England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
UPPER TRIBUNAL (Tax and Chancery Chamber)
Mr Justice Morgan
[2013] UKUT 594 (TCC)

		Royal Courts of Justice Strand, London, WC2A 2LL
		28/10/2014

RULING

Lady Justice Arden:

1. I give permission to appeal in this matter on the single ground of appeal based on the MDDP case, as drafted by Melanie Hall QC dated 28 October 2014. I refuse permission on the other grounds. I direct that the grounds of appeal accordingly be amended and the appellant should file a new skeleton argument within 21 days of the date of this ruling, limited to the ground on which permission has been given.
2. In the course of the hearing I explained very briefly my reasons for giving permission. I will do it in this ruling in a little greater length. This ruling will therefore dispense with the need for any transcript of the judgment of today's hearing.
3. The appellant provides education services. Some of these are provided under arrangements with the University of Wales. It seeks to be exempt from VAT and to bring itself under the exemption in Group 6, Item 1 in Schedule 9 to the VATA 1994. This exempts the provision of educational services by an "eligible body". The issue before the Tribunals was whether the appellant was a "college or institution" of the University of Wales in relation to courses provided under arrangements with that university. Article 132 of the Principal VAT Directive creates two categories of education provider:

"Article 132

1. Member States shall exempt the following transactions:

(i) the provision of 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, by bodies governed by public law having such as their aim or by other organisations recognised by the Member State concerned as having similar objects." (emphasis added)

4. The appellant's case below was that it was a college or institution of the University to the extent that it provided courses with the University of Wales. However the Tribunals rejected this argument. HMRC argued that an eligible body could not be an eligible body in relation to some only of its activities. This argument was accepted below and the appeal by the appellant was dismissed.
5. Very shortly after the decision of the Upper Tribunal, the Court of Justice handed down its judgment in the MDDP case (Case C-319/12 Minister Finansów v MDDPsp z oo Akademia Biznesu, sp Kimandytowa). The appellant wishes to appeal on the basis that this case makes it clear that a provider of education services for the purpose of obtaining an exemption for VAT may carry on commercial activities. It also establishes that the Member State has an obligation under EU law to recognise "organisations…concerned or having similar objects" for the purpose of Article 132 and that the courts of the Member States should in appropriate circumstances review national legislation to see whether it conforms with EU law, including the principle of fiscal neutrality.
6. The appellant seeks to establish that there are other exemptions applicable to other bodies as providers of education who carry on the business of providing education services only as part of their undertaking, for example government departments and local authorities.
7. In my judgment, permission to appeal should be given to take the MDDP point because it was decided after the decision of the Upper Tribunal and was therefore was not fully considered below. It was only considered by the Upper Tribunal when refusing permission to appeal. If the appellant is right, the United Kingdom may be in breach of its obligations under the EU Treaties. The point is important for that reason and because also there are likely to be other establishments offering educational services who are in the same position as the appellant. I am satisfied that the point is properly arguable. The appellant will have to show by deduction from the domestic implementing legislation that there is a breach of the principle of fiscal neutrality. However, I am satisfied that that is arguable and that there is also an arguable case that, if successful on this point, the appellant will be entitled to claim the exemption which it seeks.