School of Finance and Management (London) Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 09 April 2001 |
| Date | 09 April 2001 |
| Court | Value Added Tax Tribunal |
VAT Tribunal
The following cases were referred to in the decision:
Becker v Finanzamt Münster-Innenstadt (Case 8/81) [1982] ECR 53
C & E Commrs v Pilgrims Language Courses LtdVAT[1999] BVC 328
Cozens v Brutus ELR[1973] AC 854
Fitzpatrick v Sterling Housing Association Ltd WLR[1999] 3 WLR 1113
Nationwide Access Ltd No. E109
Phillips t/a Bristol Motorcycle Training Centre VAT(1992) VATTR 77; [1992] BVC 859
R v Ireland ELR[1997] QB 114
R v Westminster City Council (1997) 9 Admin. LR 504
Stichting Uitvoering Financiële Acties (SUFA) v Staatssecretaris van Financiën VAT(Case 348/87) [1989] ECR 1737; [1991] BVC 102
Victor Chandler International Ltd v C & E CommrsWLRTLR[2000] 1 WLR 1296; The Times 8 March 2000
Education - Whether appellant is an "eligible body" - Whether appellant a college of a UK university - Whether supplies exempt - Value Added Tax Act 1994, Sch. 9, Grp. 6, item 1 and Note (1)(b); Directive 77/388, the sixth VAT directive, art. 13(A)(1)(i).
The issue was whether supplies of education by the appellant company pursuant to an arrangement with a university were exempt supplies of education by an eligible body.
The appellant's business was the provision of degree-level education to fee-paying overseas students leading to the award of a University of Lincolnshire and Humberside (ULH) validated degree. Following correspondence with the commissioners, the appellant was informed that its provision of education was exempt under Value Added Tax Act 1994, Sch. 9, Grp. 6. Up to that point, the appellant had charged VAT on its supplies and it, therefore, submitted a claim to the commissioners for a refund in the sum of £251,285. The claim led to a further review by the commissioners culminating in a rejection of the appellant's claim by reason of the appellant not being an "eligible body" as required by Grp. 6. The operational arrangements of the appellant were governed by a Memorandum of Co-operation with ULH. This established the rights and responsibilities, programmes covered and financial payments between the two bodies. The agreement allowed the appellant to market its courses world-wide, setting its own cost for the education. Students applying for the courses were enrolled by the appellant and were registered as students of ULH in London or at an overseas centre. Following completion of the courses and success in the examinations moderated by external examiners, students were awarded their degree at a graduation ceremony held by ULH. The appellant paid a fee per student to ULH and during the period of the agreement worked exclusively with ULH. After June 1999, the appellant's arrangements with ULH were replaced by similar arrangements with Oxford Brookes University. On the tribunal's understanding of the provision of higher education in the UK, the students were recipients of a university education even though the courses were outsourced to an affiliated college. There are no authorities on the scope of the term "eligible body" or on Note (1)(b) to Grp. 6. The word "college" is defined in the Oxford English Dictionary in a number of ways including: an independent self-governing corporation of teachers and scholars, especially one within or associated with a university and an institution for professional or vocational training or study, a higher educational institution for those who have left school. The commissioners submitted that the central question was whether the appellant is, or was at the material times, a college of ULH. The relevant definition of "eligible body" in Note (1)(b) is "a UK university, and any college, institution, school or hall of such a university". The commissioners maintained that the phrase "of such a university" was meant to imply a constitutional link rather than a business or contractual link, and a degree of physical proximity. In the commissioners' view, there were several factors pointing to the separateness of the appellant from ULH including: its physical dissociation; the lack of obligation to provide a minimum number of places; the absence of a Royal Charter or authorisation of the Privy Council; the fact that the appellant was not a "recognised body" as defined by the Education Acts and the description in the appellant's literature as "independent" and "linking up" with the university.
