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Leez Priory v Customs and Excise [2003] UKVAT V18185 (11 June 2003)

18185

SUPPLY – Establishment providing venue and other services for weddings – Whether venue charge an exempt supply of land – Whether a `similar' establishment – Whether single supply – s.30 and Sch 9 Group 1 item 1(d) VATA 1994 – Appeal dismissed

LONDON TRIBUNAL CENTRE

LEEZ PRIORY Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: MR PAUL HEIM CMG (Chairman)

MRS S SADEQUE

Sitting in public in London on 17 January 2003

Mr P Bright, VAT Consultant, for the Appellant

A O'Connor, counsel, instructed by the Solicitor for the Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2003

DECISION

Leez Priory Ltd appeals against a ruling made by The Commissioners of Customs and Excise on 5^th October 2001 that venue charges made by it are standard rated for the purposes or value added tax.

At the hearing of this appeal the Appellant was represented by Mr P Bright, VAT consultant and the commissioners by Mr A O'Connor of Counsel.

This matter concerns the provision of services made by the appellant under its license under the Marriage Act 1994, which allows weddings to be celebrated at its premises at Leez Priory. The matter is complicated by the fact that such services are not specifically provided for in the value added tax legislation, so that the parties require the tribunal to classify them by analogy, under legislation pre-dating that Act.

The fact of the matter are not in dispute. There is dispute about the classification of the different services which the Appellant supplies.

The Tribunal accordingly sets them out in some detail.

The Appellant provides the services of a wedding venue at Leez Priory. Leez Priory is an ancient house, having impressive accommodation, which includes a Great Tower, set in a 40 acres of gardens, lawns and parkland. Its brochure contains a number of statements which are relevant to the issues raised. These are:

"Leez Priory became the first country house in England to be granted a licence to conduct marriage ceremonies.;

"The stunning 60 foot high Great Tower is licensed for marriage ceremonies and with its vast oak beams, high vaulted ceilings and leaded windows, creates an aura of tranquillity and serenity most often found in churches";

"The marriage ceremony can be tailored to the individual couple and our staff will be delighted to advise you on this, as with every other aspect of the day";

"The Great Hall can accommodate up to 80 guests and with the adjoining Gate House room we can cater up to 120 for the wedding breakfast";

"There's a grand piano in the light oak drawing room, a vaulted cellar room for evening dancing, a dark oak panelled private bar, and a brick lined Tudor room giving facilities for over 200 for evening parties";

"The parkland of Leez Priory is exclusively yours for your guests to enjoy;"

"The Priory offers overnight accommodation to guests attending parties, both in the West Wing of the main house and in a Lodge adjacent to the principal lake".

A further publicity document is headed;

"Your wedding reception at Leez Priory in 2001".

Relevant statements in that document are:-

"Your reception may be constructed to your requirements when any number of services may be added to an overall venue charge of between £1500 - £3950 for a Saturday (or any Bank Holiday Sunday) for the exclusive use of Leez Priory and grounds;"

"The Great Hall can accommodate over 80 guests for restaurant service in banquet format, using the Great Hall together with the adjoining Gate House room we can cater for 120 guests for the main wedding breakfast";

"Our ground floor rooms and vaulted cellar discotheque provide facility for over 200 guests for the wedding evening;"

"Menus can be prepared to your choice and live musical entertainment arranged";

"Our chef, photographer and florist are all available to custom build the event to your specification;"

An example is given based on 60 guests for the main meal and 100 for the evening buffet, namely a three course meal for 60 at from £32.50, welcome drinks for 60 at from £3, house wines with meal 30 bottles at from £14.95, sparkling wine for toast, 12 bottles at from £18.95, evening buffet 100 guests at prices from £12.50 per person, Leez disco to midnight for £275 if required. These are shown as amounting to £4330.90 plus VAT plus the venue charge. The document shows that the venue charge varies from £1,250 to £3,950, according to the day and season.

The document goes on to state "this cost" includes;

All non-consumables including furnishings and house decoration

Full bar facilities including staff

Free use of the Tudor Great Tower for your wedding ceremony

Exclusive use of the Great Hall, reception rooms and 40 acres of glorious gardens, lawns and parkland for the entire event.

Your own front of house manager to help plan and run your special day.

It further states that on midweek dates the Priory bridal suite is included free of charge for all full day events, and that the Priory also offers 13 en suite rooms costing from £100 plus VAT to £125 plus VAT. A draft letter to a client says "our usual method of costing is to add catering costs to a venue charge".

