Marcus Webb Golf Professional v Revenue and Customs Commissioners
| Jurisdiction | UK Non-devolved |
| Judgment Date | 23 October 2012 |
| Neutral Citation | [2012] UKUT 378 (TCC) |
| Date | 23 October 2012 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
[2012] UKUT 378 (TCC).
Upper Tribunal (Tax and Chancery Chamber).
Henderson J.
BJ Rice of BJ Rice & Associates for the appellant.
Suzanne Lambert (instructed by the Solicitor to HM Revenue and Customs) for the respondents.
The following cases were referred to in the judgment:
Gregg v C & E CommrsECASVAT (Case C-216/97) [1999] BVC 395; [1999] ECR I-4947
Haderer v Finanzamt WilmersdorfECASVAT (Case C-445/05) [2010] BVC 306; [2007] ECR I-4841
Ingenieurbüro Eulitz GbR Thomas und Marion Eulitz v Finanamt Dresden IECASVAT (Case C-473/08) [2010] BVC 728; [2010] ECR I-907
R & C Commrs v Empowerment Enterprises LtdVAT [2007] BVC 878
Value added tax - Exemption - Tuition given privately by teachers - Golf tuition - Whether tuition supplied by individual teacher acting independently of employer - Whether golf tuition supplied by golf professional on own account or on behalf of taxpayer partnership - Relevance of principle of fiscal neutrality - Taxpayer's appeal dismissed - Value Added Tax Act 1994, Value Added Tax Act 1994 schedule 9 group 6Sch. 9, Grp. 6, item 2.
This was an appeal by a partnership against a decision of the First-tier Tribunal ([2009] UKFTT 388 (TC); [2010] TC 00323) raising the question whether supplies of golfing tuition made on behalf of the partnership by an individual (W) qualified for exemption under item 2 of Grp. 6 of Sch. 9 to the Value Added Tax Act 1994.
The taxpayer was a partnership between a golf professional (M), his wife and a limited company. The taxpayer employed W, who was a golf professional, to work in its shop. W provided golf tuition on his own account and also provided tuition to clients who had been passed on to him by M or through the shop. HMRC took the view that the latter supplies were standard-rated for VAT purposes. The taxpayer argued that all the supplies of tuition should be exempt from VAT whether carried out by W as an individual or by virtue of his relationship with the partnership. The taxpayer argued that the failure to allow such an exemption was a breach of the EU principle of fiscal neutrality.
HMRC relied on the words "given privately" in art. 13(A)(1)(j) of Council Directive 77/388 (the sixth directive), contending that those words were correctly applied in UK law by VATA 1994, Sch. 9, Grp. 6, item 2, which restricted exemption to the supply of private tuition by an individual teacher "acting independently of an employer".
The First-tier Tribunal (FTT) decided that the interpretation of the words "given privately" in Haderer v Finanzamt Wilmersdorf (Case C-445/05) [2010] BVC 306; [2007] ECR I-4841 was binding on the tribunal: the tuition had to be not only private in the sense that it had to be between the teacher and one or more pupils, it also had to be supplied by a self-employed teacher. Accordingly, there had been no breach of the principle of fiscal neutrality. The UK law had correctly transposed the sixth directive ([2009] UKFTT 388 (TC); [2010] TC 00323). The taxpayer appealed.
Held, dismissing the appeal:
1.The question whether tuition was given privately by a teacher within the meaning of art. 13(A)(1)(j) of the sixth directive depended on whether it was provided by the teacher on his own account and at his own risk. The exemptions in subparagraphs (i) and (j) had to be interpreted strictly and only activities which fell within their scope were exempt. It was implicit that the principle of fiscal neutrality, important though it was, could not prevail over the clear wording of the individual exemptions or broaden their scope. (Haderer v Finanzamt Wilmersdorf (Case C-445/05) [2010] BVC 306; [2007] ECR I-4841 applied.)
2.The mere fact that the provider of tuition had self-employed status under national law was not in itself enough to show that the tuition must have been provided "privately". If the tuition in question was provided in the context and for the purposes of training courses offered by another body, it was that body rather than the individual teacher which had to be regarded as providing the tuition, and it could not be regarded as provided privately by the teacher. (Ingenieurbüro Eulitz GbR Thomas und Marion Eulitz v Finanamt Dresden I (Case C-473/08) [2010] BVC 728; [2010] ECR I-907 applied.)
