Chancellor, Masters and Scholars of the University of Cambridge
| Jurisdiction | UK Non-devolved |
| Judgment Date | 12 March 2008 |
| Date | 12 March 2008 |
| Court | Value Added Tax Tribunal |
VAT Tribunal
The following cases were referred to in the decision:
Ayuntamiento de Sevilla v Recaudadores de las Zonas Primera y SegundaECASVAT(Case C-202/90) [1993] BVC 186
CO.GE.P Srl v Ministero delle Finanze-Ufficio IVA di MilanoECAS(Case C-174/06)
C & E Commrs v Isle of Wight CouncilVAT [2005] BVC 228
Dr Gillian Evans v University of Cambridge [2002] EWHC 1382
EC v The NetherlandsECAS(Case C-235/85) [1987] ECR 1471
EC Commission v United KingdomECASVAT(Case C-359/97) [2001] BVC 458
Fazenda Pública v Câmara Municipal do Porto (Ministério Público, third party)ECASVAT(Case C-446/98) [2001] BVC 493
East End Dwellings v Finsbury BCELR[1952] AC 109
Edinburgh's Telford College v R & C CommrsVAT [2006] BVC 583
Finanzamt Augsburg-Stadt v Marktgemeinde WeldenECASVAT (Case C-247/95) [1997] BVC 415
Morgan Fleming Claverhouse Investment Trust plc v R & C CommrsECAS(Case C-363/05)
R v Cambridge UniversityENR(1723) 8 Mod Rep 148
R v Disciplinary Committee of the Jockey Club, ex parte Aga KhanWLR [1993] 1 WLR 909
R v HM Treasury and C & E Commrs, ex parte Service Authority for the National Crime SquadVAT [2000] BVC 290
R v University of Cambridge, ex parte PersaudUNK [2001] EWCA Civ 534
R v University of Nottingham, ex parte Ktorides(1998) COD 26
R & C Commrs v Isle of Wight CouncilVAT [2007] BVC 209
Riverside Housing Association Ltd v R & C CommrsVAT [2008] BVC 82
Royal Academy of MusicVAT [1995] BVC 749
T-Mobile Austria GmbH v AustriaECAS(Case C-284/04)
Ufficio Distrettuale delle Imposte Dirette di Fiorenzuola d'Arda v Comune di Carpaneto PiacentinoECASVAT(Case 231/87) [1991] BVC 70
West Devon District Council v C & E CommrsVAT [2001] BVC 525
Economic activity - Whether eu-directive 2006/112 article 13Directive 2006/112, art. 13 treats the appellant as not carrying on an economic activity - Whether the appellant is a body governed by public law for the purposes of art. 13 - Whether the appellant engages in activities as a public authority in providing higher education - Whether the appellant, as a charity, uses fuel or power otherwise than in the course or furtherance of a business within the Value Added Tax Act 1994 schedule 7A group 1Value Added Tax Act 1994, Sch. 7A, Grp. 1 - eu-directive 2006/112 article 13the 2006 VAT directive (Directive 2006/112), art. 13.
The issue was whether the commissioners correctly refused to allow the appellant to issue a certificate entitling it, under the Value Added Tax Act 1994, Sch. 7A, Grp. 1, to pay a reduced rate of VAT on supplies to it of electricity.
The appellant was a charity providing higher education and carrying out research. It constructed a building to house its Faculty of Education and occupied the building for both of these purposes. Electricity was supplied to the building and the appellant applied to the commissioners for consent to issue a certificate to the electricity supplier requiring it to charge the fuel supplied for a qualifying use at the reduced rate of VAT. The commissioners ruled that the appellant was not entitled to issue such a certificate.
The appellant argued that, as a charity, it was entitled to pay the reduced rate of VAT on electricity which was for use "otherwise than in the course or furtherance of a business" in accordance with Sch. 7A, Grp. 1, Note 3(b). In this case, the fuel was used to provide higher education to degree level. The appellant contended that it was a body governed by public law by reason of its statutory foundation and the public powers entrusted to it and that, in providing education, it was acting as a public authority by reason of the statutory regime under which it was governed and the funding and other regulations with which it was required to comply. Accordingly, it was not to be regarded as a taxable person in relation to its activities of providing education, by reason of the 2006 VAT directive (Directive 2006/112), art. 13. If the appellant was not a taxable person then it was not, by reason of the definition of "taxable person" in art. 9 of the directive, carrying out any economic activity. It followed, in the appellant's view, that if, in providing higher education, the appellant was not carrying out any economic activity, it was not then acting in the course or furtherance of a business. Therefore, it was entitled to pay the reduced rate of VAT on the supplies of electricity made to it.