Mr Hurst, a partner in the Appellant's accountants, gave evidence. He said that the Priory was not available either for accommodation or food to anybody at all save as a wedding venue. It was possible though not usual for the Priory to be hired only for a wedding without any other services being required. It was normal for it to be hired as a wedding venue with some of the services offered. Mr Hurst confirmed that the Appellant would normally look to provide the other services as this was more profitable. He said that the venue charge was for the use of the premises.

Mr Hurst further confirmed that the expression of "this cost" in this documentation issued to guests referred not to venue charge but to the whole charge made.

Mr Hurst explained that the Commissioners originally agreed that the venue charge was exempt, but after a visit in October the inspector looked at an associate company where value added tax was charged and this led to the decision under appeal.

The Tribunal accepts on these facts that, following the Marriage Act of 1994, Leez Priory entered into the business of offering the Priory as wedding and reception venue offering to potential clients the services that would attract them, including the matters cited earlier, that is to say, in particular, catering, the free use of the bridal suite on midweek dates, and the possibility of taking some of the rooms available.

In issue is whether the venue charge is subject to value added tax.

The history of the matter is set out in brief in the letter of 5^th October 2001, signed by Mr Busby, an officer of Customs and Excise at the Essex and Suffolk business taxes office in Chelmsford, in the following way;

"I have now had an opportunity to examine the background to the two different rulings you have been given for the treatment venue charges at Leez Priory and Clearwell Castle."

"My understanding is that both establishments are set up in the same way and they provide the same services, that is wedding venue providing wedding facilities, catering accommodation and sundry services. All these services are standard rated for VAT purposes."

"In addition a venue charge is made which is treated as standard rated at Clearwell Castle and exempted to this Priory. The two differing approaches have been with the approval of the appropriate local customs and excise staff."

"My initial feeling was that the venue charge was indeed to allow a license to occupy land and was, therefore, exempt. However, I have now researched the rationale behind the ruling given to you in respect of Clearwell Castle and can see that this isn't the case. I now believe that the venue charge should indeed be standard rated at Leez Priory in accordance with the ruling given to you by my colleague in Gloucester in respect of Clearwell Castle."

Mr Busby then goes on to give the reasons for his decision in the following terms;

"In general terms the right to occupy land is exempt. However, VAT Act 1994 Schedule 9 Group 1, Item 1, refers to a number of exceptions to the exemption. Item 1(d) refers to;

"The provision in an hotel, inn, boarding house or similar establishment of sleeping accommodation or of accommodation in rooms which are provided in conjunction with sleeping accommodation or for the purpose of a supply of catering;.

Note 9 to this section then defines a similar establishment as:-

"Premises in which there is provided furnished sleeping accommodation, whether with or without the provision of board or facilities for the preparation of food, which are used by or held out as being suitable for use by visitors or travellers".

"Community law specifically excludes the provision of hotel and similar under the EC6 Directive Article 13 B(b)."

"There have also been a number of VAT Tribunal decisions concerning similar circumstances for example Blendhome Ltd, Ref LON/99/868, that support this view. See the Tax Journal Monday 27 September 1999 page 22."

"I do not know why you have been given different rulings covering what are ostensibly the same scenarios. The historic files covering the Leez Priory ruling are no longer available. However, a possible explanation is that, whilst the cases are now the same, that at Leez Priory may have been different in 1995 when the ruling was given. If what was offered at Leez Priory did not include hotel accommodation in 1995 then the approach would indeed have been different. …."

The Commissioners say that the law governing the matter is in the first place section 31 of the Value Added Tax Act 1994 which states that a supply of goods is an exempt supply if it is specified in schedule 9.

Item 1, group 1 of Schedule 9 of the Act exempts;

"The grant of any interest in or right over land or have any license to occupy land… other than –

(a) …

…

(d) the provision in an inn, hotel, boarding house or similar establishment of sleeping accommodation on or accommodation in rooms which are provided in conjunction with sleeping accommodation or for the purpose of a supply of catering".

Note 9 to that Group defines "similar establishments" to include "premises in which there is provided furnished sleeping accommodation, whether with or without the provision of board or facilities for the preparation of food, which are used by or held out as suitable by visitors or travellers".

The Commissioners argument is that the Priory is a "similar establishment" to a hotel. It provides services consistent with activities of a hotel, being the provision of sleeping accommodation and breakfast. Wedding guests are not residents at the Priory; they must therefore be visitors. This satisfies the definition in note 9.

