Commissioners of Customs and Excise v School of Finance and Management (London) Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Burton |
| Judgment Date | 30 November 2001 |
| Judgment citation (vLex) | [2001] EWHC J1130-3 |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Case No: CH/2001/APP/010439 |
| Date | 30 November 2001 |
[2001] EWHC J1130-3
IN THE HIGH COURT OF JUSTICE
CHANCERY DTVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Burton
Case No: CH/2001/APP/010439
Mr Jeremy Hyam (instructed by Solicitor for HM Customs and Excise for the Appellants)
Jonathan Peacock QC and Mr Jolyon Maugham (instructed by DLA for the Respondent)
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Justice Burton
This is an appeal by the Commissioners of Customs and Excise ("the Appellants") against a decision of the VAT & Duties Tribunal (Peter Lawson (Chairman), Tony Ring) given on 9 April 2001, after a two day hearing on 19 and 20 February 2001, concluding that the School of Finance and Management (London) Ltd ("SFM") was eligible for exemption as a college of a university under Note 1 to Group 6 of Schedule 9 of the Value Added Tax Act 1994 (" VATA 1994").
The background to the hearing before the Tribunal is succinctly set out in the opening paragraphs of the Decision, which, for convenience, I repeat:
"1. The formal background to this appeal is as follows.
2. … SFM … registered for VAT with effect from 1 January 1996. [Its] business is the provision of degree-level education to fee paying overseas students, leading to the award of a University of Lincolnshire and Humberside ("ULH") validated degree.
3. Following correspondence between [SFM's] accountants and the Commissioners, the Commissioners confirmed by letter dated 11 December 1998 that [its] provision of education was exempt under [VATA 1994] Schedule 9, Group 6. After this, it was discovered that SFM had been incorrectly applying VAT to its sales. SFM therefore, through its accountants, by letter dated 1 February 1999 reclaimed VAT accounted for on its returns made for periods 05/96 to 08/98 amounting to £251,285.27.
4. The reclaim led to a further review by the Commissioners of the position and by letter dated 18 February 1999 they rejected the claim for repayment on the grounds that SFM does not qualify as an 'eligible body' under Schedule 9, Group 6 … The appeal is against that rejection.
5. On 9 July 1999 the Commissioners issued an assessment for £765,013 estimated underdeclared VAT on sales for the period 1 January 1996 to 28 February 1999.
6. [SFM] was originally part of the E W FACT plc Group of Companies ["EWFG"] which was acquired in June 1998 by Nord Anglia Education plc. The trading activities of SFM were transferred to Kingswood College Ltd, an eligible body within the Nord Anglia VAT Group, on 25 February 1999.
7. Witness statements were made by … [the] …Finance Director of Nord Anglia Group, by John Graham Carr, until 31 January 2001, when he retired, Director of Professional and Academic Training of Nord Anglia Education plc, and by Professor George Cecil Corfield BSc, PhD, who worked for fourteen years at ULH and held various posts including that of Dean of Faculty and Director of Quality, and was a member of the Vice-Chancellor's management team."
The prospectus of SFM at the material time commenced, after a foreword from the Vice-Chancellor of ULH, "[SFM] is an Associate College of [ULH] and is also part of [EWFG]". The prospectus refers to the degree of Master of Business Administration ("MBA"), "the 'premier' qualification for today's aspiring senior managers". It states that "the twelve month MBA is a part of [ULH's] International Modular Masters in Management Programme".
Prior to summer 1996 degrees for students at SFM were awarded by the University of Hull. A Memorandum of Co-operation ("MOC") between SFM and ULH, which was never in the event signed but treated as the basis of the agreement between them, was then effective instead from summer 1996. The material parts of the MOC read as follows:
"By this memorandum of co-operation between … [ULH] (the University) in partnership with …SFM, SFM will offer a range of programmes as outlined below. This agreement covers the programmes (below) delivered through University approved SFM centres world-wide."
