University of Leicester Students Union
| Jurisdiction | UK Non-devolved |
| Judgment Date | 11 August 2000 |
| Date | 11 August 2000 |
| Court | Value Added Tax Tribunal |
VAT Tribunal
The following cases were referred to in the decision:
C & E Commrs v Annabel's Casino Ltd VAT[1995] BVC 65
C & E Commrs v Glassborow VAT(1974) 1 BVC 4
Stichting Uitvoering Financiële Acties (SUFA) v Staatssecretaris van Financiën VAT(Case 348/87) [1987] ECR 1737; [1991] BVC 102
Eligible body - Preliminary issue - Goods supplied by students' union - Goods closely related to education - Whether union part of university's registration -Value Added Tax Act 1994 schedule 9 group 6Value Added Tax Act 1994, s. 46 and Sch. 9, Grp. 6, item 4(a) and Note (1)(e); Directive 77/388, the sixth VAT directive, eu-directive 77/388 article 4(1) article 13(A)(1)art. 4(1) and 13(A)(1)(i).
The issue was whether the appellant was an eligible body supplying education.
The appellant supplied soft drinks to its members, on which it accounted for output tax. The commissioners refused a claim for repayment of the tax on the ground that the appellant could not bring the supply within the scope of the exemption in Value Added Tax Act 1994, Value Added Tax Act 1994 schedule 9 group 6Sch. 9, Grp. 6. The appellant sought a ruling by the tribunal on the point as a preliminary issue.
The commissioners contended that for the appellant to succeed it was necessary to establish that it was an eligible body. The only heading of Note (1) to Grp. 6 within which it could fall was "(e) a body which - (i) is precluded from distributing and does not distribute any profit it makes; and (ii) applies any profits made from supplies of a description within this Group to the continuance or improvement of such supplies".
All the other headings referred to public bodies and to bodies that provided education and Note (1)(e) should be construed in like manner. If the appellant was not an eligible body, it had to show that it was part of the University of Leicester, which was. However, it was separately registered in 1973 as a taxable person and both the sixth VAT directive and all the authorities in the domestic legislation made it clear that registration was by a "person" carrying out an economic activity "independently". While there was a possibility within VAT law of a body corporate registering in the names of its divisions, this could not apply in the case of the appellant and the university. To the claim put forward on the appellant's behalf that it was effectively controlled by the university, the commissioners replied that it was clear that the appellant worked independently of the university to promote the interests of its students and the two bodies fulfilled different roles. Even if the appellant was effectively controlled by the university, that would not have prevented it from being liable to register separately. Since the appellant was not an eligible body and did not supply education, it could not bring itself within item 4.
The appellant conceded that it was not an eligible body, but argued that the two entities were so inextricably interlinked, with provision for the appellant's representatives to sit on committees of the council and the senate, that it was abundantly clear that the appellant could not operate without the university and should be so treated for VAT purposes.
Held, deciding the preliminary issue in the union's favour:
1. The university's charter made it clear that the appellant would be established at the same time as the university and it could not operate without the university and its buildings. Historically, the arrangements for universities had been that student unions could be separately registered, even though forming part of a university.
2. eu-directive 77/388 article 13(A)(1)Article 13(A)(1)(i) of the sixth VAT directive referred to schools or universities and the supply of goods or services closely related thereto by a body governed by public law or "other organisations" and there was no doubt that the appellant was another organisation within the public body of the university.
3. Since the appellant was part of the university and therefore an eligible body, it was party to the principal supply of education within the meaning of item 4(a).
[The tribunal set out the facts summarised above and continued as follows.]
4. For the appellant to succeed, Mrs Preston [for the respondents] submitted that it was necessary for it to establish that it was an eligible body. Value Added Tax Act 1994 schedule 9 group 6Group 6 of Sch. 9 to the 1994 Act [the Value Added Tax Act 1994] provides that supplies of education are exempt from VAT. In order to claim exemption, the supply must be made by an eligible body. Note (1) to Grp. 6 states what is an eligible body. Note (1)(e) states:
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(e) a body which-
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(i)...
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