The Open University v The Commissioners for Her Majesty's Revenue & Customs, TC 02729
| Jurisdiction | UK Non-devolved |
| Judge | Greg SINFIELD |
| Judgment Date | 03 June 2013 |
| Neutral Citation | [2013] UKFTT 326 (TC) |
| Respondent | The Commissioners for Her Majesty's Revenue & Customs |
| Appellant | The Open University |
| Reference | TC 02729 |
| Court | First-tier Tribunal (Tax Chamber) |
[2013] UKFTT 326 (TC)
TC02729
Appeal number: TC/2011/05394
VAT – whether services supplied by BBC to Open University exempt under Article
13A(1)(i) Sixth VAT Directive – was BBC body governed by public law? - no – did
BBC have educational aim required by Article 13A(1)(i)? - no - was BBC other
organisation defined by United Kingdom as having similar educational objects? -
yes – held that services supplied by BBC to Open University were exempt under
Article 13A(1)(i) Sixth VAT Directive - appeal allowed
FIRST-TIER TRIBUNAL
TAX CHAMBER
THE OPEN UNIVERSITY Appellant
- and -
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE & CUSTOMS Respondents
TRIBUNAL:
JUDGE GREG SINFIELD
Sitting in public in London on 21 – 24 January 2013
Paul Lasok QC and Owain Draper, counsel, instructed by KPMG LLP, for the
Appellant
Peter Mantle, instructed by the General Counsel and Solicitor to HM Revenue
and Customs, for the Respondents
© CROWN COPYRIGHT 2013
2
DECISION
Introduction
1. This appeal concerns a claim for repayment of VAT charged on supplies of
services made by the British Broadcasting Corporation ("the BBC") to the Open
University ("the OU") during the period 1 January 1978 to 31 July 1994, excluding 5 supplies made in the VAT period ending 30 September 1981.
2. Between 1 January 1978 and 31 July 1994, the BBC charged and accounted for
VAT on supplies of services to the OU. The services consisted of the production and
broadcasting of television and radio programmes relating to OU courses. With effect
from 1 August 1994, the Respondents (“HMRC”) accepted that the services supplied 10 by the BBC to the OU were exempt under item 4 of Group 6 of Schedule 9 to the
Value Added Tax Act 1994 ("the VATA94") as services closely related to the
provision of education by a university. In 2009, the BBC made a claim under section
80 the VATA94 for repayment of the VAT that it had charged and accounted for on
supplies made prior to 1 August 1994. HMRC rejected the claim. This appeal has 15 been brought by the OU as the recipient of the supplies made by the BBC. The BBC
has agreed to pay any amount that it receives from HMRC by way of repayment to the
OU. If the claim is upheld, the amount repayable, excluding any interest, is just under
£21 million.
3. The claim for repayment of VAT charged by the BBC during the period 20 1 January 1978 to 31 July 1994 is based on the contention that the supplies of services
by the BBC during the period were exempt from VAT under Article 13A(1)(i) of the
Sixth Council Directive of 17 May 1977 on the harmonisation of the laws of Member
States relating to turnover taxes - common system of value added tax: uniform basis
of assessment, 77/388/EEC (“the Sixth VAT Directive”). Among other supplies, 25 Article 13A(1)(i) exempted services closely related to university education provided
by bodies governed by public law having an educational aim or by other organisations
defined by the Member State concerned as having similar objects. HMRC accept
that, during the period covered by the claim, the United Kingdom’s legislation did not
exempt the BBC's services and that Article 13A(1)(i) had direct effect. HMRC 30 maintain, however, that the BBC's services did not fall within Article 13A(1)(i).
4. This matter was previously considered by the VAT Tribunal in Open University
v HM Customs and Excise [1982] VATTR 29, VAT Decision 1196. HM Customs
and Excise (as HMRC then were) issued a ruling that VAT was chargeable on
services supplied by the BBC to the OU in respect programmes relating to the OU’s 35 courses. The OU lodged an appeal and contended that the services were exempt from
VAT. The VAT Tribunal dismissed the appeal. It held that the services of the BBC
did not qualify for exemption because the BBC was not itself providing education.
The VAT Tribunal's decision was based on the premise that the person making the
supply of closely related services must also be supplying education to the students. 40 Following the decision of the Court of Justice of the European Communities (later the
Court of Justice of the European Union, together the "ECJ") in Case C-434/05
Stichting Regionaal Opleidingen Centrum Noord-Kennemerland/West-Friesland
(Horizon College) v Staatssecretaris van Financiën [2008] STC 2145 ("Horizon
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