There is a list of programmes, including the MBA and certain other programmes which are said to be "subject to approval by the University and should be advertised as such". There is a definition section, which includes the definition of a Student, which provides that "each student will be enrolled as a student of the University". It is also provided that the University grants to SFM a non-exclusive licence to use the University's Intellectual Property as defined, in connection with the courses. The most material passages which follow are as follows:
"PRINCIPLES
This agreement is based on the following principles:
• SFM shall act as an approved Centre for the delivery of the University's Courses, as defined above.
• Students will be provided with all Study Guides developed and produced by the University for the Courses …
• As part of its tutorial support, SFM will undertake the initial assessment of students' work which will be moderated by University staff appointed for that purpose.
• Students enrolled for the Courses will have the rights, privileges and responsibilities accorded to full-time students of the University.
RESPONSIBILITIES OF THE UNIVERSITY
1. To appoint Course Managers who will
• produce and maintain the student handbook for the Courses
• develop and co-ordinate an initial staff development programme …
• organise an assessment schedule for the Courses …
2. To appoint Centre Managers who will be the official liaison officer with SFM and who will
• ensure that students are registered with the University …
3. Students enrolled on the Courses will not be entitled to automatic transfer to programmes delivered at the University. They shall, however, have a right of access to the University's guidance services and a right to an interview for any further Courses applied for at the University.
4. Students will be bound by the University Regulations in force at the time and the behaviour and disciplinary regulations of SFM.
RESPONSIBILITIES OF SFM
• To provide during each Academic Year the number of student places as agreed by the University and SFM.
• To seek University Agreement of any advertising of the Courses prior to its publication.
• To ensure that the Courses provided by SFM shall attain the University's minimum teaching standards …
• To recruit and enrol students on the Courses in line with agreed University admissions policies and the Course regulations set out in the Definitive Course Documents, and to transmit student names to the University's Centre Managers for registration on the Courses.
• To act as a focal point where students can meet for formal and informal discussion of the Courses …
• To mark assessable course work and examinations and provide an agreed sample for moderation by University staff within a previously agreed schedule …
• To provide annual reports to the University on the conduct and progress of Courses.
QUALITY CONTROL AND ASSURANCE
The awards will be subject to the University's procedures for quality control and assurance. These include …
ADMINISTRATION
SFM must obtain design approval from the University for any advertising campaigns promoting the Courses, and must notify the University, in writing, of the commencement of each cohort of students on the Courses within four weeks of the commencement of the Courses.
REVIEW AND/OR TERMINATION
This Memorandum covers the period for which the degree is validated or a period of five years, whichever is the sooner, at the end of which the two institutions will review their arrangements. … Any party to the memorandum may request … termination of this memorandum at an earlier date by giving twelve months prior notice, in writing, to the partner institutions. However the institutions confirm that should either… [party] wish to terminate the relationship for whatever reason, they will collaborate to ensure that the present intake of students will be enabled to complete their Course.
FORCE MAJEURE
Should any party violate the terms of this agreement, the University or SFM reserves the right to terminate the agreement immediately. In this event, SFM will meet all reasonable expenses incurred by the University associated with the Courses and the University all reasonable expenses incurred by SFM associated with the Courses in ensuring that existing students are given a reasonable opportunity to complete the Courses."
Although, as can be seen, there is no use in the MOC of the term adopted in the prospectus, "Associate College" of ULH, there was oral evidence given in this regard, which I set out.
i) Mr Carr gave evidence as follows:
Day 1 Page 106: "ULH, as with all the Universities, has a number of collaborative provisions: in other words it would not be untypical for a university to have two or three associate colleges. For example the University of Surrey not only had [the Hampshire Business School] as associate college, it has Roehampton Institute, which is also an associate college."
Day 2 Page 7:
"Q: Do you say SFM is a college of ULH?
A: It is an associate college of ULH.
Q: Why will you not describe it as a college of ULH?
A: Well, ULH does not have colleges. ULH is a single entity university, it is not structured in colleges, so there is no college of ULH as opposed to, for example, the University of London, that has many colleges. ULH is a single entity university that has associate colleges."
ii) Professor Corfield put in a witness statement, which included the information that "students were registered with the University and received a University ID card, giving entitlement to use of University facilities in...
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