Scottish Exhibition Centre Limited V. The Commissioners For Her Majesty's Revenue And Customs

JurisdictionScotland
JudgeLord Clarke,Lord Nimmo Smith,Lord Kingarth
Judgment Date14 July 2006
Neutral Citation[2006] CSIH 42
Docket NumberXA41/05
Date14 July 2006
CourtCourt of Session
Published date14 July 2006

EXTRA DIVISION, INNER HOUSE, COURT OF SESSION

Lord Nimmo Smith Lord Kingarth Lord Clarke [2006] CSIH 42

XA41/05

OPINION OF THE COURT

delivered by LORD NIMMO SMITH

in

APPEAL

under section 11 of the Tribunals and Inquiries Act 1992

by

SCOTTISH EXHIBITION CENTRE LIMITED

Appellant;

against

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE AND CUSTOMS

Respondents:

_______

Act: Tyre, Q.C.; Dundas & Wilson, C.S., LL.P.

Alt: J. Campbell, Q.C.; Shepherd & Wedderburn

14 July 2006

Introduction

[1] This is an appeal against a decision of the Edinburgh VAT and Duties Tribunal ("the Tribunal") dated 23 March 2005. The appellant owns and operates premises in Glasgow known as the Scottish Exhibition and Conference Centre ("the SECC"). One of its trading divisions acts as a ticket selling agent for events held at the SECC. A customer who pays for a ticket by credit card or, in most instances, by debit ("Switch") card, is charged a "booking fee" in addition to the price of the ticket. The questions which arise in this appeal are: (1) whether, on a proper view of the evidence the booking fee is charged for the facility of paying by credit card or by debit card, and not for some other facility; and (2) if so, whether the booking fee falls within the scope of the exemption from VAT provided for by the legislation referred to below. The Tribunal found in favour of the respondents on both these questions. In order to succeed in this appeal the appellant must persuade us that the Tribunal erred in law, and should have found in their favour on both questions.

The relevant legislation

The European legislation

[2] The starting point is EC Council Directive 77/388 of 17 May 1977 on the harmonisation of legislation in Member States concerning turnover taxes ("the Sixth Directive"). It recites that -

"a common list of exemptions should be drawn up so that the Communities' own resources may be collected in a uniform manner in all the Member States:"

and

"the obligations of taxpayers must be harmonised as far as possible so as to ensure the necessary safeguards for the collection of taxes in a uniform manner in all the Member States;".

Title X deals with exemptions. Article 13 deals with exemptions within the territory of the country and is divided into two parts, A and B. Part A confers exemptions for certain activities in the public interest. Part B is entitled "Other Exemptions". So far as relevant it provides:

"Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of such exemptions and of preventing any possible evasion, avoidance or abuse:

[(a) to (c)]

(d) the following transactions:

[1 to 2]

3 transactions, including negotiation, concerning deposit and

current accounts, payments, transfers, debts, cheques and other negotiable instruments, but excluding debt collection and factoring;

[4 to 6]."

The United Kingdom legislation

[3] Section 4 of the Value Added Tax 1994 Act provides inter alia:

"(1) VAT shall be charged on any supply of goods or services made in the United Kingdom, where it is a taxable supply made by a taxable person in the course or furtherance of any business carried on by him."

Section 5(2)(a) provides that "supply" in the Act includes all forms of supply, but not anything done otherwise than for a consideration. Section 31(1) provides that a supply of goods or services is an exempt supply if it is of a description for the time being specified in Schedule 9. Group 5 in Schedule 9 is entitled "Finance" and contains a number of items, of which the following are relevant:

"2 The making of any advance or the granting of any credit.

5 The provision of intermediary services in relation to any transaction comprised in item ... 2 ... (whether or not any such transaction is finally concluded) by a person acting in an intermediary capacity."

Schedule 9 includes notes by reference to which, as provided in section 96(9), the items in the schedule are to be interpreted. Note (4) to Group 5 provides:

"This Group includes any supply by a person carrying on a credit card, charge card or similar payment card operation made in connection with that operation to a person who accepts the card used in the operation when presented to him in payment for goods or services."

Note (5) provides:

"(5) For the purposes of item 5 'intermediary services' consist of bringing together, with a view to the provision of financial services -

(a) persons who are or may be seeking to receive financial services, and

(b) persons who provide financial services, together with (in the case of

financial services falling within item 1, 2, 3 or 4) the performance of work preparatory to the conclusion of contracts for the provision of those financial services, but do not include the supply of any market research, product design, advertising, promotional or similar services or the collection, collation and provision of information in connection with such activities.

(5A) For the purposes of item 5 a person is 'acting in an intermediary capacity' wherever he is acting as an intermediary, or one of the intermediaries, between -

(a) a person who provides financial services, and

(b) a person who is or may be seeking to receive financial services.

(5B) For the purposes of notes 5 and 5A 'financial services' means the carrying out of any transaction falling within item 1, 2, 3, 4 or 6."

