The British Association for Shooting & Conservation Ltd v HM Revenue and Customs
| Jurisdiction | England & Wales |
| Judge | THE HONOURABLE MR. JUSTICE LEWISON,MR. JUSTICE LEWISON |
| Judgment Date | 06 March 2009 |
| Neutral Citation | [2009] EWHC 399 (Ch) |
| Docket Number | Case No: CH/2008/APP/0598 |
| Court | Chancery Division |
| Date | 06 March 2009 |
[2009] EWHC 399 (Ch)
IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION
ON APPEAL FROM THE VAT AND DUTIES TRIBUNAL
Before: The Honourable Mr. Justice Lewison
Case No: CH/2008/APP/0598
Mr Roderick Cordara QC (instructed by Baker Tilly) for the Appellant
Mr Richard Chapman (instructed by Solicitors Office HMRC) for the Respondents
Hearing dates: 26 th February 2009
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
MR. JUSTICE LEWISON:
Introduction
The constitution of The British Association for Shooting and Conservation Limited (“BASC”) says that its objects are to:
“(a) Act as a representative national body for all sporting shooting.
(b) Promote and safeguard sporting shooting.
(c) Aim at the responsible unification, guidance, education and representation of all engaged in such sport together with the promotion of conservation and scientific research into all aspects of the quarry species and other matters connected with such sport in accordance with the ethics of good sportsmanship.
(d) Uphold and maintain the legitimate interest of its members in such a manner as this Association … shall decide, in particular with regard to:—
(i) proposals to restrict by legislation the use of sporting firearms
(ii) the lawful right of every member to shoot at sporting quarry …”
These aims are supplemented by a mission statement (published on its website) which describes its mission as follows:
“Our mission is to promote and protect sporting shooting and the well-being of the countryside throughout the United Kingdom and overseas. We represent our members' interests by providing a voice for sporting shooting which includes wildfowling, game, and rough shooting, deer stalking, target shooting and air gunning, pigeon shooting and pest control, gun dogs, promoting practical habitat conservation, training and the setting of standards and undertaking appropriate research.”
BASC has about 130,000 members who pay an annual subscription. Its subscription income in 2007 was about £5.6 million. In return for their subscriptions, members receive (among other things) a magazine and insurance cover. It is common ground that part of the subscription is attributable to the zero-rated supply of magazines, and another part to the exempt supply of making insurance arrangements. The issue on this appeal is the correct VAT treatment of the rest. The VAT & Duties Tribunal (Mr Colin Bishopp, Chairman) decided that the residual subscription income was the consideration for a standard-rated supply and was therefore VATable. BASC now appeal. The appeal is restricted to a question of law only.
Findings of fact
Before embarking on the law, I set out the Tribunal's salient findings of primary fact:
i) From the individual member's perspective, the principal benefits of membership are the periodicals, the insurance cover arranged by BASC, its members' advisory service and its representation of the sport (§ 14).
ii) BASC's primary purpose is to act as a representative body for those engaged in sporting shooting (§ 15).
iii) The primary purpose is qualified by other objectives. These include conservation which important both for the members and for its own sake (§ 16).
iv) Conservation, coupled with land management, is one of BASC's major activities. Much of what it does in this sphere is not exclusively for the immediate benefit of its own members but for the advantage of all (though including its own members) who take an interest in the preservation of the countryside, irrespective of their wish to pursue game, and is correspondingly of public benefit (§ 17).
v) BASC performs an important public education role (§ 18).
vi) BASC represents the UK government in European negotiations. This is an important activity and, although it undoubtedly does benefit its members, it also confers benefits on the community at large (§ 19).
vii) BASC's director of communications spends a great deal of his time on activities which are of wider public benefit, including advising central and local government, public bodies such as ACPO and conservation authorities, and political parties (§ 20).
viii) There is a direct link between the residual subscription income and those activities (§ 23).