The Commissioners say that the venue charge does not represent a separate supply. It is ancillary to the principal supply of catering. It cannot be regarded as an aim in itself. It is a means of better enjoying the principal service of catering. The brochure confirms that the venue charge covers the service of a front of house manager together with a full bar facilities including staff. Even if the venue charge were to be regarded as a separate supply it would still be taxable as excluded from exemption under item 1(d) of schedule 9, which speaks of "rooms which are provided… for a purpose of the supply of catering". Thus the principal supply, according to the Commissioners, is the provision in a "similar establishment" to a hotel of accommodation in rooms which are provided for the purpose of a supply of catering.

The Appellant however argues that the venue charges should be exempt. It say that this position had in fact been accepted by the Commissioners and that it were astonished when in 1998 a different officer took a totally opposite view and chose to ignore the earlier ruling.

The Appellant says that the venue in issue clearly neither a hotel, in or a boarding house. It is also not "a similar establishment" that is to say premises in which there is provided sleeping accommodation which are used by or held out as being suitable for visitors or travellers. The accommodation in Leez Priory is not used by or held out as being suitable for visitors or travellers. Furthermore the exclusion under the 6^th Directive uses the term ".. the hotel sector or sectors with a similar function". Similar functions, for UK purposes, must therefore be "similar establishments" as defined in note 9. The similarity alleged by the Commissioners does not therefore exist. The Appellant says that for capital tax purposes a hotel or comparable establishment is an establishment which has as its main purpose the provision of facilities of overnight accommodation.

The Appellant says that the venue charges are precisely charges for the occupation of premises. The charge is for the whole of the premises, apart from offices, including all of the reception rooms, disco, wedding rooms etc and the garden and grounds. The sleeping accommodation is incidental to the main activity, is separately costed, and if taken at all is charged for separately. It is not part of the venue charge. The venue charge is simply a charge to occupy the premises. Other facilities are offered, costed and charged separately to the venue charge.

The Tribunal first considers as a matter of fact what services were supplied by the Appellant.

The short answer is that the Appellant was supplying "wedding functions" as indicated in its application for registration, received on 11 August 1998, and described more fully in the brochures to which the Tribunal has been referred.

What was supplied by the Appellant was more precisely described in evidence by Mr Hurst, whose evidence the Tribunal accepts. The Tribunal therefore finds that the Appellant was supplying what was necessary to hold a wedding and the reception and other festivities associated with the celebration of weddings including the use of Leez Priory. It was unusual for it to supply that venue only, as it would normally look to provide the other services specified in the brochure, as it was more profitable to do this. This is precisely in accordance with the statement in one of the publicity documents that "your reception may be constructed to your requirements when any number of services may be added to an overall venue charge …" . The other services are food and drink, discotheque, live musical entertainment, photographer, florist, bar facilities, front of house manager, as well as a bridal suite included free of charge for all full day events, and 13 double and family rooms. The publicity document speaks of a popular format based on 60 guests for a main meal and a 100 for an evening buffet, giving as a guideline for likely costs and states that that would amount to £4,330.90 plus VAT plus the venue charged, the venue charge varying from £1,250 to £3,950 depending on the season. It is indicated that these two charges together would include all non-consumables, full bar facilities including staff, free use of the Great Tower for the ceremony, exclusive use of the Great Hall, reception rooms and gardens, and the front of house manager to help plan and run the day.

It is also relevant that much of the area covered by the venue charged, gardens and lawns for example, are not necessarily the subject of any other facilities.

It is clear to the Tribunal that if the Appellant only offers the use of the premises of Leez Priory, granting an exclusive licence to use the house and grounds and that no other supplies are made, this will amount to an exempt supply of the grant of a licence to occupy land under Schedule 9, Group 1 of the Value Added Tax Act 1994 (Item 1). However, the Tribunal finds as a fact that while this is a possibility, it is not the normal transaction and it is not a transaction which the Appellant seeks, as the Appellant seeks to make other supplies with the right to use the premises.

Three questions arise for the determination of the Tribunal. Was there a separate supply the subject of a venue charge or was there a composite supply within which supply the venue charge was incorporated? If there was a composite supply was there a main supply which characterises the supply? Thirdly, is the matter covered by the argument that in any event Leez Priory is a "similar establishment" to a hotel inn or boarding house within Item 1(d) of Group 1 to Schedule 9.

On these matters the parties referred the Tribunal to a number of decided cases.

On the question of whether there was a single or composite supply the Tribunal was referred to the judgment of the European Court of Justice in the case of Card Protection Plan Ltd v Commissioners of Customs and Excise (Case C-349/96) [1999] STC 270. The following passage from the judgment reported at page 293 is relevant:

"26. By its first two questions, which should be taken together, the national court essentially asked, with reference to a plan such as that offered by CPP to its customers, what the appropriate criteria are for deciding, for VAT purposes, whether a transaction which comprises several elements is to be regarded as a single supply or as two or more distinct supplies to be assessed separately.

It must be borne in mind that the question of the extent of a transaction is of particular importance, for VAT purposes, both for identifying the place where the services are provided and for applying the rate of tax or, as in the present case, the exemption provisions of the Sixth Directive. In addition, having regard to the diversity of commercial operations, it is not possible to give exhaustive guidelines on how to approach the problem correctly in all cases.

However, as the court held in Faaborg-gelting Linien A/S v Finanzamt Flensburg (Case C-231/94) [1996] STC 774 at 783, [1996] ECR 1-2395 at 2411-2412, paras 12-14, concerning the classification of restaurant transactions, where the transaction in question comprises of bundle of features and acts, regard must first be had to all the circumstances in which the transaction takes place.

In this respect, taking into account first, that it follows from article 2(1) of the Sixth Directive that every supply of a service must normally be regarded as distinct and independent and, second, that a supply which comprises a single service from an economic point of view should not be artificially split, so as not to distort the functioning of the VAT system, the essential features of the transaction must be ascertained in order to determine whether the taxable person is supplying the customer, being a typical consumer, that several distinct principal services or with a single service.

There is a single supply in particular in cases where one or more elements are to be regarded as constituting the principal supply, whilst one or more elements are to be regarded, by contrast, as ancillary services which share the tax treatment of the principal supply. A service must be regarded as ancillary to a principal service if it does not constitute for customers an aim in itself, but a means of better enjoying the principal service supplied (see Customs and Excise Commissioners v Madgett & Baldwin (T/A Howden Court Hotel) (joined cases C-308/96 and C-94/97) [1998] STC 1189 at 1206, para 24).

The Commissioners rely also on the appeal of Blendhome Ltd T/A Stanhill Court Hotel v Commissioners of Customs and Excise (LON/98/866) where the Tribunal considered the exemption listed in Schedule 9 and in particular Item 1 of Group 1, regarding "the provision in an hotel, inn, boarding house or similar establishment of sleeping accommodation or of accommodation in rooms which are provided in conjunction with sleeping accommodation or for the purpose of a supply of catering." That case concerned a small hotel licensed for the holding of civil wedding ceremonies. Persons getting married paid for rooms and catering and also paid an exclusivity fee. For that fee persons getting married were granted the exclusive use of the public rooms of the hotel and the grounds. The Tribunal first considered whether there was a single or composite supply, and second the scope of exemptions and exceptions to exemptions expressed in the Sixth Directive in the light of the European Court of Justices judgment in the case of Skatteministeriet v Henricksen (1990 STC 768) holding that the exception to the exemption was to be given a wider construction consistent with the overall scheme and purpose of the Sixth Directive, relying on the following excerpts:

"Account should be taken in that regard of the fact that the phrase "excluding … the letting of premises and sites for parking vehicles" in article 13B(b) of the Directive introduced as an exception to the exemption laid down in that provision in regard to the leasing or letting of a moveable property. It thus places the transactions which it encompasses under the general rules of the Directive, which make all taxable transactions subject to tax, except where exemptions are expressly provided for. That provision thus cannot be interpreted restrictively as meaning that only open parking places, to the exclusion of closed garages, come within its scope".

The Tribunal found, in paragraph 28 of its decision:

Exclusivity is only offered as part of wedding reception arrangements, it is not a "free standing" supply. It is "ancillary" to the wedding reception supply. It would also, in our view, be "integral" and "part and parcel" of the celebration arrangements which are the primary or predominant consideration when the money is paid for the supply or supplies".

Although that case dealt with wedding receptions in hotels, the fact of the matter, in particular relating to exclusivity arrangements were not the same as those in the present appeal.

