Eastbourne Town Radio Cars Association v Commissioners of Customs and Excise
| Jurisdiction | England & Wales |
| Judge | LORD SLYNN OF HADLEY,LORD HOFFMANN,LORD COOKE OF THORNDON,LORD HOBHOUSE OF WOODBOROUGH,LORD SCOTT OF FOSCOTE |
| Judgment Date | 04 April 2001 |
| Neutral Citation | [2001] UKHL 19 |
| Date | 04 April 2001 |
| Court | House of Lords |
[2001] UKHL 19
HOUSE OF LORDS
Lord Slynn of Hadley
Lord Hoffmann
Lord Cooke of Thorndon
Lord Hobhouse of Woodborough
Lord Scott of Foscote
My Lords,
The Association is an unincorporated body whose members are private hire car drivers in Eastbourne. They pay a joining fee and they pay each year a proportion of the Association's expenses. Through salaried employees services are provided for the members such as advertising and arranging jobs by telephone or radio contact. The Association applied for registration and was registered with effect from 1 September 1991 for the purposes of value added tax. It was not disputed that the Association was making supplies for the purpose of value added tax which exceeded the registration threshhold.
In August 1994 the constitution of the Association was revised. The Association contended that thereafter it was not making supplies to its members and it applied for its registration to be cancelled under para 13(2) of Schedule 1 to the Value Added Tax Act 1994 ("The Act") on the basis that it was no longer registerable. The Commissioners refused the application and their decision was upheld by the London VAT Tribunal, set aside by Turner J [1996] STC 1469 and restored by the Court of Appeal [1998] STC 669. The question on this appeal is whether the Association does make taxable supplies to its members in view of the changes to its constitution.
The Act provides that:
"4(1) VAT shall be charged on any supply of … services made in the United Kingdom, where it is a taxable supply made by a taxable person in the course or furtherance of any business carried on by him.
(2) A taxable supply is a supply of goods or services made in the United Kingdom other than an exempt supply.
5(1) Schedule 4 shall apply for determining what is, or is to be treated as, a supply of goods or a supply of services.
(2) Subject to any provision made by that Schedule and to Treasury orders under subsections (3) to (6) …
(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 … is a supply of services."
There is no suggestion in this case that if the Association does make a supply for a consideration it is other than a supply of services.
The Act has two other provisions which deal with the position of an Association. Section 46 empowers the Commissioners to make regulations determining by what persons anything required to be done under the Act is to be done "where a business is carried on in partnership or by a club, association or organisation the affairs of which are managed by its members or a committee or committees of its members".
Section 94 provides that:
"(1) In this Act "business" includes any trade, profession or vocation;
(2) Without prejudice to the generality of anything else in this Act, the following are deemed to be the carrying on of a business -
(a) the provision by a club, association or organisation (for a subscription or other consideration) of the facilities or advantages available to its members;"
The 1994 version of the constitution of the Association provides for the management of the Association to be entrusted to an elected committee which is given power not only to deal with admissions to and expulsion from membership and to determine the contributions of members to the expenses of the Association but also to determine such matters as the number of employees required, to appoint sub-committees for special purposes and generally to manage "the affairs" of the Association.
Many of the articles of the 1994 Constitution repeat what was in the 1991 Constitution. But there are differences deliberately introduced with VAT liability in mind and which the Association submits are not only important but crucial. It is therefore necessary to consider these in some detail.
Thus para 3 of the 1991 Constitution provides that:
"The purposes for which the Association is established are the following:-
(a) To provide for the members of the Association premises from which there shall be conducted the businesses of the members as independently contracting private car hire drivers.
(b) To provide by means of wireless telecommunications, telephone and such other means as may from time to time be deemed desirable, such communications network for the advancement of the members' business as may be appropriate.
(c) To employ such Manager, telephonist and other staff as may, from time to time, be desirable.
(d) To conduct for and on behalf of the members from time to time, such negotiations and activities as may be deemed to be in the interests of the members in connection with their said businesses.
(e) To do all other things as may from time to time, in the opinion of the Association, or of the Committee of the Association be deemed desirable and opportune for the development of the business interests of the members."
The Constitution further provides:-
"23. The Committee shall have power:-
(a) generally to manage the affairs of the Association in accordance with the rules and bye-laws;
(b) to appoint from their number sub-committees for special purposes and to delegate to them any of the powers of the Committee except those of electing and expelling and making, altering or revoking bye-laws".
