Trustees for the MacMillan Cancer Trust
| Jurisdiction | UK Non-devolved |
| Judgment Date | 06 July 1998 |
| Date | 06 July 1998 |
| 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
British Airways plc v C & E Commrs VAT(1990) 5 BVC 97
C & E Commrs v Wellington Private Hospital LtdVAT[1997] BVC 251
International Bible Students Association v C & E CommrsVAT(1987) 3 BVC 205
Marleasing SA v La Comercial Internacional de Alimentación SA(Case C-106/89) [1990] ECR I-4135
Nuffield Nursing Homes Trust VAT(1989) 4 BVC 548
The Lord Mayor and Citizens of the City of Westminster VAT(1988) 3 BVC 847
Yoga for Health Foundation v C & E Commrs VAT(1984) 2 BVC 200,044
Exemption - Welfare services - Hotel-type accommodation specifically adapted for cancer sufferers - Establishment run like a normal hotel, but with nursing care available if required - Establishment operated on non-profit making basis - Whether supplies of welfare services - Whether separate supplies of hotel accommodation and welfare services - Value Added Tax Act 1994 schedule 9 group 7Value Added Tax Act 1994, Sch. 9, Grp. 7, item 9 and Notes (6) and (7); Directive 77/388, the sixth VAT directive, eu-directive 77/388 article 13(A)(1)art. 13(A)(1)(g).
The issue was whether the services supplied in an establishment similar to a seaside hotel with a clientele restricted to cancer sufferers amounted to: (1) a single exempt supply of welfare services; (2) a single standard-rated supply of hotel accommodation; or (3) separate supplies of hotel accommodation and welfare services.
The appellant was formed in 1974 to support cancer relief within the East Dorset Health District with the MacMillan Unit, the first in the country and the first to be operated in partnership with the National Health Service, opening in February 1975.
In 1986, the trust sought and found a suitable hotel in Bournemouth, Albany Lodge, to provide holidays for cancer sufferers, their families and carers which was suitable for convalescents and which offered professional advice for medical or personal problems that might arise during their stay. Although nursing staff were present in case of need, the nursing was not of the "hands on" variety provided in a nursing home. Albany Lodge was said to be the only establishment of its type in the country and its owner was a non-profit making body.
Patients were referred to the trust by their doctors, hospitals or nurses and to be accepted they had to meet specific criteria. These were that they were out-patients receiving regular treatment and care from the Home Care Service of a hospice or continuing Care Unit or from a MacMillan nurse. They had to be sufficiently capable and stable physically and mentally to cope with the hotel type of holiday offered, albeit with additional medical and nursing assistance. They had to be able to manage their own medication and personal hygiene and possess or be provided with sufficient means for payment of the holiday, which was for a maximum duration of two weeks.
By a decision of 25 March 1997, the commissioners ruled that the supplies made by the appellant at Albany Lodge were standard-rated.
Relying on references in the brochure to "a special hotel holiday", "a small well-furnished hotel" and other references to a hotel, the commissioners contended that the facilities at Albany Lodge were standard-rated supplies of hotel accommodation, with any care which might be provided being subsumed within the main supply. They pointed to Note (7) in Value Added Tax Act 1994 schedule 9 group 7Value Added Tax Act 1994, Sch. 9, Grp. 7, whereby the supply of accommodation or catering was not to be included in exempt welfare services except where ancillary to the provision of care, as support for the proposition that the supplies were not single supplies of welfare services. They conceded that the tribunal might conclude that there was a supply of hotel accommodation, together with a dissociable supply of care. However, to characterise the whole supply as exempt would have the effect of distorting competition.
The appellant contended that to the extent that UK law lent itself to a more restrictive interpretation than the European provision the latter could be directly relied upon. They argued that there was no question of competition between Albany Lodge and a normal hotel establishment and that in terms both of UK and European law the appellant was making exempt supplies of welfare services.
Held, allowing the taxpayer's appeal:
1. All the categories of persons received at Albany Lodge came within the definition of Note (6)(a), i.e. "the provision of care … designed to promote the physical or mental welfare of … sick, distressed or disabled persons", and this included accompanying members of the family and carers.
2. Although there were similarities between Albany Lodge and a normal hotel, there were also important differences, in particular: (a) that the former was a charity and run on a non-profit making basis; (b) that only those suffering from cancer and upon professional recommendation could avail themselves of the facilities and only for a specific time; and (c) that a type of nursing care was available.
3. There was no significant difference between services "closely linked to welfare", being the words of eu-directive 77/388 article 13(A)(1)art. 13(A)(1)(g), and the words "directly connected with … the provision of care …" in Note (6). All categories of persons received at Albany Lodge came within the definition.
4. The restriction imported into the exemption by Note (7) which excluded accommodation or catering save where ancillary to the provision of welfare services was an unacceptable restriction of the meaning of the words in eu-directive 77/388 article 13(A)art. 13(A), as was evident from the fact that old people's homes were included in eu-directive 77/388 article 13(A)(1)art. 13(A)(1)(g). In the instant case, the provision of accommodation and catering were ancillary to the provision of welfare and therefore Note (7) did not exclude the supplies.
5. In arguing for the dissociation of care from that of hotel accommodation, the commissioners were incorrectly labelling the entire transaction, which was contrary to authority. There was welfare and care for the whole of the visitor's stay at Albany Lodge and this was the dominant element of what was in fact supplied. It was a relatively simple transaction with one supplier and one supply, namely that of welfare services which were exempt.
[The tribunal set out the facts summarised above and continued as follows.]
The issue between the parties is how the services offered by Albany Lodge should be classified for value added tax. The commissioners' original decision of 25 March 1997 was to the effect that there was but one supply, the predominant element of that supply...
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