3.The application of those principles of EU law led inexorably to the conclusion that the present appeal failed. The relevant tuition was not provided by the teacher on his own account, because he provided it on behalf of the taxpayer and in fulfilment of contracts entered into between the taxpayer and its customers. He was enabling the taxpayer to fulfil the obligation to provide training which it had entered into with the customer. In contradistinction to the training which the teacher provided to his own clients, he was not providing the training on his own behalf and for his own account. The fact that in some respects he was providing the tuition at his own risk, in that he would not be paid if the lesson was cancelled, could not in itself lead to the conclusion that the exemption was available, because the diagnostic test in Haderer required that the relevant tuition should be provided by a teacher who was acting both on his own account and at his own risk. Even if the latter part of the test might be regarded as satisfied, the former part clearly was not. Despite the undoubted importance of the principle of fiscal neutrality, that principle could not prevail over the interpretation of the exemption in art. 13(A)(1)(j) which had been laid down by the ECJ. It did not matter what W's precise employment status was under English law when he provided the tuition, because the tests laid down by the ECJ made it clear that if a teacher provided tuition on behalf of another taxable body, the teacher could not be said to provide it privately within the meaning of art. 13(A)(1)(j).
1.This is an appeal by a partnership called Marcus Webb Golf Professional ("the Partnership") against a decision ("the Decision") of the First-tier Tribunal (Tax Chamber) ("the FTT") released on 31 December 2009, following a hearing in London on 6 April and 14 December 2009 (see [2009] UKFTT 388 (TC); [2010] TC 00323). The members of the FTT were Judge John Avery Jones CBE (Chairman) and Diana Wilson.
2.The only live issue on the appeal is whether supplies of golfing tuition services made on behalf of the Partnership by a Mr Richard West, in the factual circumstances which I will describe, between about 2003 and 2006, qualified for exemption under Value Added Tax Act 1994 schedule 9 group 6item 2 of Group 6 of Schedule 9 to the Value Added Tax Act 1994 ("VATA 1994"). A further issue before the FTT, which related to a repayment claim for an accounting period in 2003, has not been pursued on appeal.
3.Item 2 of Group 6 exempts:
the supply of private tuition, in a subject ordinarily taught in a school or university, by an individual teacher acting independently of an employer.
4.This exemption was intended to give effect in domestic UK law to the corresponding exemption then contained in eu-directive 77/388 subsec-or-para A article 13Article 13(A)(1)(j) of the Sixth VAT Directive (Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes - Common system of value added tax: uniform basis of assessment). It needs to be read in the context of eu-directive 77/388 subsec-or-para A article 13Article 13(A) as a whole, which is headed "Exemptions for certain activities in the public interest", and in particular with the immediately preceding sub-paragraph (i):
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(1)Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall lay down for the purposes of ensuring the correct and straightforward application of such exemptions and of preventing any possible evasion, avoidance or abuse:
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(i) children's or young people's education, school or university education, vocational training or retraining, including the supply of services and of goods closely related thereto, provided by bodies governed by public law having such as their aim or by other organisations defined by the Member State concerned as having similar objects;
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(j) tuition given privately by teachers and covering school or university education;
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These exemptions are now contained, in materially the same language, in eu-directive 2006/112 subsec-or-para 1 article 132Article 132(1)(i) and (j) of the Principal VAT Directive of 2006, Council Directive of 28 November 2006 on the common system of value added tax.
5.The FTT held that the UK had correctly transposed Article 13(A)(1)(j) of the Sixth Directive into domestic law, and that "tuition supplied by Mr West as an employee of [the Partnership]" was not exempt: see paragraph 12 of the Decision. The Partnership now appeals against that conclusion, with permission granted (I was told) by Sir Stephen Oliver QC.
6.I emphasise that the scope of the appeal is confined to this single issue, because Mr BJ Rice of BJ Rice & Associates (a firm of chartered tax advisers and accountants), who appeared for the Partnership as he had at the hearing before the FTT, seemed anxious at times in both his written and oral submissions to stray into related but distinct disputes which Mr Webb has been conducting with HMRC. The limited nature of the present appeal was reinforced when the FTT...
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