Miller Freeman World-wide Plc
| Jurisdiction | UK Non-devolved |
| Judgment Date | 01 April 1998 |
| Date | 01 April 1998 |
| Court | Value Added Tax Tribunal |
VAT Tribunal
The following cases were referred to in the decision:
Board of Trade, The City of Chicago VAT(LON/92/766) No. 9114; [1993] BVC 657
Celtic Football and Athletic Co Ltd v C & E Commrs VAT(1983) 1 BVC 554
C & E Commrs v Kilroy Television Co Ltd VAT[1997] BVC 422
C & E Commrs v Shaklee International VAT(1981) 1 BVC 444
Lumby VAT(MAN/94/593) No. 12,972; [1996] BVC 4047
Business entertainment - Input tax - Exhibition organiser - Social events organised for exhibitors at trade fairs - Cost of social events included in price paid by exhibitors - Whether provision of "business entertainment" by organiser to exhibitors - SI 1992/3222Value Added Tax (Input Tax) Order 1992 (SI 1992/3222), art. 5(1).
The issue was whether the appellant was entitled to recover input tax on supplies made to it in connection with social events held during the course of the exhibitions which it organised.
The appellant staged exhibitions. The appeal concerned specific supplies in relation to events which it arranged in 1993: the hire of a banqueting room, band and disco in connection with the Craft Fair, food and drinks provided in a hotel at the Gift Fair, food and drinks provided at a hotel for the Premier Menswear Show and food and drinks provided at a hotel for the Premier Bridalwear Show. The third and fourth supplies related to cocktail parties, which could be attended by exhibitors upon application. No mention was made in the agreements for taking space for exhibition stands of any obligation on the part of the organiser to provide a social event. Where a specific charge was made by the appellant for tickets to attend a function, it was accepted by the commissioners that this was not the provision of entertainment or hospitality caught by the blocking order. Further, it was accepted that the appellant budgeted for the expense of providing a social event in fixing the charge for stand space. On occasions, exhibitors gave away tickets to social events to esteemed buyers and in such a case the issue was not the provision of entertainment to the buyer. The issue of business entertainment related to the entitlement on the part of the appellant to claim input tax on goods and services which were provided to an exhibitor without a separate and specific charge. A finding of fact was made that at the time an exhibitor put in his application form for stand space he did not know, because the appellant had not given him details, whether there would in fact be social events and what form they might take if they took place. However, there was an expectation among regular exhibitors at particular exhibitions based upon past experience that social functions of some kind would be arranged.
The appellant contended that because an exhibitor paid for the cost of the food and drink in the price paid for exhibiting at a show the concept of free entertainment or hospitality was absent, so that the blocking order did not apply.
The commissioners contended that the correct test was whether the appellant was under a legal obligation to provide the "entertainment" in question to the exhibitors. On the facts before the tribunal, it had failed to establish any such contractual obligation.
Held, dismissing the company's appeal:
1. When an exhibitor paid the cost of taking a stand he paid for the right to be at the exhibition and not for a right to receive free entertainment.
2. While it was in the appellant's general interest that exhibitors took part in the exhibitions which it mounted, this was not consideration provided to the appellant in return for hospitality sufficient to establish that they did not get it free.
3. The entertainment provided by the appellant was therefore free to the recipients in the sense envisaged by the blocking order.
[The tribunal set out the facts summarised above and continued as follows.]
1. This is the first of two appeals, which were heard consecutively, by Miller Freeman World-wide plc as the appellant is now called. It is in the business of staging exhibitions, as it has done for several years as Blenheim Group plc, in which name this appeal was lodged. I will refer to the appellant as "Blenheim".
2. The issue in this appeal, which is against an assessment notified by the commissioners on 10 March 1994 and their decision contained in a letter of 16 January 1996, is whether supplies which Blenheim used in connection with special events during the course of its exhibitions and after-show parties were used for the purposes of business entertainment so that any credit for input tax for the VAT charged to the appellant on those supplies is blocked.
3. As now narrowed down, the dispute before the tribunal is about VAT charged on the following four invoices (- although the point involved has a continuing general importance for the appellant's business):
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(2) from the Crown Hotel, Harrogate, in respect of the hire of the banqueting room and the band and disco stated in the invoice to have been in connection with the Craft Fair on 11 May 1993; (VAT £64.69);
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(3) from the Hotel Majestic, Harrogate, stated to be in respect of food and drinks provided at the Gift Fair on 22 July 1993 (VAT £374.42);
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(4) from the Belfry Hotel, Wishaw, Sutton Coldfield, stated as being in respect of food and drinks provided at the Premier Menswear Show, 16-18 August 1993 (VAT £1436.24);
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(5) from the Birmingham Metropole Hotel & Conference Centre, stated to be in respect of food and drinks provided at the Premier Bridalwear Show on 15 August 1993 (VAT £2509.86).
4. I heard evidence from Mr James Douglas Emslie, the appellant's financial planning director, who joined Blenheim as group taxation manager in October 1993. He has not been involved personally in organising either the exhibitions put on by Blenheim or the events within them of the kind with which the tribunal is concerned and he has no personal knowledge of the terms and conditions of the contracts with particular exhibitors. He gave his testimony from his knowledge gained from attending shows and events and from his meetings and discussions with colleagues and exhibitors. I allowed a witness statement to be read which had been made by Mr Mark Phillips, sales director of Ronald Joyce (London) Ltd, although it was...
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