The Commissioners for HM Revenue and Customs v The Open University
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Henderson |
| Neutral Citation | [2015] UKUT 0263 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Subject Matter | Tax,21 May 2015 |
| Date | 21 May 2015 |
| Published date | 01 December 2016 |
[2015] UKUT 0263 (TCC)
Appeal number: FTC/100/2013
VAT – whether services supplied by BBC to Open University exempt under
Article 13A(1)(i) of the Sixth VAT Directive – appeal on law from decision
of First-tier Tribunal that services were exempt – was BBC a body governed
by public law? – no – did BBC have educational aim required by Article
13A(1)(i)? – yes – was BBC other organisation defined by United Kingdom
as having similar objects? – yes – appeal dismissed
UPPER TRIBUNAL (TAX AND CHANCERY CHAMBER)
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE & CUSTOMS
Appellants
-and-
THE OPEN UNIVERSITY
Respondent
TRIBUNAL: MR JUSTICE HENDERSON
Sitting in public at the Rolls Building, London EC4A 1NL on 17, 18 and 19 November
2014
Mr Peter Mantle, instructed by the General Counsel and Solicitor for HMRC, for the
Appellants
Mr Paul Lasok QC, instructed by KPMG LLP, for the Respondent
© CROWN COPYRIGHT 2015
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Introduction
1. This is an appeal by the Commissioners for Her Majesty’s Revenue and
Customs (“HMRC”) from a decision (“the Decision”) of the Tax Chamber of
the First-tier Tribunal (Judge Sinfield, “the FTT”), which was released on 3
June 2013 after a four day hearing in London in January of that year. The
appeal is brought with permission granted by Judge Sinfield on 6 August
2013.
2. The case concerns supplies of production and broadcasting services made by
the British Broadcasting Corporation (“the BBC”) to the Open University
(“the OU”) during the period of 16 years and seven months from 1 January
1978 until 31 July 1994, but excluding (for reasons which I will explain) the
September 1981 quarter. I will call this period “the Appeal Period”. With
effect from 1 August 1994, HMRC have until recently accepted that the
services in question were and are exempt under item 4 of Group 6 of Schedule
9 to the Value Added Tax Act 1994 (“VATA 1994”) as services provided by
an “eligible body” which are closely related to the provision of education by a
university, the “eligible body” for this purpose being the BBC Open
University Production Centre. The wording of the exemption in item 4 of
Group 6, read with the relevant definitions of “eligible body” in Note (1)(d) to
Group 6 and of “public body” in Note (5) to Group 7, differs in significant
respects from the wording of the predecessor provisions which were in force
during the Appeal Period. However, HMRC have indicated to the OU that the
current exemption of the relevant services may be reconsidered following the
outcome of the present proceedings.
3. From soon after the introduction of VAT in 1973 until the end of the Appeal
Period, the BBC had charged and accounted for VAT on the services which it
supplied to the OU. In 2009, the BBC made a claim under section 80 of
VATA 1994 for repayment of the VAT which it had charged and accounted
for on all supplies made to the OU before 1 August 1994. HMRC rejected the
claim, and a review of that decision was then requested by the OU under
section 83B of VATA 1994. The request was made by the OU, rather than the
BBC, because the OU had paid the VAT charged to it by the BBC, and the
BBC had agreed to pass on to the OU any amounts that it recovered from
HMRC. By decisions in March and June 2011, HMRC allowed the BBC’s
claim in relation to the initial period from 1 April 1973 to 28 February 1974,
but maintained their rejection of the claim for all subsequent periods. The OU
then appealed to the FTT, confining its appeal to supplies made during the
Appeal Period.
4. The total amount of allegedly overpaid tax which the BBC sought to recover
for the Appeal Period, excluding interest, was £21,059,078. This amount was
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reduced by approximately £270,000, when the OU accepted that supplies
made during the September 1981 quarter had to be excluded. The reason for
this, as the FTT explained in paragraph 4 of the Decision, is that an appeal
relating to that quarter had in 1982 been heard and dismissed by the VAT
Tribunal. The Tribunal based its decision on a view of the law which, much
later, was shown to be incorrect by the decision of the European Court of
Justice (the “ECJ”) in Case C-434/05, Stichting Regionaal Opleidingen
Centrum Noord-Kennemerland/West-Friesland (Horizon College) v
Staatssecretaris van Financiën [2007] ECR I-04793, [2008] STC 2145
(“Horizon College”). No appeal was brought by the BBC or the OU from that
decision, so it remains binding on the parties as res judicata.
5. The Appeal Period began with the entry into force on 1 January 1978 of the
Sixth VAT Directive (Sixth Council Directive 77/388/EEC of 17 May 1977 on
the harmonisation of the laws of the Member States relating to turnover taxes
– Common system of value added tax: uniform basis of assessment).
Throughout the Appeal Period, Article 13 of the Sixth VAT Directive
provided as follows:
“Article 13 Exemptions within the territory of the country
A. Exemptions for certain activities in the public
interest
1. Without prejudice to other Community
provisions, Member States shall exempt the
following under conditions which they shall
lay down for the purpose of ensuring the
correct and straightforward application of
such exemptions and of preventing any
possible evasion, avoidance or abuse:
…
(i) children’s or young people’s education,
school or university education, vocational
training or retraining, including the supply of
services and of goods closely related thereto,
provided by bodies governed by public law
having such as their aim or by other
organisations defined by the Member State
concerned as having similar objects;
…”
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