Whitbread Group Plc v C & E Commissioners
| Jurisdiction | England & Wales |
| Judge | THE HONOURABLE MR JUSTICE PETER SMITH,Mr Justice Peter Smith |
| Judgment Date | 23 March 2005 |
| Neutral Citation | [2005] EWHC 418 (Ch) |
| Docket Number | Case No: CH/2004/APP/0598 |
| Court | Chancery Division |
| Date | 23 March 2005 |
[2005] EWHC 418 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Peter Smith
Case No: CH/2004/APP/0598
Mr Andrew P Young (instructed by Collins Dryland & Thorowgood) for the Appellant
Ms Sara Williams (instructed by The Solicitor To The Customs and Excise) for the Respondent
Hearing dates: 9 th March 2005
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Justice Peter Smith:
INTRODUCTION
This is an appeal by the Appellant, Whitbread Group Plc ("Whitbread") against the decision of the VAT Tribunal of 4 th June 2004 (Mr J Demack, Chairman) when it dismissed Whitbread's appeal against a refusal by HM Customs and Excise to repay £235,310.69, which Whitbread contended it had paid a standard rate of VAT thereon, when it should have been zero rated as " cold food not sold on the premises".
The supplies in question were retail sales of cold sandwiches and similar items, which were made to air passengers and other persons authorised in the departure area at various airports within the United Kingdom. The actual supplies were made by Whitbread's subsidiary, Costa Ltd. Technically it could be said that Costa should be the Applicant and Appellant, but HMCE quite sensibly is not taking a point on that.
The Commissioners rejected the claim for repayment by letter dated 18 th February 2003, saying " all supplies of cold food in the departure areas of airports are supplies for consumption on the premises and therefore standard rated. The premises are not confined to the outlet and associated chairs and tables, but are the whole of the departure area".
NATURE OF APPEAL
The appeal is brought pursuant to section 11(1) of the Tribunal's and Enquiries Act 1992, which provides as follows:—
" … if any party to proceedings before [the tribunal] is dissatisfied in point of law with a decision of the tribunal, he may, according as rules of court may provide, either appeal from the tribunal to the High Court or require the tribunal to state and sign a case for the opinion of the High Court."
It follows therefore that the Court can only entertain the appeal in so far as it raises an error of law. There is no appeal against a finding of fact, although that can be qualified to this extent; if the tribunal states a conclusion which on its face is a finding of fact, but is a finding that such as no reasonable tribunal properly and instructed in the law could have made, the tribunal made an error of law.
BACKGROUND
Costa Ltd. supplies foods and drinks to the public. The supplies are made from shops, kiosks or other units often in close proximity to public transportation systems. " Costa Coffee" outlets are a familiar site to members of the travelling public. The appeal concerned those supplies made within the " air side" curtilage of public airports. The airports in question are; London Heathrow, Gatwick, Stanstead and Birmingham. Supplies made from outlets located at railway stations are not subject to the appeal.
THE STATUTORY PROVISIONS
The provisions are to be found in the Value Added Tax 1994 Schedule 8 ("the Act"). The relevant provisions are as follows:—
" Value Added Tax Act 1994 Schedule 8Value Added Tax Act 1994 Schedule 8
Part II
The Groups
Group 1—Food
The supply of anything comprised in the general items set out below, except—
(a) a supply in the course of catering; and
(b) a supply of anything comprised in any of the excepted items set out below, unless it is also comprised in any of the items overriding the exceptions set out below which relates to that excepted item.
General items
Item No.
1. Food of a kind used for human consumption.
2. Animal feeding stuffs.
3. Seeds or other means of propagation of plants comprised in item 1 or 2.
4. Live animals of a kind generally used as, or yielding or producing, food for human consumption.
Excepted items
Item No.
1. Ice cream, ice lollies, frozen yogurt, water ices and similar frozen products, and prepared mixes and powders for making such products.
2. Confectionery, not including cakes or biscuits other than biscuits wholly or partly covered with chocolate or some product similar in taste and appearance.
3. Beverages chargeable with any duty of excise specifically charged on spirits, beer, wine or made-wine and preparations thereof.