[4] The provisions of the 1994 Act quoted above are designed to implement the provisions of Article 13B(d) of the Sixth Directive. As those provisions have direct effect and as the court is required to construe the equivalent provisions of the 1994 Act in the light of the requirements of the Article, it is to the European legislation that we must ultimately have regard. The appellant does not claim to be entitled to an exemption under the Act which is not available under the Article, and the appeal was conducted on the basis that it was common ground that the relevant provisions of the Act have the same effect as those of the Article. We agree with the criticisms made by Sir Andrew Morritt V-C in Customs and Excise Commissioners v BAA plc [2003] S.T.C. 35 at para. [46] and Bookit Limited v Revenue and Customs Commissioners [2005] S.T.C. 1481 at para. [14]. As he said in the latter case:

"What is the point of the draftsman of the Act setting out in his own elaborate language what he understands to be the effect of the Sixth Directive? In cases where the Sixth Directive is mandatory and of direct effect to do so is, at best, unnecessary and at worst gives rise to a breach of the United Kingdom's obligation not to afford any exemption wider or narrower than that allowed by the Sixth Directive."

The first question

[5] The Tribunal heard evidence from only one witness, John Sharkey, C.A., M.B.A., the appellant's Financial Director. They described his evidence as being uncontroversial, except in one minor respect. They were also referred to various documents. Their findings in fact were relatively brief, and did not quote from the documents. The account which follows is derived from the Tribunal's findings in fact, supplemented by reference to the documents and by points made by counsel in their submissions.

[6] The appellant's business is the provision of accommodation for exhibitions, conferences, concerts and other public entertainments at the SECC. The appellant does not itself arrange such events, but contracts with their promoters to provide a location for their events, together with other facilities and support. It is in regular contact with several such promoters. In relation to concerts in particular the appellant will typically enter into two contracts with the promoter, a hire agreement and a ticket sale agreement. The appellant has a box office organisation to facilitate the sale of tickets. In terms of the venue hire agreement typically the appellant would seek to sell at least a 50% allocation of tickets. It is important for the appellant's business with promoters to offer, in addition to accommodation, contact with a regular audience support and a ticket distribution network. The appellant attracts a high proportion of regular patrons in its audiences. The appellant sells tickets as the agent of the promoter. The appellant is not paid by the promoter for selling tickets.

[7] Among the documents is a copy of a hire agreement between the appellant and Clear Channel Entertainment Music UK Limited, promoter of a concert to be given by the entertainer Will Young, which is typical of the hire agreements entered into between the appellant and promoters. Its provisions, so far as relevant, are as follows:

"1. HIRE

1.1 We agree that:-

1.1.1. subject to the terms of this Hire Agreement including

the Conditions set out in paragraph 9 below you have the right to use the premises comprised in Hall 4 in its entirety and related offices at the Centre ('the Premises');

1.1.2. this right is granted to enable you to stage the event to

be called WILL YOUNG, (the 'Event');

1.1.3. this right is for the period from 0600 hrs on 02.12.2004

to 0400 hrs on 03.12.2004 inclusive (the 'Hire Period');

1.1.4. the Event shall be open to visitors from 1830 hrs to

2330 hrs on 02.12.2004 (the 'Open Period').

1.2. You agree to stage the event and to use the Premises

throughout the Hire Period solely for the Event.

2. SERVICES

2.1. We will provide, or arrange for the provision of, the services

listed in Paragraph 8 below, ('the Services') during the Hire Period, and you agree to accept the Service.

3. CHARGES

3.1 You will pay us charges of £26,500 exclusive of VAT ('the

Charges'), for the use of the Premises and the provision of the Services during the Hire Period. In the event of early termination of the Agreement the Charge will be based on tickets sold at the time of termination or the minimum guarantee whichever is the...

To continue reading

Request your trial
10 cases
  • BMW (UK) Limited, MG Rover Group, Lloyds Banking Group PLC, Standard Chartered PLC and others v The Commissioners for HM Revenue and Customs
    • United Kingdom
    • Upper Tribunal (Tax and Chancery Chamber)
    • 19 Octubre 2016
    ...bound by the decision of the Inner House of the Court of Session in Scottish Exhibition Centre Ltd v Revenue and Customs Commissioners [2008] STC 967, in the absence of conflicting authority the Upper Tribunal should follow 148. We shall take the same course. To the extent that the decision......
  • Margott (as representative member of MDL Property Consultants LLP
    • United Kingdom
    • First Tier Tribunal (Tax Chamber)
    • 19 Diciembre 2017
    ...hearing the question whether, as the Upper Tribunal sitting in England, we were bound by Scottish Exhibition Centre Ltd v R & C Commrs [2007] BVC 716, as a judgment of the Inner House of the Court of Session. Surprisingly, there was no immediate straightforward answer to that question, and ......
  • BMW(UK) Limited, MG Rover Group Limited, Lloyds Banking Group PLC, Standard Chartered PLC and others v HMRC
    • United Kingdom
    • Upper Tribunal (Tax and Chancery Chamber)
    • 19 Octubre 2016
    ...bound by the decision of the Inner House of the Court of Session in Scottish Exhibition Centre Ltd v Revenue and Customs Commissioners [2008] STC 967, in the absence of conflicting authority the Upper Tribunal should follow 148. We shall take the same course. To the extent that the decision......
  • National Exhibition Centre Ltd
    • United Kingdom
    • First Tier Tribunal (Tax Chamber)
    • 7 Mayo 2013
    ...Applying the ruling in Bookit Ltd v R & C CommrsVAT[2006] BVC 605 ("Bookit") and Scottish Exhibition Centre Ltd v R & C CommrsVAT[2007] BVC 716 ("SEC"), the Tribunal also decided that the services provided by the taxpayer for the booking fees were exempt supplies of card processing services......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT