provided under contract, it is no longer entertainment or hospitality in the ordinary...
To continue reading
Request your trial
-
BMW (GB) Ltd v Commissioners of Customs and Excise
...BVC 35; [1993] BVC 38 C & E Commrs v Shaklee International VAT(1981) 1 BVC 444 Celtic Football and Athletic Co Ltd v C & E Commrs VAT(1983) 1 BVC 554 Value added tax - Business entertainment - Inputs irrecoverable in respect of tax attributable to supplies used for business entertainment - ......
-
Merlin Scientific LLP
...5 of the 1992 Order it must be provided free of charge to the recipient: see Celtic Football and Athletic Co Ltd v C & E Commrs VAT(1983) 1 BVC 554, a decision of the Inner House of the Court of Session. This case concerned a situation where the home club was obliged to pay for its visiting......
-
Miller Freeman World-wide Plc
...Board of Trade, The City of Chicago VAT(LON/92/766) No. 9114; [1993] BVC 657 Celtic Football and Athletic Co Ltd v C & E Commrs VAT(1983) 1 BVC 554 C & E Commrs v Kilroy Television Co Ltd VAT[1997] BVC 422 C & E Commrs v Shaklee International VAT(1981) 1 BVC 444 Lumby VAT(MAN/94/593) No. 12......
-
Peugot-Citreon Automobiles Limited v The Commissioners of Customs and Excise, V 18681
...of consideration, and in the wider sense, is a critical factor. In Celtic Football and Athletic Co Ltd v Customs and Excise Commissioners [1983] STC 470 the Inner House held that “entertainment”, if it was to come within the terms of the Order, must be provided free to the recipient. At p 4......