4. Other beverages (including fruit juices and bottled waters) and syrups, concentrates, essences, powders, crystals or other products for the preparation of beverages.
5. Any of the following when packaged for human consumption without further preparation, namely, potato crisps, potato sticks, potato puffs, and similar products made from the potato, or from potato flour, or from potato starch, and savoury food products obtained by the swelling of cereals or cereal products; and salted or roasted nuts other than nuts in shell.
6. Pet foods, canned, packaged or prepared; packaged foods (not being pet foods) for birds other than poultry or game; and biscuits and meal for cats and dogs
7. Goods described in items 1, 2 and 3 of the general items which are canned, bottled, packaged or prepared for use—
(a) in the domestic brewing of any beer;
(b) in the domestic making of any cider or perry;
(c) in the domestic production of any wine or made-wine.
Items overriding the exceptions
Item No.
1. Yoghurt unsuitable for immediate consumption when frozen.
2. Drained cherries.
3. Candied peels.
4. Tea, "matè," herbal teas and similar products, and preparations and extracts thereof.
5. Cocoa, coffee and chicory and other roasted coffee substitutes, and preparations and extracts thereof.
6. Milk and preparations and extracts thereof.
7. Preparations and extracts of meat, yeast or egg.
Notes:
(1) "Food" includes drink.
(2) "Animal" includes bird, fish, crustacean and mollusc.
(3) A supply of anything in the course of catering includes—
(a) any supply of it for consumption on the premises on which it is supplied; and
(b) any supply of hot food for consumption off those premises;
and for the purposes of paragraph (b) above "hot food" means food which, or any part of which—
(i) has been heated for the purposes of enabling it to be consumed at a temperature above the ambient air temperature; and
(ii) is at the time of the supply above that temperature.
(4) Item 1 of the items overriding the exceptions relates to item 1 of the excepted items.
(5) Items 2 and 3 of the items overriding the exceptions relate to item 2 of the excepted items; and for the purposes of item 2 of the excepted items "confectionery" includes chocolates, sweets and biscuits; drained, glace. or crystallised fruits; and any item of sweetened prepared food which is normally eaten with the fingers.
(6) Items 4 to 6 of the items overriding the exceptions relate to item 4 of the excepted items.
(7) Any supply described in this Group shall include a supply of services described in paragraph 1(1) of Schedule 4".
Although Costa sells hot food and cold food from the outlets, the appeal is only in respect of cold food, which is sold at the outlets for consumption off the premises. For these purposes Costa contends the Premises comprise the area occupied by it under a concession arrangement with the Airport Authority. The cold food in question consists mainly of pre-packaged sandwiches.
Two copies of catering concession agreements were provided in the bundle of documents for the Tribunal in respect of Terminal 1 and Terminal 4 of Heathrow Airport respectively. Each grants Costa a non-exclusive right to supply " the catering service" from the " catering outlets". Catering service means the preparation and supply and sale of food, refreshments and alcohol by the concessionaire as listed in Schedule 2, and the catering outlet is defined as those areas made available at the airport from which the concessionaire is required to operate, including backup store, kitchen/food preparation area shown as red on the relevant plan. The term is for 5 years and 3 months from the date of the calendar month following that in which the trading date falls and the fee is a turnover fee based on a percentage of the sales. There are clauses in the document designed to establish that the relationship is licensor/licensee as opposed to landlord/tenant. Nothing turns on those for the present purposes. I note in passing that there is a right on the part of the Airport Authority to move the concessionaire to different sites within the departure area. It is the areas covered by the concession agreements from time to time that Whitbread contends are the premises for the purposes of the Act.
I do not derive any assistance from the description of the services provided in the concession agreement, merely because they describe it as a catering service cannot have any impact on the question of law as to the applicability of the Act.
FINDINGS OF THE TRIBUNAL
In paragraph 5 and following of the written decision, the Tribunal made a number of factual findings based upon the joint bundle of documents and the parole evidence of Mr Giorgio Fioravanti, Costa's regional manager and Mr Paul Jepson, the Commissioners' assessing officer.
Customers visit Costa's units to take advantage of its catering service. They decide on their purchases and place their order. Having been served they pay for them. They may then...
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