Revenue and Customs Commissioners v Bridport and West Dorset Gold Club Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 30 July 2012 |
| Neutral Citation | [2012] UKUT 272 (TCC) |
| Date | 30 July 2012 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
[2012] UKUT 272 (TCC).
Upper Tribunal (Tax and Chancery Chamber).
Proudman J.
The following cases were referred to in the judgment:
Able UK Ltd v R & C CommrsVAT [2011] UKUT 193 (TCC); [2011] BVC 1,607
Adams v Lancashire County CouncilICR [1996] ICR 935
British Association for Shooting and Conservation Ltd v R & C CommrsUNKVAT [2009] EWHC 399 (Ch); [2009] BVC 323
Canterbury Hockey Club v R & C CommrsECASVAT (Case C-253/07) [2008] BVC 824; [2008] ECR I-7821
CILFIT (Srl) v Ministry of HealthECAS (Case 283/81) [1982] ECR 3415
CopyGene A/S v SkatteministerietECASVAT (Case C-262/08) [2010] BVC 974; [2010] ECR I-5053
C & E Commrs v ApS SamexUNK [1983] 1 All ER 1042
C & E Commrs v Federation of Technological IndustriesUNKVAT [2004] EWCA Civ 1020; [2004] BVC 682
Diagnostiko & Therapeftiko Kentro Athinon-Ygeia AE v Ipourgos IkonomikonECASECASVAT (Joined Cases C-394/04 and C-395/04) [2009] BVC 843; [2005] ECR I-10373
EC Commission v GermanyECASVAT (Case C-287/00) [2003] BVC 11; [2002] ECR I-5811
EC Commission v SpainECAS (Case C-124/96) [1998] ECR I-2501
Everything Everywhere (formerly T-Mobile) v R & C CommrsECASVAT (Case C-276/09) [2011] BVC 44; [2010] ECR I-12359
Henn and Darby v DPPELR [1981] AC 850
Hoffmann, ReECASVAT (Case C-144/00) [2005] BVC 41; [2003] ECR I-2921
HP Bulmer Ltd v J Bollinger SAELR [1974] Ch 401
Kennemer Golf & Country Club v Staatssecretaris van FinanciënECASVAT (Case C-174/00) [2002] BVC 395; [2002] ECR I-3293
Kennemer Golf & Country Club of Zandvoort (LJN: AE 8363, Netherlands Supreme Court, 33764)
Keswick Golf ClubVAT No. 15,493; [1998] BVC 2,250
R v Pharmaceutical Society of Great Britain, ex parte Association of Pharmaceutical ImportersUNK [1987] 3 CMLR 951
R v International Stock Exchange of the United Kingdom and the Republic of Ireland Ltd, ex parte Else (1982) LtdELR [1993] QB 534
Royal Bank of Scotland plc v R & C CommrsVAT [2007] CSIH 15; [2007] BVC 429
Staatssecretaris van Financiën v Stichting Kinderopvang EnschedeECASVAT (Case C-415/04) [2009] BVC 860; [2006] ECR I-1385
Stichting Regionaal Opleidingen Centrum Noord-Kennemerland/West-Friesland (Horizon College) v Staatssecretaris van FinanciënECASVAT (Case C-434/05) [2010] BVC 281; [2007] ECR I-4793
Sweden v Stockholm Lindöpark ABECASVAT (Case C-150/99) [2001] BVC 93; [1991] ECR I-493
Value added tax - Sport - Exemption - Members clubs - Non-profit making golf club - Scope of exemption for "supply of certain services closely linked to sport … by non-profit-making organisations" - Whether green fees charged to visiting non-members standard-rated or exempt - Meaning of "additional income" - Distortion of competition - Whether directive properly implemented - Upper Tribunal referred interpretation of directive to ECJ - Council Directive 2006/112, eu-directive 2006/112 subsec-or-para 1 article 132 subsec-or-para d article 133 article 134art. 132(1)(m), 133(d), 134 - VATA 1994, Value Added Tax Act 1994 schedule 9 group 10Sch. 9, Grp. 10, item 3.
This was an appeal by HM Revenue and Customs from a decision of the First-tier Tribunal ([2011] UKFTT 354 (TC); [2011] TC 01214) on the scope of the VAT exemption for "the supply of certain services closely linked to sport … by non-profit-making organisations" under Council Directive 2006/112, art. 132(1)(m) and its implementation in the Value Added Tax Act 1994, Sch. 9, Grp. 10, item 3.