The Tribunal's factual conclusion, based on those primary findings of fact, was expressed (§ 21) as follows:
“From that evidence I am satisfied that, while BASC is an organisation whose primary purpose is the protection and advancement of its members' interests, and that it cannot divorce any of what it does from that primary purpose, it conducts itself in a thoroughly responsible and public-spirited fashion, has rightly earned the respect of government and similar bodies, and does not seek to advance its members' interests at all costs but only when they coincide with, or at least do not conflict with, the public interest. I am, in particular, satisfied that BASC is rather different from a conventional campaigning organisation or pressure group.”
Later in the decision the Tribunal made the following factual comments or findings:
i) Conservation and other public-spirited activities are seriously pursued and represent a substantial part of BASC's activities (§ 36);
ii) BASC's activities make it more likely that the right to shoot is preserved and the facilities for doing so survive; and those activities are important (§ 41).
One supply or more than one supply?
There is one preliminary matter that must be addressed. In paragraph 2 of its decision the Tribunal said:
“It seemed to me probable that the residual subscription income is the payment for a bundle of supplies, but neither party suggested that they should be identified, segregated and treated separately, and I shall treat the bundle as a single supply, whether or not composite.”
It is not entirely clear from this quotation whether the Tribunal explicitly raised this question with the parties, or whether it was merely recording its private thoughts. However, it was common ground that the Tribunal was correct in recording that it had not been asked further to dissect the benefits of a subscription, having excluded from its consideration the supply of the magazine and insurance. Mr Cordara QC on behalf of BASC sought to argue that the residual subscription income could be dissected into a number of separate supplies. Mr Chapman, for HMRC, objected that this was not open to BASC on an appeal on a point of law, in view of the way that BASC had put its case below. If the residual subscription income was to be further dissected, it would require a detailed factual examination of precisely how much time and money BASC spent on the activities alleged to constitute separate supplies. Mr Chapman relied on the principle encapsulated in the judgment of May LJ in Jones v. MBNA International Bank (CA) (30th June 2000) which was applied by the Court of Appeal in McDonald v. Coys of Kensington [2004] EWCA Civ. 47 and Petromec Inc v Petroleo Brasileiro SA Petrobas [2006] 1 Lloyd's Rep 121. His formulation of the principle was as follows:
“….. a party cannot ….. normally seek to appeal a trial judge's decision on the basis that a claim, which could have been brought before the trial judge, but was not, would have succeeded if it had been brought. The justice of this as [a] general principle is ….. obvious. Parties to litigation are entitled to know where they stand. The parties are entitled, and the court requires, to know what the issues are. Upon this depends a variety of decisions, including, by the parties, what evidence to call, how much effort and money it is appropriate to invest in the case, and generally how to conduct the case; and, by the court, what case management and administrative decisions to make and give, and the substantive decision of the case itself. Litigation should be resolved once and for all, and it is not, generally speaking, just if a party who successfully contested a case advanced on one basis should be expected to face on appeal, not a challenge to the original decision, but a new case advanced on a different basis. There may be exceptional cases in which the court would not apply the general principle which I have expressed.”
It is true that one difference between a tax appeal and other litigation is that a decision in a tax appeal relates only to a particular disputed assessment, and does not create an issue estoppel for assessments in future years. But I do not consider that this turns every tax appeal into an exceptional case. In my judgment Mr Chapman's point is well-taken. I do not consider that on appeal BASC can open the question whether the residual subscription income should be further dissected. That is something that BASC can raise if and when it faces a disputed assessment in the future.
The legislation
The domestic provisions governing the exemptions in issue are contained in Groups 9 and 10 of Schedule 9 to the VAT Act 1994. These provisions are designed to give effect to the directly applicable provisions of article 13A of the EC Council Directive 77/388 (“the Sixth Directive”) (now article 132(1)(l) and (m) of the Council Directive of 28 November 2006) on the common system of value added tax. Argument on this appeal concentrated on the words of the directive itself rather than its domestic implementation. The relevant provisions of the Sixth Directive are:
“(l) supply of services and goods closely linked thereto for the benefit of their members in return for a subscription fixed in...
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