"27. At the Annual General Meeting any member may propose a new rule or bye-law or alteration or deletion of any existing rule or bring before the meeting any subject or proposal which relates to the affairs of the Association, provided that by not less than seven days before the meeting he shall have given the Secretary notice thereof in writing".
These were replaced in the 1994 Constitution which contains the following paragraphs:
"3. The purposes for which the Association is established are the following:-
(a) The employment by the members of such manager telephonist and other staff as may, from time to time, be desirable.
(b) To facilitate the supply by third parties to members as joint principals of the use of telephone equipment and such other services, goods and facilities as may be required by the members including (but not to the exclusion of any other services)
i) Advertising and promotion
ii) Post and stationery.
iii) Insurance (but not insurance of vehicles belonging to members).
iv) Computers.
v) Radio facilities.
4. The Association shall carry out its activities upon a non-profit making basis.
5. The entire income and property of the Association shall be applied solely towards the promotion of the purposes set out in paragraph 3 above. No portion shall be paid or transferred to the persons who at any time are or have been members of the Association or to any of them, or to any person claiming through any of them.
7.(g) Each member shall contribute such weekly or other periodical sum as the Committee shall from time to time resolve on account of his Share of the expenses of the Association.
23. The Committee shall have power:-
(a) Generally to manage the affairs of the Association as agents for the members in accordance with the rules and bye-laws;
(b) To appoint from their number sub-committees for special purposes and to delegate to them any of the powers of the Committee except those of electing and expelling and making, altering or revoking bye-laws.
34. The Committee shall keep all proper and necessary records of all receipts and payments taken or made by them on behalf of the Association or its members and shall present an audited account thereof at the Annual General Meeting and the same shall be at the expense of the members of the Association.
The total expenses of the Association thus ascertained will be divided equally among the members. Any member who has been a member for only a part of the period covered by the account shall be allocated a rateable proportion of the total epenses computed on a time basis. At the same time every member will receive a statement of his account with the Association covering the same period in which he will be charged his share of the total expenses and credited with the contributions he has made in accordance with clause 7 (g) above. The balance of each member's account at the end of the period may be dealt with by reduction or increase or such member's future contribution or in any other manner at the discretion of the Committee including demand for immediate payment of any debit balance in the books of the Association.
The Association shall obtain goods and services in accordance with this Constitution as agent for the members jointly".
42. In the Driver's Rules attached to this Constitution the word 'subscription' shall be read as if it referred to the contributions on account of expenses described in this Constitution under paragraph 7 (g)".
Other changes may arguably point in the same direction of transferring the business from that of the Association to that of the members. Thus para 7 (g) in 1991
"Each member shall contribute such weekly or other periodcial sum as the Committee shall from time to time resolve for the purposes of fulfilling the expenses of the Association"
became in 1994
"(g) Each member shall contribute such weekly or other periodical sum as the Committee shall from time to time resolve on account of his share of the expenses of the Association."
I doubt however whether there is any real difference between them.
But Mr Smouha contends that the emphasis in the clauses to which I have referred on the members rather than on the Association fundamentally changes the position in regard to VAT. He further relies on the terms of the "Statement of Conditions of Service" under...
To continue reading
Request your trial
-
Tesco Plc v Commissioners of Customs and Excise
...39 Laws J's approach was approved by the House of Lords in Eastbourne Town Radio Cars Association v. Customs & Excise Commissioners [2001] STC 606, [2001] UKHL 19 (see per Lord Slynn at para 14). In paragraphs 15 and 16 of his speech, Lord Slynn stressed the importance of the 'commercial re......
-
A1 Lofts Ltd v HM Revenue and Customs
...them. 41 Reed was quoted with approval by the House of Lords in Eastbourne Town Radio Cars Association v Customs and Excise Commissioners [2001] STC 606. The issue in that case was whether an unincorporated association whose members were taxi drivers was making taxable supplies to those mem......
-
HM Revenue and Customs v Loyalty Management UK Ltd (Joined Cases C-53/09 and C-55/09)
...the contracts are not determinative. He cites a number of authorities including Eastbourne Town Radio Cars Association –v—CCE [2001] STC 606 paragraph 14 and WHA Ltd –v—CCE [2004] STC 1081 paragraph 29. I accept that to be the case and if Mr Vajda relies on this proposition to support a co......
-
Debenhams Retail Plc v HM Revenue and Customs
...STC 588, 595, quoted with approval by the House of Lords in Eastbourne Town Radio Cars Association v. Customs and Excise Commissioners [2001] UKHL 19; STC 606: "First, ….. the concept of supply for the purposes of VAT is not identical with that of contractual obligation. Secondly, in conse......