The taxpayer was a members' golf club. It was an "eligible body" within the meaning of Note (2A) to Grp. 10 of Sch. 9 to VATA 1994. In 2009 the taxpayer made a voluntary disclosure to HMRC by which it sought to recover VAT of £140,358 previously declared as output tax on green fees charged to visiting non-members. HMRC rejected the claim and maintained that the green fees were standard-rated income because the granting of playing rights to non-members did not satisfy the terms of item 3 of Grp. 10, which provided VAT exemption for the supply of sporting services by an eligible body to an individual except, where the body operated a membership scheme, an individual who was not a member. Note (2) to Grp. 10 stipulated that an individual could be considered a member for such purposes where he was granted membership for a minimum period of three months. The taxpayer contended that the UK legislation was inconsistent with Community law, since it discriminated between supplies to members and to non-members. HMRC maintained that the distinction drawn between members and non-members was required by the terms of art. 134(b) of the 2006 VAT directive, as the basic purpose of charging green fees was to obtain "additional income" for the organisation by carrying out transactions which directly competed with those of commercial enterprises liable for VAT.
The application of art. 132 was subject to art. 133 which allowed a member state to subject the art. 132(1)(m) exemption, for "the supply of certain services closely linked to sport … by non-profit-making organisations", to conditions, one of which was contained in art. 133(d): "the exemptions must not be likely to cause distortion of competition to the disadvantage of commercial enterprises subject to VAT". Article 132 was also subject to art. 134, which provided for the exemption to be excluded "(b) where the basic purpose of the supply is to obtain additional income for the body in question through transactions which are in direct competition with those of commercial enterprises subject to VAT".
The FTT allowed the taxpayer's appeal and held that the relevant green fee income was consideration for an exempt supply. That income could not properly be described as "additional" when it was derived from an activity included in the principal objects of the club, was received year after year and was applied in the same way as subscription income in defraying the taxpayer's ordinary expenses. In principle, the exemption extended to all relevant supplies to persons taking part in sport. The restriction of the exemption to only some such persons was, therefore, contrary to the purpose of the exempting provision. The provisions of UK law which distinguished between supplies to members and supplies to others were not capable of properly achieving the objective of art. 133(d) of the 2006 VAT directive and were ineffective.
HMRC appealed contending that the FTT had erred in law in deciding that, as a matter of construction of art. 132 and 134 of the principal VAT directive, the green fees were exempt from the charge to VAT. HMRC argued that the issues of the meaning of "additional income" in art. 134(b) and the correct implementation of art. 133(d) should be referred to the ECJ.
Held, ruling that there should be a reference to the European Court of Justice:
It was evident from the materials before the Upper Tribunal that different European member states interpreted the provisions differently. The taxpayer argued that the matter was acte clair, but its submission conflated the question of the interpretation of additional income in art. 134(b) with the finding of facts about whether there was competition with a commercial organisation subject to VAT. The questions were treated as discrete by the First-tier Tribunal. It was the latter question which was the question of fact for the national court and which had been determined by the First-tier Tribunal. The meaning of "additional income" was critical to the decision. Did it simply mean "more income" thus bearing no particular emphasis; did it mean "additional to income from sport/the core exempted activities", as the taxpayer submitted; did it mean "income from an activity not of a kind customarily made" by the club, as the First-tier Tribunal found; or did it bear a wider meaning enabling HMRC to exclude the supply of services to non-members? The case was nowhere near acte clair. There was genuine doubt as to what was comprised in the phrase "additional income" in art. 134(b). There should only be a reference if it was necessary in order to enable the court to give judgment. Even then the national court retained a limited discretion whether to refer. There should be a reference of the art. 134(b) question, bearing in mind that it had been interpreted in different ways in different member states and that in the UK there were a large number of cases which turned on or were affected by it. The FTT's decision also raised the legal question whether a member state had to eliminate all distortions of competition when imposing conditions under art. 133(d) on the grant of exemption under art. 132(1)(m). The manner in which the exemption could or could not be restricted was of general importance in the Community and the art. 133(d) issue should be referred together with the issue of the construction of art. 134(b).
1.On 1 June 2011 the First-tier Tribunal (Mr Colin Bishopp) allowed the appeal of Bridport and Dorset Golf Club Limited ("the Club") against a determination of the appellant Commissioners ("HMRC") (see [2011] UKFTT 354 (TC); [2011] TC 01214). The Club is a non-profit-making golf club. The question for the First-tier Tribunal was whether the charges ("green fees") made by the Club to visiting non-members playing on its course were exempt from value added tax or whether, as HMRC maintained, they were standard-rated for the purposes of that tax. In the Club rules those visiting golfers are sometimes...
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