The Commissioners for HM Revenue and Customs v 1) The Learning Centre (Romford) Ltd, 2) L.I.F.E. Services Ltd
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Nugee,Judge Herrington |
| Neutral Citation | [2019] UKUT 0002 (TCC),[2019] UKUT 0002 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Subject Matter | Tax,23 January 2019 |
| Date | 23 January 2019 |
| Published date | 23 January 2019 |
[2019] UKUT 0002 (TCC)
Appeal numbers: UT/2016/0201 & UT/2017/0119
VAT – Exemption for welfare services – Item 9 Group 7 Sch 9 VATA – Respondents
providing day care services in England and not state-regulated – whether Item 9 breaches
fiscal neutrality on basis that providers of day care services in Scotland and Northern
Ireland are state-regulated and their supply of services exempt – whether Respondents’
supply of services exempt – no breach of fiscal neutrality
UPPER TRIBUNAL (TAX AND CHANCERY CHAMBER) UT/2017/0119
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMS Appellants
- and -
THE LEARNING CENTRE (ROMFORD) LTD Respondent
UT/2016/0201
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMS Appellants
- and -
L.I.F.E. SERVICES LTD Respondent
TRIBUNAL: Mr Justice Nugee
Judge Timothy Herrington
Sitting in public at the Rolls Building, London EC4A 1NL on 4 and 5 December 2018
Jonathan Davey QC and Natasha Barnes, instructed by the General Counsel and
Solicitor for HM Revenue and Customs, for the Appellants
Eamon McNicholas, instructed directly, for The Learning Centre (Romford) Ltd
Jonathan Bremner QC, instructed by Gerald Edelman LLP, for L.I.F.E. Services Ltd
© CROWN COPYRIGHT 2019
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DECISION
Introduction
1. There are two appeals before the Upper Tribunal (“the UT”) from decisions
of the First-tier Tribunal (“the FTT”). They raise the same issue, which is
whether provisions of the Value Added Tax Act 1994 (“VATA 1994”) which
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provide an exemption for VAT for certain welfare services infringe the EU
principle of fiscal neutrality. The particular context is the provision of day
care services by bodies that are neither public bodies nor charities but are
private entities providing such services for profit.
2. We give the detail of the legislation below but in essence VATA 1994 has the
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effect that the supply of services by such a body is only exempt for VAT
purposes if the body is “state-regulated”. In England and Wales there is no
regulation of the provision of day care services as such. But in Scotland there
is devolved legislation which means that the provision of day care services is
regulated; and the same is true in Northern Ireland under separate devolved
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legislation. That means that day care services provided by commercial
providers in England and Wales are not exempt and are liable to VAT at the
standard rate, whereas such services in Scotland and Northern Ireland are
exempt.
3. The first appeal (UT/2017/0119) concerns a company called The Learning
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Centre (Romford) Ltd (“TLC”) which provides day care services in England
to vulnerable adults with learning difficulties. TLC applied to de-register for
VAT on the grounds that its supplies were exempt. The Commissioners for
Her Majesty’s Revenue and Customs (“HMRC”) refused to permit TLC do so
on the grounds that TLC’s supplies were taxable. TLC appealed to the FTT
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against HMRC’s decision. By a decision released on 13 June 2017 ([2017]
UKFTT 0492 (TC)) the FTT (Judge Barbara Mosedale) allowed TLC’s appeal
on the grounds that the UK’s welfare services exemption did not correctly
transpose the relevant EU Directive because the UK did not have regard to the
need for fiscal neutrality and the need for all private bodies in the UK
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providing the same service to be treated in the same manner for VAT
purposes. HMRC appeal to the UT against this decision. Permission was
given by the FTT (Judge Mosedale) on 17 August 2017.
4. The second appeal concerns a company called L.I.F.E. Services Ltd (“LIFE”)
which also provides day care services in England, in this case to adults with a
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broad spectrum of disabilities. LIFE appealed to the FTT against a
determination of HMRC that its services were taxable. By a decision released
on 23 June 2016 ([2016] UKFTT 444 (TC)) the FTT (Judge Charles Hellier
and Mr William Haarer) allowed LIFE’s appeal on the grounds that the
relevant provisions of VATA infringed the principle of fiscal neutrality
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because they exempted charities and not providers such as LIFE. The
question of fiscal neutrality as between the various nations of the UK (which
we will call “the devolved nations issue”) was not raised at this hearing.
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