Commissioners of Customs and Excise v Zinn and Another
| Jurisdiction | England & Wales |
| Judgment Date | 20 November 1987 |
| Date | 20 November 1987 |
| Court | Queen's Bench Division |
Queen's Bench Division (Crown Office List).
Mr. Robert Jay (instructed by the Solicitor for Customs and Excise) for the Crown.
Mr. David Neuberger (instructed by Woolsey Morris & Kennedy, Sidcup) for the taxpayers.
Before: Nolan J.
The following cases were referred to in the judgment:
British Airports Authority v. C. & E. Commrs. WLRVAT[1977] 1 W.L.R. 302; (1976) 1 BVC 97
British Railways Board v. C. & E. Commrs.WLRVAT[1977] 1 W.L.R. 588; (1977) 1 BVC 116
C. & E. Commrs. v. The Automobile Association VAT(1974) 1 BVC 8Barton v. C. & E. Commrs. VAT(1974) 1 BVC 13
Trewby v. C. & E. Commrs. WLRVAT[1976] 1 W.L.R. 932; (1976) 1 BVC 80
Value added tax - Exempt supplies - Licence to occupy land - Licence to occupy seats or boxes in the Albert Hall granted for 999 years - Licence capable of assignment - Whether assignment of licence exempt supply as assignment of licence to occupy land - Value Added Tax Act 1983 schedule 6 group 1Value Added Tax Act 1983, Sch. 6, Grp. 1, item 1.
This was an appeal by the Commissioners of Customs and Excise against the decision of a VAT Tribunal (1986) 2 BVC 205,467 that the transfer of the right to occupy a seat or a box in the Albert Hall fell within the exemption from VAT for the transfer of an interest in land.
The Royal Albert Hall was built under a Royal Charter of 1867 and was leased for 999 years to the Corporation of the Hall of Arts and Sciences. Members were invited to subscribe for permanent seats or boxes which gave them exclusive rights to occupy them for the period of the lease. A register of seat holders and a prescribed form of transfer or assignment was provided for. Each registered holder was entitled to a certificate naming him as "proprietor" of the seat or box concerned. A supplemental charter of 1887 and Acts of Parliament in 1876 and 1927 enabled the Corporation to let the Hall for private meetings and to exclude the members from the Hall for certain purposes.
Over a period of years the taxpayers acquired permanent seats and boxes by assignments of lease and subsequently sold them. The Commissioners of Customs and Excise assessed the taxpayers to VAT on those sales.
The taxpayers appealed against the assessment contending that the assignment of part of the original lease of the seats amounted to the assignment of a licence to occupy land and was thus an exempt supply within the Value Added Tax Act 1983, Value Added Tax Act 1983 schedule 6 group 1Sch. 6, Grp. 1, item 1.
The Commissioners contended that, even if the original rights of the seat holders amounted to a licence to occupy land, those rights had been whittled down over the years and that the remaining rights amounted merely to a right to attend certain performances.
The Tribunal allowed the taxpayers' appeal holding that the later limitations did not alter the original rights which had amounted to a licence to occupy land, and the assignments were accordingly exempt supplies.
The Commissioners appealed contending that whatever was the form of the agreement to assign, it was the substance of the agreement which had to be looked at, and that was only the assignment of a right to attend performances, which could not amount to a licence to occupy land.
Held, dismissing the Crown's appeal:
1. The true nature of the agreement between the taxpayers and the assignee was the transfer of the rights conferred by the original grant of a licence to occupy the seat or box in question.
2. There was no obligation under the agreement to provide the assignee with any entertainment, but only the transfer of the right to occupy the seat when performances might be provided by the Corporation of the Hall of Arts and Sciences.
3. The rights transferred, which extended over a long term of years, were capable of exploitation like other items of property including sub-licensing for the sale of tickets.
4. The transfer of the right to occupy seats or boxes was therefore the transfer of a licence to occupy land falling within the exemption provided by Value Added Tax Act 1983 schedule 6 group 1Sch. 6, Grp. 1, item 1.
By a notice of motion dated 1 September 1986, the Commissioners of Customs and Excise appealed against the decision of a VAT Tribunal. The grounds of the appeal were that the Tribunal erred in law:
(2) In holding that the supply of permanent seats at the Albert Hall constituted the assignment of an interest in or a right over land or of a licence to occupy land within the Value Added Tax Act 1983,Value Added Tax Act 1983 schedule 6 group 1Sch. 6, Grp. 1, item 1.
(3) In failing to hold that the supply of such seats was chargeable to VAT at the standard rate.
Nolan J.: This is an appeal by the Commissioners of Customs and Excise against a decision of the VAT Tribunal given on 13 August 1986. By that decision the Tribunal held that the taxpayers were not liable to VAT on the money received for what are described in the assessment as sales of theatre seats. The seats in question are at the Albert Hall.
It is common ground that the sale was a supply of goods or services for the purposes of the VAT legislation: see Value Added Tax Act 1983 section 3 subsec-or-para (2)sec. 3(2) of the Value Added Tax Act 1983, which provides so far as relevant:
(a) "supply" in this Act includes all forms of supply, but not anything done otherwise than for a consideration;
(b) anything which is not a supply of goods but is done for a consideration (including, if so done, the granting, assignment or surrender of any right) is a supply of services.
The taxpayers maintain however, and the Tribunal have held, that the sale was an exempt supply by virtue of Value Added Tax Act 1983 section 17 subsec-or-para (1) schedule 6 group 1sec. 17(1) and Sch. 6, Grp. 1, item 1 to the 1983 Act. Value Added Tax Act 1983 section 17 subsec-or-para (1)Section 17(1) reads:
A supply of goods or services is an exempt supply if it is of a description for the time being specified in Finance Act 1972 schedule 6Schedule 6 to this Act.
Value Added Tax Act 1983 schedule 6 group 1Schedule 6, Grp. 1, item 1 reads:
The grant, assignment or surrender of any interest in or right over land or of any licence to occupy land, other than …
and there is then set out a list of transactions to which the exemption does not apply.
The question at issue is whether the sale of the seats was an assignment of a licence to occupy land for the purposes of this provision. Mr. Jay for the Commissioners submits that having regard to the real commercial purpose of the transaction it was not a supply of a licence to occupy land but of a right to attend performances at the Albert Hall. It could not be both, submitted Mr. Jay. What the purchaser was paying for was the right to attend performances, and such rights of occupation of land as he might acquire were purely incidental.
I must begin by setting out what is involved in a sale or assignment of what are called permanent seats at the Albert Hall. To do so I must go back to the year 1867 when the Corporation of the Hall of Arts and Sciences was incorporated by Royal Charter.
The purposes of the Corporation declared in the charter included the building of the Royal Albert Hall. The objects in view included the holding of congresses for purposes of science and art, performances of music, agricultural and other exhibitions and generally any other purposes connected with science and art.
By eu-directive notrep article 4Art. 4 of the charter it was provided:
With a view to raise the required funds for the building and maintenance of the Hall the Corporation may receive Subscriptions or Donations from any persons or societies desirous of giving the same; and, subject to the rights reserved to members of the Corporation by this Our Charter, may grant to the persons or societies giving such...
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