The appellant referred to the "updating" approach to the interpretation of legislation and, in particular, to the case of Victor Chandler International Ltd v C & E Commrs WLR[2000] 1 WLR 1296 in which it was held that it had become a well-known rule of statutory construction that an ongoing statutory provision should be treated as "always speaking". This principle was set out in Bennion's Statutory Interpretation, third edition (1997) in that it is presumed that Parliament intends the court to apply to an ongoing Act a construction that continuously updates its wording to allow for changes since the Act was initially framed. While it remains law it is to be treated as "always speaking". In the appellant's view, there was no doubt that what it provided to students was university education. Even if it was not a body governed by public law, as required under the Community educational exemption in art. 13(A)(1)(i) of Directive 77/388, the sixth VAT directive, ULH was such a body and the degree awarded by ULH was a proper authorised degree. The appellant submitted that on a proper construction of UK law, it was an eligible body. However, because of the way the domestic VAT law in this area is fragmented it was difficult to reconcile it with art. 13. The appellant contended that there was no merit in the commissioners' attempt to construe Note (1)(b) by referring to the definition of terms like "school", "university" or "college" in other Acts of Parliament not related to tax law. Had Parliament intended Note (1)(b) to be construed in a way which referred to other Acts, it would have said so. As it did not, those words should be given their normal everyday meaning. In this respect, it was in no way straining the meaning of the words to say that if a university had a body which was a college of it, affiliated or associated with it, and which for all practical purposes was the university and was providing university education, then that was encompassed within the definition of "eligible body" in Note (1)(b) and its supplies of education were exempt.
Held, allowing the company's appeal:
1. In considering whether the "always speaking" construction was the predominant argument, the tribunal reviewed a number of matters which militated against the appellant being regarded as a college: the appellant's lack of constitutional links with ULH; the fact that the appellant had links with three different universities over a five-year period; the fact that the Memorandum of Co-operation with ULH was unsigned and the transfer of the business by the appellant to a different legal entity, Kingswood School Ltd.
2. Notwithstanding the cumulative strength of these matters, it was the case that the system of provision of further and higher education had changed so much in the last decade that the "always speaking" doctrine should prevail.
3. The fundamental purpose of the appellant was to provide education leading to the award of a university degree and in this context the appellant could fairly be regarded as a college of a university.
4. It followed that during the periods in question the appellant was a college of ULH and the supplies of education which it made during those periods were exempt.
[The tribunal set out the facts summarised above and continued as follows.]
18. The following are extracts from Professor Corfield's [ULH] evidence:
Until February 1999, SFM's premises were located at Borough High Street, London Bridge, where the campus comprised lecture rooms, academic staff offices, administration departments, reception and student services area, library, computer centre, refectory and student social facilities.
Students were recruited by SFM and enrolled with SFM. Admission to all programmes required students to have prior qualifications and experience as agreed with the University. Students were registered with the University and received a University ID card, giving entitlement to use of University facilities in Hull and Lincoln, together with a copy of University Regulations. Students were subject to general SFM and University Regulations and also to the University approved programme-specific regulations for all assessments, progression and classification of awards.
SFM has 3 intakes of students per annum - February, June and October semesters. An undergraduate BA degree requires 6 semesters of study and the MBA programme is 2 semesters of taught units followed by a dissertation. All programmes are unitised and credit points are assigned to units as is normal for ULH and all UK universities. Each subject unit is delivered in a single semester of 10 teaching weeks and 3 hrs per week of tuition.
Assessment of a unit is typically through an assignment and end of unit examination. All assessments are set or approved by ULH staff and take place at SFM in London or overseas. Marking is by SFM academic staff in the first instance, with all assessments moderated by University subject specialists. Students' results are presented to University Boards of Examiners in Hull and independent External examiners appointed by the University ensure national standards are maintained.
Students degrees are awarded by the University (in line with the Quality Assurance Agency principles) and University award ceremonies are held in Hull and Lincoln to celebrate students' achievements.
ULH assures that the quality and standards of provision at partner institutions is secure and maintained through rigorous initial validation of programmes, approval of centres, regular monitoring by University subject staff, reports from...
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