The commissioners argued that art. 13 of the directive had more limited scope than the appellant asserted: by providing that a body governed by public law was not regarded as a taxable person in respect of activities in which it was engaged as a public authority, art. 13 looked only to the question of the supplies made by the public body when it was so engaged; in effect it treated them as outside the scope of VAT, or as exempt. Article 13 did not look to the question of whether the activities in which the public body was engaged were economic activities. Accordingly, the article did not have effect to entitle the appellant to claim reduced rate VAT on electricity supplies it received on the ground that the electricity was used "otherwise than in the course or furtherance of a business". Notwithstanding the appellant's statutory foundation, it was not a "body governed by public law" for the purposes of art. 13, so that even if art. 13 were in point, the appellant would not be within its ambit. The appellant, in providing education, did not engage in activities "as a public authority" since it did not operate under a special legal regime, so for that reason also it fell outside the ambit of art. 13.
The tribunal identified three issues in the appeal. First, it was required to decide if it was correct to interpret and apply art. 13 so that a body within its ambit engaging in activities within its ambit was treated for VAT purposes as not carrying on an economic activity when it engaged in those activities. If the appellant failed on this issue its appeal must also fail. If the appellant succeeded on this issue then, in order to succeed in the appeal, it must succeed on both the second and third issues. The second issue was whether the appellant was a "body governed by public law" for the purposes of art. 13 and thus within art. 13. The third issue was whether the appellant, in providing higher education, was engaging in activities "as a public authority" for the purposes of art. 13 and thus engaging in activities within art. 13.
Held, dismissing the charity's appeal:
1. The appellant was not a "body governed by public law" for the purposes of the 2006 VAT directive, art. 13.
2. Should the tribunal be wrong in finding that the appellant was not a "body governed by public law", the appellant, in providing higher education, was not engaged in activities "as a public authority" for the purposes of art. 13.
3. Should the tribunal be wrong in finding that the appellant was not a "body governed by public law" and was not engaged in activities "as a public authority" for the purposes of art. 13, that article did not have the effect that, when the appellant engaged in such activities, it was to be treated for VAT purposes as not carrying on an economic activity.
4. In providing higher education the appellant was acting "in the course or furtherance of a business" and, in consequence, supplies of electricity or other fuel which it used in providing higher education were not supplies for use "otherwise than in the course or furtherance of a business".
5. Supplies of electricity to the appellant did not quality as supplies at the reduced rate of VAT within the Value Added Tax Act 1994, Sch 7A, Grp. 1.
1. This is an appeal by The Chancellor, Masters and Scholars of the University of Cambridge ("the Appellant") against a decision of the Commissioners for Her Majesty's Revenue and Customs ("the Commissioners") given in their letter of 1 September 2005 to refuse to allow the Appellant to issue a certificate entitling it, under the provisions of Value Added Tax Act 1994 schedule 7A group 1Group 1, Schedule 7A to the Value Added Tax Act 1994 ("VATA"), to pay a reduced rate of VAT on supplies made to it of electricity.
2. The Appellant's case can be summarised as follows:
(2) As a charity it is entitled to pay the reduced rate of VAT on electricity supplies made to it if it uses the electricity "otherwise than in the course or furtherance of a business";
(3) In the present case the electricity was used by the Appellant in the course or furtherance of providing higher education to degree level;
(4) The Appellant is a body governed by public law by reason of its statutory foundation and the public powers entrusted to it and, in providing education, is acting as a public authority by reason of the statutory regime under which it is governed and the funding and other regulations with which it must comply, so that it is not to be regarded as a taxable person in relation to its activities of providing education, by reason of eu-directive 2006/112 article 13Article 13 of the Council Directive of 28 November 2006 ("the 2006 VAT Directive");
(5) If the Appellant is not a taxable person, then it is not (by reason of the definition of "taxable person" in eu-directive 2006/112 article 9Article 9 of the 2006 VAT Directive) carrying out any economic activity;
(6) If in providing higher education the Appellant is not carrying out any economic activity, it is not then acting in the course or furtherance of a business;
(7) Accordingly, the electricity used by the Appellant in the course or furtherance of providing higher education is used "otherwise than in the course or furtherance of a business", and the Appellant is entitled to pay the reduced rate of VAT on the supplies of such electricity made to it.
3. The Commissioners' case can be summarised as follows:
(2) eu-directive 2006/112 article 13Article 13 of the 2006 VAT Directive has more limited scope than...
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