Commissioners of Customs and Excise v Lord Fisher
| Jurisdiction | England & Wales |
| Judgment Date | 24 February 1981 |
| Date | 24 February 1981 |
| Court | Queen's Bench Division |
Queen's Bench Division.
Mr. S. Brown and Mr. S. Aitcheson (instructed by Mr. G. F. Gloak, Solicitor H.M. Customs and Excise) appeared as Counsel on behalf of the appellants.
Mr. D. Milne (instructed by Messrs. Greene & Greene, Bury St. Edmonds, Suffolk) appeared as Counsel on behalf of the respondent.
Before: Gibson J.
Value added tax - Supplies in the course of a business - Whether contributions from invited guests to a pheasant shoot a supply in the course of business - Whether taxpayer carrying on a business - section 2 subsec-or-para (2)Finance Act 1972, sec. 2(2)(b) (now section 2 subsec-or-para (1)sec. 2(1)).
This was an appeal by the Crown against the decision of the London Value Added Tax Tribunal allowing an appeal by the Rt. Hon. Lord Fisher ("the taxpayer") against an assessment in respect of contributions by the taxpayer's guests to the expense of maintaining the shooting over the taxpayer's estate.
The main hobby of the taxpayer was shooting. In order to finance his shooting he invited guests to join the shoot, who were invariably his friends or relations, and sought substantial contributions from them. He neither sought nor made any profit on the contributions, the purpose of which was to cover the cost of the shoot. In addition, the taxpayer made an equal contribution from his own pocket. The Commissioners assessed the taxpayer in respect of the contributions on the basis that they amounted to consideration for the supply of services "in the course of business" carried on by the taxpayer. The taxpayer appealed and, in allowing his appeal, the VAT Tribunal held that the supply of services by the taxpayer for which contributions were received was in the course of arranging a shoot for pleasure and social enjoyment and accordingly the supplies were not made in the course of a business carried on by the taxpayer. The Crown appealed.
Held, dismissing the Crown's appeal:
On the true construction of the word "business" in the Finance Act 1972, section 2 subsec-or-para (2)sec. 2(2)(b) there was to be excluded any activity which was no more than an activity for pleasure and social enjoyment. The sharing of the costs of a sporting or other pleasure activity did not by itself turn that activity into a business. The taking of contributions from those who joined the shoot was not the predominant concern or purpose of the taxpayer in organising the shoot and there was no supply of services made by the taxpayer in the course of carrying on a business.
Gibson J.: This is an appeal by the C. & E. Commrs. They ask that the decision of a VAT Tribunal, given on 11 December 1979, be reversed.
The decision of the Tribunal, of which Mr. Neil Elles was Chairman, was that certain payments received by Lord Fisher, as contributions from a Mr. C. Matsas and from a Mr. Martin and a Mr. Gourlay towards the cost of running Lord Fisher's shoot on his estate in Norfolk, were not received in the course of Lord Fisher's business and thus the payments were not subject to payment of VAT.
The Commissioners ask that this court should direct, as a matter of law, that those payments were received by Lord Fisher, for the taxable supply of services in the course of a business carried on by him, so that the payments would be subject to tax. The particular payments considered in this case were samples. Similar contributions were made by other relations and friends of Lord Fisher who joined him in shooting at Kilverstone.
An appeal from this Tribunal is brought to the High Court under section 13sec. 13 of the Tribunals and Inquiries Act 1971, which section is made applicable to decisions of VAT Tribunals by the Tribunals and Inquiries (Value Added Tax Tribunals) Order S.I. 1972, No. 1210. This section provides that:
If any party to proceedings before any such tribunal … is dissatisfied in point of law with a decision of the tribunal, he may, according as rules of court may provide, either appeal therefrom to the High Court or require the tribunal to state and sign a case for the opinion of the High Court.
This appeal is not by case stated and accordingly the relevant rules of court are set out in R.S.C. Ord. 55. The powers of the court on hearing such an appeal are set out in Ord. 55, R. 7, and it is sufficient to refer to para. (5) of that rule. That paragraph provides that:
The Court may give any judgment or decision or make any order which ought to have been given or made by the court, tribunal or person and make such further or other order as the case may require or may remit the matter with the opinion of the Court for rehearing and determination by it …
There is, in short, an appeal on law only. The court cannot set aside or vary the decision of the Tribunal on any issue of fact if that decision has been reached without any error of law.
