Eynsham Cricket Club v The Commissioners for HM Revenue and Customs
Jurisdiction | UK Non-devolved |
Judge | Mr Justice Nugee,Judge Herrington |
Neutral Citation | [2019] UKUT 0286 (TCC) |
Court | Upper Tribunal (Tax and Chancery Chamber) |
Subject Matter | Tax,1 October 2019 |
Date | 01 October 2019 |
Published date | 01 October 2019 |
[2019] UKUT 0286 (TCC)
Appeal number:UT/2018/0038
VAT – whether construction of cricket pavilion by cricket club zero-rated – whether
cricket club a “charity” for VAT purposes – whether pavilion had intended use as a
village hall or similarly in providing social or recreational facilities for a local
community – whether EU law principles of equal treatment or fiscal neutrality
apply
VATA 1994 Sch 8 Group 5 Item 2 and Note 6 – FA 2010 Sch 6
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
EYNSHAM CRICKET CLUB
Appellant
- and -
THE COMMISSIONERS FOR HER MAJESTY’S
Respondents
REVENUE & CUSTOMS
TRIBUNAL:
Mr Justice Nugee
Judge Timothy Herrington
Sitting in public at The Royal Courts of Justice, Rolls Building, Fetter Lane,
London EC4 on 18, 19 and 20 June 2019
John Brinsmead-Stockham, Counsel, instructed by Hogan Lovells International
LLP, Solicitors, for the Appellant
Howard Watkinson, Counsel, instructed by the General Counsel and Solicitor to
HM Revenue and Customs, for the Respondents
© CROWN COPYRIGHT 2019
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DECISION
Introduction
1. Eynsham Cricket Club (“ECC” or the “Club”) appeals against a decision by
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the First-tier Tribunal (“FTT”) (Judge Jonathan Richards and Susan Lousada)
released, following revisions on review, on 29 December 2017 (the “Decision”). The
FTT dismissed ECC’s appeal against a decision by the Respondents (“HMRC”)
dated 21 May 2015 that ECC was not entitled to treat construction services supplied
to them for the building of a cricket pavilion as zero-rated under the terms of Value
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Added Tax Act 1994 (“VATA 1994”) Schedule 8 Group 5 Item 2.
2. The provision in VATA mentioned above provides for zero-rating to apply to
the supply in the course of the construction of a building intended for use only for a
“relevant charitable purpose.” In order to obtain the benefit of that provision, the
requirements of the definition of “relevant charitable purpose” contained in Note 6 to
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Group 5 of Schedule 8 VATA had to be met, which meant that it had to be found that
the pavilion was intended to be used “by a charity” either “otherwise than in the
course or furtherance of a business” or “as a village hall or similarly in providing
social or recreational facilities for a local community.”
3. ECC was, at all material times, a registered Community Amateur Sports Club
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(“CASC”) within the meaning of the Corporation Tax Act 2010 (“CTA 2010”).
4. There were four issues before the FTT as follows:
Issue 1: At the relevant time, was ECC a “charity” for the purposes of VATA
Schedule 8, Group 5, Note 6, which applies the definition contained in the
Finance Act 2010 (“FA 2010”) Schedule 6?
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This issue was broken down into the following three sub-issues:
Issue 1(a): was ECC “established for charitable purposes only” within the
terms of FA 2010 Schedule 6 paragraph 1(1)(a)?
Issue 1(b): did s 6 of the Charities Act 2011 (“CA 2011”), which
provides that a CASC established for charitable purposes cannot be a
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charity under the general law of charities, prevent ECC from being
“established for charitable purposes only” under FA 2010 Schedule 6
paragraph 1(1)(a)? and
Issue 1(c): did ECC satisfy the “registration condition” in FA 2010
Schedule 6 paragraph 3, that is did it comply with “any requirement to be
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registered” under CA 2011?
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Issue 2: Was the new pavilion intended for use solely by ECC “otherwise than
in the course or furtherance of a business” for the purposes of VATA Schedule
8, Group 5, Note 6(a)?
Issue 3: Was the new pavilion intended for use solely by ECC as “a village hall
or similarly in providing social or recreational facilities for a local community”
5
for the purposes of VATA 1994 Schedule 8, Group 5, Note 6(b)?
Issue 4: If ECC was not entitled to treat the services supplied to it in connection
with the construction of the new pavilion as zero-rated for UK VAT purposes,
then would this constitute a breach of the EU law principles of: (1) equal
treatment; and/or (2) fiscal neutrality?
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5. The FTT determined Issues 1(b), 1(c) and 3 in favour of ECC. However,
HMRC succeeded on Issues 1(a), 2 and 4. The basis of the FTT’s finding that ECC
was not “established for charitable purposes only” was that although it was
established for a charitable purpose, namely “the advancement of amateur sport”
within the terms of s 3(1)(g) CA 2011 it was also established for a subsidiary purpose
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of providing social facilities to the residents of Eynsham. The FTT found that such a
subsidiary purpose was not a charitable purpose within s 3 CA 2011 and consequently
ECC was not “established for charitable purposes only” for the purposes of Schedule
6 FA 2010.
6. ECC’s success before the FTT in respect of Issues 1(b), 1(c), and 3 meant that if
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ECC had also succeeded in respect of Issue 1(a) then ECC’s appeal would have been
allowed, in full, on the basis of the VAT analysis as a matter of UK law (i.e. without
ECC having to rely on the EU law arguments in Issue 4).
7. On 23 April 2018 Judge Herrington granted ECC permission to appeal on the
papers to the Upper Tribunal in respect of Issue 1(a) and Issue 4.
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8. In its Response to ECC’s application for permission to appeal, dated 19 June
2018, HMRC conceded that the sole basis on which the FTT had dismissed ECC’s
appeal, that is its decision in respect of Issue 1(a), was wrong in law. Following a case
management hearing which was held on 22 January 2019 to consider the effect of
HMRC’s concession, the Upper Tribunal (Judge Herrington) issued a decision on 18
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February 2019 ([2019] UKUT 0047 (TCC)) in which the Upper Tribunal allowed
ECC’s appeal in respect of Issue 1(a) and determined that issue in ECC’s favour as a
preliminary issue before the Upper Tribunal.
9. The effect of that decision was that ECC had effectively succeeded in its appeal
before the FTT. However, as HMRC in its Response sought to challenge the FTT’s
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findings in respect of Issue 1(b), Issue 1(c) and Issue 3 HMRC proceeded as the
appellants. Therefore, although these proceedings are still formally an appeal by ECC
against the Decision, ECC is now regarded, in substance, as the respondent.
10. ECC has not appealed against the FTT’s findings on Issue 2. ECC maintains its
appeal on Issue 4 and that issue will be relevant if HMRC succeed on any of the
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FTT’s findings which they challenge.
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