The Commissioners say that the legislative intention is to prevent value shifting to increase hire charges and to suppress catering charges. The Appellant however say that the wedding venue charge is a distinct supply; there is no contractual obligation on the wedding party to use other services; a wedding party could easily enter into an agreement to pay the wedding venue charge and provide their own catering; there are in any event only 13 bedrooms in the Priory the supply cannot be characterised by reliance on the availability of bedrooms, which in any event required to be booked separately. In the appeal of Blendhome, say the Appellant, the Commissioners agreed that the use of the room for the ceremony and a room used by the Registrar were exempt.

The Commissioners also rely on the appeal of Willerby Manor Hotels Ltd v Commissioners of Customs and Excise (MAN/99/871) in which case it was contended that the supply of a function room was not part of a composite supply of a catering package relating to an evening reception in conjunction with the wedding breakfast. The Tribunal found on the facts that the Appellant did offer a package of services and that the fact that the charge for a room for an evening function was calculated and charged differently from the charge of the room for a wedding breakfast was not relevant. The Tribunal said that it was plain that if there was no wedding there would be no evening reception and found it impossible to say that the supply of a room for such a reception should be divorced from the supplies relating to the other celebrations accompanying the wedding. The hire of a function room for an evening reception was a supply ancillary to those of wedding reception facilities. The Tribunal applied the fact and degree test laid down in the Card Protection Plan case, and found that there was a composite supply of a standard rated package of wedding reception facilities, the main ingredient in which was the supply of catering.

Again this was a case decided on its own facts, but the Tribunal finds the reasoning quoted from the decision applicable.

The Tribunal was further referred to the case of Acorn Management Services Ltd v Commissioners of Customs and Excise (LON/2000/534) in which the concept of "similar establishment" in item 1 of Schedule 9 was considered together with Note 9 to Item 1 qualifying the term "similar establishment". The Tribunal relied for guidance on the proper approach on the judgment of the European Court of Justice in the case of Blasi v Finanzamt München I [1998] STC 336. That case concerned questions about the provision of short-term accommodation for guests in accommodation in sectors with a function similar to that of the hotel sector. The Tribunal relied on the following paragraphs in that judgment:

"18. It must first be noted that the Court has consistently held that the terms used to specify the exemptions provided for by article 13 of the Sixth Directive are to be interpreted strictly, since they constitute exceptions to the general principle that turnover taxes are to be levied on all services supplied for consideration by a taxable person …

The phrase "excluding … the provision of accommodation, as defined in the laws of a Member States, in the hotel sector or in sectors with a similar function" in article 13B(b)(I) of the Sixth Directive introduce as an exception to the exemption which article 13(B) provides for the leasing or letting of immoveable property. It thus subjects the transactions to which it refers to the general rule laid down in the Directive, namely that VAT is to be charged on all transactions, except in the case of delegations expressly provided for. That phrase cannot therefore be interpreted strictly.

It should be added that, as the Advocate General (Jacobs) has noted at paragraph 18 of his opinion, the words "sectors with a similar function" should be given a broad construction since their purpose is to ensure that the provision of temporary accommodation similar to, and hence in potential competition with, that provided in the hotel sector is subject to tax.

In defining the classes of provision of accommodation which are to be taxed by derogation from the exemption for the leasing or letting of immoveable property, in accordance with article 13B(b)(I) of the Sixth Directive, the Member States enjoy a margin of discretion. That discretion is circumscribed by the purpose of derogation, which, in regard to making dwelling accommodation available, is that the – taxable – provision of accommodation in the Hotel sector or in sectors with a similar function must be distinguished from the exempted transaction of leasing and letting of immoveable property.

It is consequently a member for the Member States, when transposing article 13(B)(b)(I) of the Sixth Directive, to introduce those criteria which seemed to them appropriate to draw that distinction.

For accommodation in the hotel sector (as a taxable transaction) is distinguished from the letting of dwelling accommodation (as an exempted transaction) on the basis of its duration, that constitutes an appropriate criterion of distinction since one of the ways in which hotel accommodation specifically differs from the letting of dwelling accommodation is in the duration of the stay. In general, a stay in an hotel tends to be rather short and that in a rented flat fairly long.

In this connection, as Advocate General (Jacobs) has stated at para 20 of his opinion, the use of the criterion of the provision of short term accommodation being defined as less than six months, appears to be a reasonable means by which to ensure that the transaction of taxable persons whose business is similar to the essential function performed by a hotel, namely the provision of temporary accommodation on a commercial basis, are subject to tax".

