Institute of the Motor Industry v Commissioners of Customs and Excise ; Case C-149/97
| Jurisdiction | UK Non-devolved |
| Judgment Date | 03 April 2000 |
| Date | 03 April 2000 |
| Court | Value Added Tax Tribunal |
VAT Tribunal
The following cases were referred to in the decision:
Institute of the Motor Industry VATNo. 14,639; [1997] BVC 2157
Institute of the Motor Industry v C & E Commrs VAT(Case C-149/97) [1999] BVC 21
Exemption - Professional bodies - Non-profit making organisations supplying services for benefit of members - Voluntary association of workers in automotive industry - Whether organisation had "aims of a trade union nature" - Directive 77/388, the sixth VAT directive, eu-directive 77/388 article 13(A)(1)art. 13(A)(1)(l).
The issue was whether the appellant was an organisation "with aims of a … trade union … nature …" within Directive 77/388, the sixth VAT directive, eu-directive 77/388 article 13(A)(1)art. 13(A)(1)(l), as interpreted by the European Court of Justice ((Case C-149/97) [1999] BVC 21).
The case returned to the tribunal from a reference to the European Court for guidance on the meaning of the words "organisations with aims of a trade union nature". Further evidence was led on the aims and objects of the Institute and the tribunal's decision was based on the finding of facts at this hearing and the hearing in 1996 ([1997] BVC 2157). These were that the appellant was a voluntary association of employees, self-employed persons and "traders" in the retail motor industry, the aims of which were to put into practice the promotion and improvement of standards among its members, responding to the requirements of the industry for skills, the improvement of career structures and prospects within the industry and the enhancement of the public perception of the industry and the people who worked within it. The means adopted to achieve those aims were, inter alia, by encouraging the establishment of courses run by other institutions, by participating in negotiations with government bodies and industrial organisations for the funding and maintaining of standards in the courses, by disseminating information designed to keep its members up-to-date with developments in the industry and in their skills and by keeping a job placement register.
The appellant contended that the expression "defence and representation" in current conditions covered everything that enhanced the position of its members and was not confined to such obvious matters as bargaining in wage negotiations. In particular, the appellant negotiated on behalf of its members with government and trade organisations about the funding and setting up of courses and qualifications.
Held, dismissing the taxpayer's appeal:
Real and advantageous though the benefits provided by the appellant to its members were, they did not amount to the direct function of defence and representation required by the interpretation of the phrase "aims of a trade union nature" by the Court of Justice.
[The tribunal set out the facts summarised above and continued as follows.]
5. The court's ruling is on p. 36 and reads as follows:
For the purposes of eu-directive 77/388 article 13(A)(1)art. 13(A)(1)(l) of the sixth Council directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the member states relating to turnover taxes - common system of value added tax: uniform basis of assessment, an organisation with aims of a trade-union nature means an organisation whose main aim is to defend the collective interests of its members - whether they are workers, employers, independent professionals or traders carrying on a particular economic activity - and to represent them vis-à-vis the appropriate third parties, including the public authorities.
6. The ruling is based on the court's explanation of its interpretation of para. (1)(l) found in para. 17 to 21. So far as is material, the points made by the court can be summarised as follows:
•A strict interpretation must be given to para. (1)(l) on the grounds that it is an exempting provision.
•The organisation in question is not entitled to exemption unless its aims of promoting the interests of its members are put into practice by defending and representing their collective interests: para. 19.
•The defending and representing must be vis-à-vis the relevant decision makers (para. 19) or other appropriate third parties (para. 20).
•The "members" whose collective interests are defended or represented are a wider class than simply workers in a trade: they include workers, employers, independent professionals and traders (para. 20).
•The aim to defend and represent in the manner referred to above must be the organisation's "main aim".
