SAE Education Ltd v The Commissioners for Her Majesty's Revenue & Customs, TC 03358
| Jurisdiction | UK Non-devolved |
| Judge | John CLARK |
| Judgment Date | 28 February 2014 |
| Neutral Citation | [2014] UKFTT 218 (TC) |
| Respondent | The Commissioners for Her Majesty's Revenue & Customs |
| Appellant | SAE Education Ltd |
| Reference | TC 03358 |
| Court | First-tier Tribunal (Tax Chamber) |
[2014] UKFTT 218 (TC)
TC03358
Appeal number: TC/2011/02251
VAT – Exemption – Company providing educational courses to students –
succession of agreements between company and university – whether supply
of educational courses by company exempt – whether courses supplied by
eligible body – whether company a college of a university – VATA 1994 Sch
9, Group 6, Item 1, Note (1)(b) – EC Council Directive 2006/112, Art
132(1)(i) – appeal allowed
FIRST-TIER TRIBUNAL
TAX CHAMBER
SAE EDUCATION LTD Appellant
- and -
THE COMMISSIONERS FOR HER MAJESTY’S Respondents
REVENUE & CUSTOMS
TRIBUNAL:
JUDGE JOHN CLARK
DR MICHAEL JAMES, MBE
Sitting in public at 45 Bedford Square London WC1B 3DN on 1-4 July, 31
October and 1 November 2013
Melanie Hall QC, instructed by Davenport Lyons, for the Appellant
Sarabjit Singh of Counsel, instructed by the General Counsel and Solicitor to
HM Revenue and Customs, for the Respondents
© CROWN COPYRIGHT 2014
DECISION
1. The Appellant (“SEL”) appeals against a decision made by the Respondents
(“HMRC”) concerning supplies of education made by SEL, namely that SEL is not an 5 “eligible body” for the purposes of Group 6 of Schedule 9 to the Value Added Tax
Act 1994 (“VATA 1994”), and that its supplies of education are accordingly not
exempt supplies for VAT purposes. SEL also appeals against various assessments
made in accordance with that decision.
The background facts 10
2. The evidence consisted of fourteen lever-arched files of documents, including
two witness statements given by Professor Leon Zybys Klich. In addition, Professor
Klich gave extensive oral evidence. From the evidence we find the following
background facts; we consider disputed evidence later in this decision.
3. The initials “SAE” are an acronym for “School of Audio Engineering”. SEL is a 15 member of the SAE corporate group, which trades worldwide as “SAE Institute” in
the provision of education and training in audio and digital media technologies and
production.
The development of SAE’s UK operations
4. According to the SAE Institute website, “SAE London opened its doors in 20 1985”. Since that date, the SAE Institute business in the UK has been carried on by a
succession of different UK subsidiaries of SAE Technology Group BV (“SAEBV”).
On 7 July 1995, SAE Educational Trust Ltd (“SETL”) was incorporated as a company
limited by guarantee.
5. On 1 January 1996, SETL entered into a Licensing Agreement with SAEBV 25 (then named SAE Nederland BV). This enabled SETL to provide courses in audio
engineering, film making, electronic music production and music business. Some of
these courses led to a diploma qualification awarded by SAE, and following
development of the relationship between SAE Institute and Middlesex University
(“MU”) as described under the next sub-heading, others led to a degree qualification 30 validated by MU.
6. On 29 April 2009, SEL entered into a licensing agreement with SAE Licensing
AG. (No copy of that agreement was included in the evidence.) On 30 April 2009, the
licence granted to SETL by SAEBV was terminated. On 1 May 2009, SETL and SEL
entered into a “Sale of Business Agreement”, under which SETL sold its assets and its 35 business (defined as “the business of operating private colleges for audio engineering
and digital film training”) for a purchase price specified as £9,208.43. SETL
subsequently went into liquidation. From that point onwards, the business has been
carried on by SEL.
3
Development of the relationship with MU
7. Since 1998 SAE Institute has provided education in the UK in collaboration
with MU. The relationship between SAE Institute entities and MU has been governed
by various agreements between them, as described below.
8. These agreements fall into three categories: 5
(1) those describing the general nature of the relationship;
(2) those providing for validation of SAE programmes;
(3) those providing for accreditation of SAE.
9. The first agreement between an SAE entity and MU was the 1998
Memorandum of Co-operation, signed and dated 18 January 1998. (We refer to all 10 such Memoranda as “MoCs”.) This fell within category (1) above. It stated expressly
that it was a legally binding agreement. It provided for BA Honours Recording Arts
and BA Honours Multimedia Arts programmes to be taught by the named SAE entity,
SAE Technology College (“SAETC”), on a full-time basis at specified campuses as
“validated collaborative programmes” of MU. Overall responsibility for the 15 programmes was retained by MU, with day to day direction undertaken by SAETC’s
Link Director and Programme Co-ordinators.
10. Under the heading “Admissions”, the 1998 MoC provided:
“a) The admission requirements for the programme shall conform to
the University’s general entrance requirements (or equivalent overseas) 20 and any requirements specific to the programmes agreed at validation
or subsequently.
b) Recruitment and admission of students shall be undertaken by the
College.”
11. Under the heading “Programme Monitoring and Management”, it provided: 25
“The programme shall be subject to the on-going monitoring and
review procedures of the University in order to ensure that the
administration, staffing, academic validity of the programme and
standards achieved are equivalent to those of the University and that
the quality of student experience is consistent with that of University 30 students following similar programmes.”
12. Detailed provisions of the 1998 MoC governed the approval of programmes,
which SAETC was permitted to launch as soon as any conditions set at validation had
been met. The campuses approved to offer the programmes covered by the MoC were
London, Munich and Sydney. 35
13. A further MoC was entered into between “SAE” and MU on 24 March 1999.
This related only to the provision of work-based learning courses.
14. With effect from 1 June 2003, a replacement for the 1998 MoC and subsequent
annexes was entered into between “SAE Institute” and MU; it covered the validation
of three BA Honours Degree programmes. 40
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