That Tribunal then went on to consider a number of other cases on the meaning of "similar establishment" in the context of "hotel, inn …". In particular the Tribunal relied on the case of The Lord Mayor and Citizens of the City of Westminster v Customs and Excise Commissioners [1989] VATTR 71, which concerned a hostel known as Bruce House for single homeless men whose length of stay varied between a few days and several weeks. The Tribunal deciding that case said that Bruce House was not run as a profit making institution and went on to consider whether it had some of the characteristics possessed by hotels, inns and boarding houses and examine the characteristics which distinguished these three types of establishment from other establishments such as prisons or schools which provided accommodation but were not similar to hotels, inns or boarding houses because the accommodation they provided was provided for a purpose subsidiary to the main purpose of the establishment. It said that Bruce House certainly had some of the significant characteristics which were shared by hotels, inns and boarding houses but the customers of such establishments were normally provided with a bedroom providing privacy, and such establishments were normally run with a view to making a profit. The Tribunal came to the conclusion that the differences were not so great as to allow it to say that Bruce House was not similar to a hotel, inn or boarding house.

In the appeal of International Students House v Customs and Excise Commissioners (VATTR 14420) there was accommodation provided for students. The Tribunal in the appeal of International Students House considered the meaning of the words "visitor" and "traveller" in relation to students and concluded that in the normal everyday use of the English language a person whose residence has a degree of permanence was neither a visitor nor a traveller. The Tribunal in International Students House concluded its deliberations by the following passage:

"Assessing as did the tribunal in the appeal of the Lord Mayor and Citizens of Westminster, the purpose for which the accommodation in International Students House was provided the tribunal finds that the predominant purpose of International Students House was not the provision of accommodation but the fulfilment of its objectives, accommodation being subsidiary to its main purpose of helping overseas students, and improving international relations. It follows that the tribunal decided that International Students House is not a "similar establishment" to an hotel, inn or boarding house and that although it provides accommodation, such accommodation is not provided in premises used or held out as being suitable for use by visitors or travellers".

The Tribunal deals first with the question of whether the venue charge can be treated as representing a separate supply, being a single service, distinct from the other supplies made to customers of Leez Priory. The Tribunal proceeds on the basis of the passage cited from the judgment in Card Protection Plan. It asks first whether there is a distinct and independent supply of the right to use Leez Priory covered by the venue charge. The Tribunal considers the matter on the facts, as explained in the evidence of Mr Hurst. It finds that where there was only a supply of the venue charge, and thus the sole supply of a licence to occupy Leez Priory with no other supplies this would amount, subject to the condition that Leez Priory was not a "similar establishment" for the purposes of item 1(d) of Group 1 to Schedule 9 of the Value Added Tax Act 1994, to an exempt supply, amounting to a licence to occupy land, under section 31 of the Value Added Tax Act 1994 being a supply of the description specified in Schedule 9 Group 1 item 1.

However the evidence is that the Appellant sought to combine the provision of the right to use Leez Priory for weddings with the provision of all the other services related to the provision of food, drink, accommodation and entertainment, together with other services, to persons using the Priory on those occasions. It is relevant to whether the venue charge is a separate supply that a separate price is charged for this. It is further relevant that unless a customer paid the venue charge, he or she would not be allowed to use Leez Priory and could not benefit from the other services. Secondly the Tribunal relies on the statement in paragraph 29 of the judgment in Card Protection Plan that "a supply which comprises a single service from an economic point of view should not be artificially split, so as not to distort the functioning of a VAT system, the essential features of the transaction must be ascertained in order to determine whether the taxable person is supplying the customer, being a typical customer, with several distinct principal services or with a single service". The typical customer here is one to whom a series of services are held out, to whom it is sought to provide a series of services, and who receives and pays for a series of services. The Appellant says, that without the supply the subject of the venue charge nothing else can happen and suggests therefore that the other services are ancillary to the service the subject of the venue charge, which must be treated as the principal service. However, most commercial transactions depend in some way on the use of land or premises. What the Tribunal must do is have respond to all the circumstances in which the transaction takes place.

The passage quoted from the judgment in Card Protection Plan, and in particular paragraph 32 suggest that the court must determine whether thee are two independent supplies, namely an exempt supply and a taxable supply, or whether one of those two supplies is the principal supply to which the other is ancillary so that it derives its tax treatment from the principal supply.

