Commissioners of Customs and Excise v Royal Exchange Theatre Trust
| Jurisdiction | England & Wales |
| Judgment Date | 17 July 1979 |
| Date | 17 July 1979 |
| Court | Queen's Bench Division |
Queen's Bench Division.
Mr. S. Brown (instructed by the Solicitor for Customs & Excise) for the Crown.
Mr. S. Oliver (instructed by Messrs. Addleshaw, Sons & Latham) for the trustees.
Before: Neill J.
VAT - Whether supply in course of a business - Trustees obtaining lease of land on which to build a theatre and subsequently assigning lease to charitable company incorporated by them - Funds to build theatre raised by appeals to the public - Whether assignment of a lease a supply in the course of any business carried on by the trustees - section 2 subsec-or-para (2)Finance Act 1972 sec. 2(2) (now section 2 subsec-or-para (2)VATA 1983, sec. 2(2)).
This was an appeal by the Crown from a decision of the Manchester VAT Tribunal allowing an appeal by the Royal Exchange Theatre Trust from a decision by the Commissioners that the assignment of a lease by the trustees was not a supply in the course of business.
A trust had been set up for the purpose of advancing public education by promoting and improving the arts of drama, ballet, opera, music and the cinema. The trustees were directed to incorporate a company, which was registerable as a charity, and to endeavour to obtain for the company the lease of part of a building with sufficient floor space therein to erect a theatre. The trustees were to raise funds to pay for the erection of the theatre. When the theatre was completed the trustees were obliged to make a gift of the theatre to the company. The trustees raised substantial sums of money by public appeal, incorporated a company, acquired a lease of a building for a term of 25 years and, having completed a theatre in the building, assigned the lease to the company. The trustees claimed that the assignment of the lease was a supply by them in the course of a business. The Commissioners disputed this but a VAT Tribunal upheld the contention of the trustees. The Crown appealed.
Held, allowing the Crown's appeal:
There was no monetary consideration from the company for the assignment of the lease and no commercial element in the trustees' activities. It followed that these activities were not business ones and accordingly the assignment of the lease did not constitute a supply in the course of a business carried on by the trustees.
Neill J.: This is an appeal by the C. & E. Commrs. (the Commissioners) against a decision of a VAT Tribunal sitting in Manchester on 23, 24 and 25 March 1977. The decision is dated 24 July 1978. By its decision the Tribunal allowed an appeal by the respondent, Mr. Robert David Hillyer Scott, who had appealed to the Tribunal on behalf of the Trustees of The Royal Exchange Theatre Trust. I shall refer to the respondent to the present appeal as "the Trust".
In 1977 the Trust assigned to Royal Exchange Theatre Trustees Ltd., the benefit of a lease of part of the Royal Exchange building in Manchester. The question for determination in the present appeal is whether the assignment of that lease was, for the purposes of VAT, a supply in the course of a business carried on by the Trust.
The facts are set out in the decision of the Tribunal. I can summarise them quite shortly.
The present Manchester Royal Exchange was opened in October 1921, at a time when Manchester still dominated the world trade in cotton. In 1940 the building was badly damaged by fire, but much of the damaged structure was rebuilt and the restored building was opened in November 1953. After a short burst of activity following the 1939-45 War, however, the Lancashire cotton industry and with it the size of the membership of the Manchester Royal Exchange suffered a steady decline. On 31 December 1968, the Exchange ceased to function. Soon after its closure as an "exchange" the building passed into the hands of the Prudential Assurance Company Ltd. The Prudential recognised the potentialities of the considerable office accommodation as a property investment. In addition to the office accommodation, however, the building included a very large hall, some three-quarters of an acre in extent. A hall of this size presented a difficult letting problem.
Meanwhile, in the summer of 1968, that is, a few months before the Exchange in Manchester closed, a newly formed professional theatre company had just begun to rehearse its first production in London. The theatre company was called the 69 Theatre Company. In due course the theatre company came to Manchester. It had a very successful season at the University Theatre, and following that success the company decided to seek a permanent home in Manchester. At one time the theatre company was minded to look for a site on which to build a conventional theatre, but the cost of such a scheme would have been very high. A committee of local industrialists and philanthropists was formed to help solve the problems of the theatre company. It was this committee which saw the...
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