Trebah Garden Trust
| Jurisdiction | UK Non-devolved |
| Judgment Date | 10 April 2000 |
| Date | 10 April 2000 |
| Court | Value Added Tax Tribunal |
VAT Tribunal
The following cases were referred to in the decision:
Dean and Canons of Windsor VATNo. 15,703; [1999] BVC 2010
Glastonbury Abbey VATNo. 14,579; [1997] BVC 2135
North of England Zoological Society v C & E Commrs VAT[1999] BVC 437
The Zoological Society of London VAT[1998] BVC 2328
Exemption - Cultural services - Right of admission to historic gardens - Owner established trust to own and run gardens, retaining right to live in house in gardens - Whether gardens a museum - Whether appellant an eligible body - Whether appellant managed and administered on voluntary basis by person with no financial interest in its activities - Directive 77/388, the sixth VAT directive, eu-directive 77/388 article 13(A)(1) article 13(A)(2)art. 13(A)(1)(n) and 13(A)(2)(a); Value Added Tax Act 1994 schedule 9 group 13Value Added Tax Act 1994, Sch. 9, Grp. 13, item 2(a) and Note (2).
The issue was whether supplies made by the appellant, a non-profit making garden of historic interest which was open to the public, should be treated as exempt, on the basis that it was a museum and an eligible body as defined by Value Added Tax Act 1994 schedule 9 group 13Value Added Tax Act 1994, Sch. 9, Grp. 13, Note (2).
The garden at Trebah is at the head of a 25-acre ravine running down to the Helford River, Cornwall. It was created in 1826 by Charles Fox and it is regarded as one of the great gardens of England. At various times it has received specimens of what has become a magnificent collection of rare plants, many of them mature, from all over the world. It is open to the public every day of the year. Trebah House dates back to 1750. In 1939, the house and garden were sold separately from the estate and in 1947 the original house was destroyed in a fire. By 1981, when acquired by H and his wife, the property had passed through several hands. The house was in a poor state of repair and the garden had become a wilderness. H set about restoring the garden, an undertaking that took ten years and cost a great deal of money. So much so that H decided that he could no longer afford to run it and in 1990 settled the property in trust. In that year it became a company limited by guarantee and registered as a charity. For a time, H was a member of the trust's council of management but he later retired from that position although he maintained a role as a co-ordinator reporting to the council. At the time of the appeal, H and his wife had the exclusive use of two bedrooms and shared a third room. Rooms on the ground floor were used by the trust as offices and for storage. H and his wife had joint use of the dining room, drawing room and kitchen on the ground floor. They paid no rent for their accommodation, but they paid a proportion of the joint expenses and one of them was always on hand as a warden 80 hours a week. In order to supplement the money raised by the appellant from admission fees to the gardens, H made an interest-free loan to the trust of £115,746 and Mrs H made an interest-bearing loan of £69,707 to build a coffee shop when the trust was short of capital. At the time of the hearing, the amount outstanding had been reduced to £58,000 and was being reduced as fast as possible. The appellant had 33 employees and there were 800 members of the trust. In 1999, there were 103,000 visitors to the gardens. H had registered the trust's predecessor, The Trebah Foundation, for VAT in 1987. By letter dated 17 September 1998, in response to the appellant's request for exemption from tax pursuant to Value Added Tax Act 1994 schedule 9 group 13Value Added Tax Act 1994, Sch. 9, Grp. 13, item 2, the commissioners wrote refusing the request on the grounds that Trebah was not "a museum, gallery, art exhibition or zoo" and the trust was not an eligible body. The Trust appealed.
The appellant contended that the true purpose of Directive 77/388, the sixth VAT directive, eu-directive 77/388 article 13(A)(1)art. 13(A)(1)(n) was to exempt cultural activity, the original proposal for a sixth VAT directive having included a reference to "botanical or zoological gardens" among the cultural activities. This was such an activity and on a purposive construction of Value Added Tax Act 1994 schedule 9 group 13Grp. 13, the supplies made by the trust to its paying visitors to the garden were within the exemption, the garden being akin to a museum. The appellant was an eligible body, since there were no profits and to the extent that H and his wife managed and administered the property it was on a voluntary basis without their having a financial interest in the appellant's activities.
The commissioners contended that Trebah was not a museum which, as ordinarily envisaged, was a building or part of a building displaying inanimate objects and artefacts. Neither did the appellant qualify as an eligible body, since some part of the profits from the admission of visitors was applied towards the upkeep of the house in which H and his wife lived. H had a financial interest in the activities of the trust in that he was involved in its management and administration and he had a financial interest in it to the extent that he had a right to repayment of the loans.
Held, dismissing the taxpayer's appeal:
1. The relevant text of the provision relating to cultural services that was finally adopted in the sixth VAT directive bore hardly any resemblance to the proposal because member states could not agree on a list of cultural activities. It was left to each individual state to determine which cultural activities within its territory should be exempt, so that it was necessary to construe the terms of Value Added Tax Act 1994 schedule 9 group 13Grp. 13.
2. While the commissioners' interpretation of what constituted a museum was too restrictive, in particular institutions displaying objects in the open air being capable of constituting a museum, the garden, albeit informative, could not a fairly be described as a museum in the context of Value Added Tax Act 1994 schedule 9 group 13Grp. 13.
3. This was sufficient to determine the issue in the commissioners' favour. However, proceeding to the issue of whether the appellant was an eligible body, the conclusion reached was that it did, in that although H and his wife occupied the house rent-free they would not remain there if they were unable to fulfil a useful function or if they enjoyed ill-health and any receipts from the admission charges were assigned to the continuance and improvement of the appellant's activities.
4. On the issue of financial interest, the reference in the domestic legislation to a "direct or indirect financial interest in its...
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