London School of Marketing Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 15 May 2017 |
| Neutral Citation | [2017] UKFTT 715 (TC) |
| Date | 15 May 2017 |
| Court | First-tier Tribunal (Tax Chamber) |
[2017] UKFTT 0715 (TC)
Judge Jennifer Dean
Mr M. Reason, Counsel appeared for the appellant
Mr R. Hill, Counsel appeared for the respondents
Value added tax – Application to stay proceedings until judgment given by Court of Appeal in a similar dispute – Company's application granted – Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273), r. 5(3)(j).
The First-tier Tribunal (FTT) allowed the application by the Company to stay proceedings, because the FTT could in due course be assisted by the forthcoming judgment in a similar case as regards clarifying the disputed issues.
The Appellant Company appealed against HMRC's decision that it was not an eligible body within VATA 1994, Sch. 9, Grp. 6, item 1, Note (1)(b), because it supplied other courses outside of an agreement between it and the Anglia Ruskin University.
The Appellant applied under Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273), r. 5(3)(j) to stay proceedings until the decision of the Court of Appeal had been issued in R & C Commrs v SAE Education Ltd, which was due to be heard in June 2017. Proceedings had been stayed since HMRC's application of 21 June 2013, which was lifted following the Court of Appeal's judgment in Finance and Business Training v R & C Commrs [2016] BVC 6.
The Appellant submitted that:
- the key issue in SAE was whether it was an eligible body within note (1)(b) to Grp. 6. More specifically, the appeal concerned whether the company was a college of Middlesex University. Therefore, the SAE judgment will bind the FTT as to the approach in relation to the issue of whether an organisation is a college of a university. The principle derived from consideration of these issues is fundamental to the way in which the FTT must approach the appeal; and
- it would be expedient to stay proceedings to avoid (a) incurring unnecessary costs and (b) wasting court time and resources, as the Court of Appeal may render any decision of the FTT superfluous. A stay of proceedings would not be for an undue period, given the proximity of the Court of Appeal hearing. The Appellant's case does not hinge on oral evidence, so the risk to witness evidence and consequential prejudice is minimal.
HMRC argued that a stay should not be granted where:
- the case is at an early stage of preparation;
- the facts remain to be established;
- most of the factual material required will be the same whatever the Court of Appeal decides on those parts of the SAE case which are possibly relevant to this case;
- there is no likelihood that the appeal will be heard before the SAE judgment is published by the Court of Appeal; and
- the parties can usefully complete the initial stages of preparation for the eventual FTT hearing, while waiting for the SAE judgment, so as to avoid any unnecessary delay.
Also, HMRC submitted that most of grounds in SAE are fact specific. The one legal issue, which may be relevant, was whether it was necessary to ascertain whether the University and the Appellant had a common understanding of the agreement between them and whether the common understanding was that they were in a relationship of University and college (para. 22 of the decision).
Thus, HMRC did not challenge to any significant degree the submission that the Court of Appeal's judgment in SAE may be of material assistance. Essentially, HMRC's objection to the application was that there will remain, irrespective of the SAE judgment, findings of fact specific to the Appellant that will require determination and, given the early stages of this appeal, the parties can usefully continue to progress matters, as the hearing of this appeal is unlikely to take place before the Court of Appeal's judgment. Once the judgment is handed down the parties can consider any impact on this appeal.
However, the FTT decided, on balance, to grant the stay. The delay should be minimal as the Court of Appeal was due to hear SAE imminently. The FTT balanced against that delay the potentially unnecessary costs and time of preparation in respect of disclosure in circumstances which the parties (and ultimately the FTT) will in due course be materially assisted by the Court of Appeal's judgment in clarifying and potentially narrowing the issues in dispute. In the FTT's view, expediency is achieved by enabling the parties to await the judgment and thereby consider the issues (para. 27 of the decision).
The FTT stayed proceedings until 60 days after the Court of Appeal issued its judgment in SAE.
In deciding to stay proceedings, the FTT took account of the overriding objective of dealing with cases fairly and justly, which includes avoiding delay, so far as compatible with proper consideration of the issues and dealing with the case in ways which are proportionate to the importance of the case. A stay is appropriate if the FTT considers that a decision in another court would be of material assistance, though not necessarily determinative in resolving the issues and that it is expedient to do so.
[1] By Notice of Appeal dated 11 April 2013 the Appellant appealed against the decision of HMRC dated 14 March 2013 that it was not an “eligible body” within the meaning of item 1(1) and Note (1)(b) of Group 6, Schedule 9, VATA 1994 because the Appellant provides other courses outside of an agreement between it and the Anglia Ruskin University (“ARU”).
[2] The Appellant submits that by reason of its August 2009 agreement with ARU it qualifies as a “college of ARU” and consequently all of its supplies are exempted from the section 1 VATA 1994 requirement otherwise to be made subject to VAT. In the alternative the Appellant submits that the principle of fiscal neutrality is breached and, in any event, apportionment is required to be applied to its supplies.
[3] HMRC contends that the Appellant's approach is misconceived because: a) for the Appellant's actual supplies to qualify as exempt from the general principle that all of a taxable person's supplies be subject to VAT, the Appellant must first itself qualify as an “eligible body” within the meaning of item I(a), Group 6, Schedule 9, VATA 1994, as properly construed within the meaning of articles 131, 132(1)(i) and 134 of Directive 2006/112/EC. That qualification is premised on the type of supplier and is binary. Only subsequent to such (subsisting) qualification may that body's actual provision of education qualify as exempt from VAT; b) such approach accords with: i) the principle of fiscal neutrality which Directive 2006/112/EC reflects in article 132(1) and to adopt LSM's approach would itself breach that principle; ii) article 132(1)(i) and 134 such that to require apportionment of the Appellant's ARU supplies would re-write the terms of Directive 2006/112/EC article 1 and also item I(a) and Note (l)(b).
[4] By application dated 27 March 2017 the Appellant seeks to stay proceedings until the decision of the Court of Appeal in R & C Commrs v SAE Education Ltd [2016] BVC 514 (“SAE”). The Appellant notes that proceedings have been stayed since the Respondent's application of 21st June 2013 which has been lifted following the Court of Appeal's judgment in Finance and Business Training Ltd v R & C Commrs [2016] BVC 6.
[5] The Appellant submits that the key issue in the SAE appeal is whether it is to be treated as an “eligible...
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