In the present case the Tribunal considers that the facts are that it is sought to supply a complete package of which the venue charge represents only a part and, taking a "typical" example, the smaller part. It is of course true that nothing would be supplied to anybody who did not undertake to pay the venue charge, but this seems not to the Tribunal to be conclusive for the classification of what is an exempt supply. For example a person purchasing an object the acquisition of which required a prior user's licence would not by the purchase of the user's licence necessarily create the conditions for the classification of the supply of the object as being the same as the supply of the licence.

It is clear from the facts before the Tribunal that the Appellant was not seeking to make a separate supply of the licence to use Leez Priory; it was seeking to make a composite supply of what is termed wedding functions. These included a number of matters, some of which were said to be free of charge in certain circumstances or included within other charges.

The guidance from the judgment of the European Court of Justice in Card Protection Plan at paragraph 31 of the judgment indicates that the fact that a single price is charged is not decisive. If a customer intended to purchase two distinct services it would be necessary to identify the part of the single price which related to an exempt transaction. It seems to the Tribunal to follow that if distinct prices are attributed to distinct parts of a transaction that fact also is not decisive. Here some charges were itemised and some were not. The "typical" transaction contained no less than seven items specifically costed, and a number of others said to be included. The supply of the wedding function was therefore a composite one, and represents in the finding of the Tribunal the main supply. Within that main supply a number of services were ancillary and optional but the supply to the typical customer was the package. It appears to the Tribunal to be a distortion in economic terms if the venue charge, admittedly an essential preliminary were to be treated as the principal service when the other services, in fact amounted to the major part of the transaction.

The Tribunal having regard to all the circumstances in which the transaction of the supply of wedding functions takes place, as enjoined by the European Court of Justice in paragraph 28 of its judgment in Card Protection Plan, considers in the light of what it has found regarding the facts of the transaction that here the Appellant was supplying the customer "being a typical customer" with a single service of what may be called "wedding services" or as the Appellant described it in its application for registration, "wedding functions". That was the main supply. The components of that supply, the right to use the Priory, food, drink, accommodation, entertainment and the services of staff were parts of that main supply none of which parts is determinative of the tax treatment appropriate to that main supply. The main supply that of wedding functions, is not exempt.

Nevertheless it is necessary to consider that in the event of the venue charge being, contrary to what the Tribunal has found, a distinct supply of the grant of a licence to occupy land, and thus exempt in accordance with the exemption stated in Group 1 item 1 of Schedule 9 to the Value Added Tax Act 1994 that exemption is prevented from applying by the terms of item 1(d) as being "other than" :

"(d) The provision in an hotel, inn, boarding house or similar establishment of sleeping accommodation or of accommodation in rooms which are provided in conjunction with sleeping accommodation or for the purpose of a supply of catering".

This excepting provision is further defined by Note (9) to Group 1 which reads as follows:

"(9) "Similar establishment" includes premises in which there is provided furnished sleeping accommodation, whether with or without the provision of board or facilities for the preparation of food, which are used by or held out as being suitable for use by visitors or travellers".

The question therefore is whether Leez Priory which is accepted as not being a hotel, inn or boarding house is a "similar establishment" providing either sleeping accommodation or accommodation in rooms which are provided in conjunction with sleeping accommodation or rooms which are for the purpose of a supply of catering. Note 9 says that the expression "similar establishment" includes premises in which there is provided furnished sleeping accommodation, which, insofar as relevant to the facts of this appeal, are held out as being suitable for use by visitors or travellers.

The Tribunal approaches the exception to the exemption in the following way. First, while an exemption is to be construed strictly, an exception to an exemption, which leads to the application of the general rule that a supply of goods or services is subject to tax, is to be interpreted more widely. That principle, often stated, was reiterated by the European Court of Justice in the case of Blasi v Finanzamt München I [1998] STC 336. According to that judgment the passage in article 13B(b)(I) of the Sixth Directive introducing an exception to the exemption provided in article 13(B) for the leasing or letting of immoveable property, in the terms "excluding … the provision of accommodation, as defined in the laws of Member States, in the hotel sector or in sectors with a similar function" "cannot therefore be interpreted strictly".

There is no dispute that the conditions set out in item 1 of Group 1 and in Note 9 come within the defining powers allocated to Member States by the exclusion, as defined in the laws of the Member States of accommodation "in the hotel sector or in sectors with a similar function". The expression "similar function" in the exception appears in Group 1 as "similar establishment". There is thus no difficulty in considering the terms of the exception in United Kingdom law, there being no discernible distinction between the terms of the Directive and item 1d of Group 1.