VAT was first imposed by the Finance Act 1972. It is charged:
… on the supply of goods and services in the United Kingdom (including anything treated as such a supply) and on the importation of goods into the United Kingdom.
That is section 1 subsec-or-para (1)sec. 1, subsec. (1). This case is concerned only with the supply of services. The relevant law is that contained in the Act of 1972 before the amendments made by the Finance Act 1977.
The scope of the tax is laid down by section 2sec. 2as follows:
(1) Except as otherwise provided by this Part of this Act the tax shall be charged and payable as follows.
-
(2) Tax on the supply of goods or services shall be charged only where -
(a) the supply is a taxable supply; and
(b) the goods or services are supplied by a taxable person in the course of a business carried on by him; and shall be payable by the person supplying the goods or services.
Lord Fisher at all times was a taxable person being registered with reference to certain other activities which are agreed to have been business activities.
The provisions of section 5sec. 5 determine what is a supply of services for the purposes of VAT. It is sufficient to refer to parts of section 5 subsec-or-para (2)subsec. (2) and to section 5 subsec-or-para (8)subsec. (8) of that section. section 5 subsec-or-para (2)Sub-section (2)provides that:
… supply of services does not include anything done otherwise than for a consideration
,
and section 5 subsec-or-para (8)subsec. (8) provides that:
Subject to the preceding provisions of this section, anything which is not a supply of goods but is done for a consideration (including, if so done, the granting, assignment or surrender of the whole or part of any right) is a supply of services.
The tax is charged at the specified rate upon the value of the supply of services. By section 10 subsec-or-para (2)sec. 10, subsec. (2) it is provided that:
If the supply is for a consideration in money its value shall be taken to be such amount as, with the addition of the tax chargeable, is equal to the consideration.
It is thus clear that a supply of services, made for a consideration within section 5 subsec-or-para (8)sec. 5, subsec. (8), is not a taxable supply unless it is supplied by a taxable person "in the course of a business carried on by him". It is with the meaning in law of this phrase that this case has been concerned.
It is provided by section 45 subsec-or-para (1)sec. 45, subsec. (1) of the 1972 Act that:
In this Part of this Act "business" includes any trade, profession or vocation; and -
(a) the provision by the Independent Broadcasting Authority of broadcasting services; and
(b) the provision by a club or by an association to which this paragraph applies of the facilities available to its members; and
(c) the provision by an organisation to which this paragraph applies of the advantages of membership; and
(d) the admission, for a consideration, of persons to any premises; shall be deemed to be the carrying on of a business.
The case for the Commissioners before the Tribunal was that Lord Fisher, in organising his shoot at Kilverstone for himself, his friends and relations, made to them grants of a right to shoot, and that those grants were made for a consideration, namely, the contribution paid. It was not there seriously contended by Mr. Milne, who appeared for Lord Fisher at the Tribunal and in this court, that the invitation by Lord Fisher to his friends to join the shoot, and payment of the suggested sum by way of contribution to the cost, did not constitute a supply of services under section 5 subsec-or-para (8)sec. 5, subsec. (8) as being "Anything … done for a consideration", although Mr. Milne submitted that there was no grant of any right.
It was not submitted to the Tribunal that the arrangements between Lord Fisher and his friends and relations who joined the shoot, were such that, because of its social or family nature, there was no intention thereby to give rise to any legal relationship.
In this court it was conceded by Mr. Milne that the arrangements made by Lord Fisher for his shoot did constitute the supply of services for a consideration within section 5 subsec-or-para (8)sec. 5, subsec. (8), although of course Mr. Milne said that the arrangements were plainly such as might be expected to be made among friends and relations for the sharing of the cost of a shoot in which they all wished to take part. In this appeal, therefore, the only question has been whether the supply of services for a consideration by Lord Fisher was "in the course of a business carried on by him".
Before the Tribunal it was argued for the Commissioners that the supply of services by Lord Fisher was made in the course of a business carried on by him, namely, the business of supplying shooting. In the alternative it was submitted that Lord Fisher was carrying on a business of running his estate at Kilverstone and that the taxable supplies relating to the shooting at Kilverstone were made in the course of that business.
In this court that alternative submission has been abandoned...
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