7. The court's ruling substantially embodied the Advocate General's advice. We quote from his opinion:
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47. I do not consider that any carrying on of an activity or pursuit of an aim which may happen to interest or concern a trade union, or a trade union or professional organisation, can constitute aims of a trade-union nature. Nor, moreover, can the exercise of any activity on the part of its members suffice for an organisation to be said to constitute a body pursuing aims of a trade-union nature and, consequently, for it to come within the terms of the expression "organization with aims of a … trade-union … nature", in such a way as to be covered ratione personae by the exemption from VAT provided for in eu-directive 77/388 article 13(A)(1)art. 13(A)(1)(l).
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48. Accordingly, the better interpretation, in my view, of the relevant expression in art. 13 is that it refers to the substantive aims of trade-union activity and accordingly covers those non-profit-making organisations which, irrespective of their legal form, pursue such aims.
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…
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51. The decision in ASTI (Case C-213/90, [1991] ECR 1-3507; [1993] 2 CEC 472) may therefore provide two elements relevant to the issue now before the court which enables us to apply an operational criteria in approaching the term "trade union" under Community law. Thus, the epithet "trade union" is proper to an organisation which, irrespective of its legal form, has as its aim the defence (safeguarding and promoting) of the interests of its members (whether workers, employers of the liberal professions or also generally persons carrying on any economic activity) and their representation. Consequently, it is not sufficient for a non-profit-making organisation simply to promote the interests of its members where that does not go hand in hand with the defence of those …
8. The court's decision clears up our first concern. The Institute's supplies are not disqualified from exemption because its members include employers. The sole issue, therefore, is whether its aims are "of a trade-union nature". With the ruling of the Court of Justice in mind we now turn to set out our findings of facts. These are drawn in the main from the evidence of Mr RK Ward, its director general at the time. He gave evidence at the first hearing. His evidence and the documentary material is summarised in [Institute of the Motor Industry VAT[1997] BVC 2157]. At the hearing on 24 March 2000, Mr Allen Tyrer, the financial director of the Institute, came and gave further evidence. The following is a combination of the findings of the facts and functions of the Institute based on all the evidence. We use the Memorandum of Association as the structure; a new Memorandum of Association was adopted on 14 July 1998 but it does not produce any change material to the present enquiry.
9. Object (b) is:
to establish the work of the … Association as a corporation recognizable by law, and if thought fit, in due course to apply for a Royal Charter or other form of incorporation into which the present corporation may merge.
The Institute has not applied for a Royal Charter. Mr Ward explained that in due course they hoped to apply, but to do so now might "deprive the Institute of flexibility".
10. Object (c) is:
to hold examinations from time to time to test the knowledge and proficiency of applicants for membership and of existing members of the Institute in commercial, legal and engineering subjects, and any other sciences, arts and other subjects which in the opinion of the Institute are necessary or desirable to recommend to its members for study and qualification.
Mr Ward explained that the Institute pursues this object in various ways. It award[s] its own vocational engineering qualifications to its members. It awards a Certificate of Management. It approves higher education automotive courses and programmes. It is an awarding body for NVQs and SVQs. Training for those qualifications is carried out by other bodies and organisations. The Institute provides training for assessors.
11. The vocational engineering qualifications awarded are the CAE (Certificate of Automotive Engineering) and the Licentiate of Automotive Engineering ("the LAE"). The CAE qualifies the holder as a motor industry technician. The LAE qualifies the holder as a motor industry master technical/supervisor. To qualify the member has to have completed a vocational programme covering one of the three heads applicable to the CAE and to produce a more advanced certificate (e.g. City and Guilds Full Technical Certificate of Licentiateship), to have a supervisory qualification (the programme for which is provided by the Institute but undertaken within the candidate's employer company or a further education body), a Training and Development Lead Body qualification as an assessor of the other candidate's performance in the work place, and either to have been a CAE for two years or to have at least five years relevant experience. A candidate can achieve both the CAE and the LAE on practical rather than written work; 18.6 per cent of all members of the Institute have either the CAE or the LAE qualification.
12. The Certificate of Management is awarded to candidates who have completed a specified number of modules (in, e.g. Management, Finance, Law, Computer Application, Marketing and Promotion, Parts Management, Sales Management and Fleet...
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