The first question is whether Leez prior is a "similar establishment" to a hotel, inn, or boarding house. It clearly is not a hotel, inn or boarding house. The similarity between Leez Priory and such establishments is that it provides to those persons who have entered into the class of customers by arranging to take advantage of its facilities, food and drink, and sleeping accommodation where the latter is specifically reserved.

The Tribunal in the case of The Lord Mayor and Citizens of the City of Westminster v Customs and Excise Commissioners [1989] VATTR 71 was at pains to consider the characteristics possessed by hotels, inns and boarding houses. It relied among other factors on the purpose for which accommodation was provided. While other establishments might provide accommodation, a hotel, inn or boarding house provided accommodation as its main purpose. Hotels, inns and boarding houses commonly provided food for those resorting to them. The accommodation was usually provided for people who are for varying periods away from home.

In the case of Dinaro t/a Fairway Lodge v Customs and Excise Commissioners (VATTR 17148) the tribunal considered whether an establishment was a "similar establishment". It was an establishment which only accepted residents nominated by the Local Authority Social Services Department. There were three main elements of dissimilarity, which were decisive. These were the selectivity exercised over the choice of residents, the high degree of supervision for all inhabitants and the emphasis of a family concept for all those who were residents.

In the present appeal the dissimilarity between Leez Priory and any hotel or inn providing food, drink, accommodation and other hospitable services is that it is not open to all, that it is open only to those who take it for wedding functions and the activity connected with the celebration of weddings, and that the sleeping accommodation is limited to 13 rooms. Leez Priory does not hold itself out to be an establishment open to visitors or travellers generally.

It follows that Leez Priory would without any doubt be a "similar establishment" as it provides food, drink, accommodation and other hospitable services, were it not for the fact that these services are provided to a strictly limited class of persons that is to say wedding parties and this by prior agreement. It is not open to members of the public generally. It appears to the Tribunal that this dissimilarity is not necessarily decisive. Establishments similar to a hotel, inn or boarding house could well offer the same facilities as a hotel, inn or boarding house but specify that they were for a limited class of paying customers. In the appeal of Dinaro the tribunal found an essential dissimilarity by the fact that the establishment only accepted residents nominated by the Local Authority Social Services Department thus that clients could not choose to use the establishment at their own volition, and were subject to being directed to it for other considerations, among which the economic does not appear. In the present case the decision to use Leez Priory and to accept the supplies offered by it depend on the free choice of the persons concerned, subject to satisfying the conditions imposed by the establishment. The crux of the matter must be whether the dissimilarity that Leez Priory is not open to the general public is so great that Leez Priory cannot be a similar establishment even though it is in fact an establishment in all respects similar to a hotel, inn or boarding house save that it is only available to a specific class of client that is to say those wishing to have a supply of wedding functions. It does not seem to the Tribunal that an establishment in other respects similar to a hotel, inn or boarding house becomes dissimilar by the fact that it only supplies the services usually supplied by hotel, inn or boarding house to wedding parties.

There is no question that subject to the restriction of clientele Leez Priory provides "sleeping accommodation" and "accommodation in rooms which are provided … for the purpose of the supply of catering".

Note (9) says that the term "similar establishment" includes premises in which there is provided furnished sleeping accommodation which are used by or held out as being suitable for use by visitors or travellers. The use of the word "are" means that the words "used by or held out as being suitable for use by visitors or travellers" refers to the word "premises" earlier used. Leez Priority does provide some "furnished sleeping accommodation "… "used by or held out as being suitable for use by" guests at wedding functions.

The Appellant says that as Leez Priory is not generally open it cannot be said that its premises are "used by or held out as being suitable for visitors or travellers" as the persons who come fall into neither category. The Commissioners however say that if they are not travellers they are bound to be visitors, that is to say they are persons visiting the Priory for the purpose for which the Priory offers them its services.

The Tribunal in the appeal of Acorn Management Services Ltd relied on an earlier decision, International Students House, on the way in which the words travellers or visitors were there considered. The definition reached by that tribunal is helpful here only to the extent that a person whose residence had a degree of permanence was not thought to be a visitor or traveller. A visitor, said the Tribunal, "is, in the normal use of the English language, a person who visits a place or person. A traveller is one who travels from one place to another. To the question "are wedding guests visitors to Leez Priory?" The Tribunal answers "Yes" as they are persons who visit that establishment for the purpose of the wedding. The premises of Leez Priory are held out as being suitable for use by such visitors and are in fact used by them. A visitor is not necessarily one who sleeps on the premises visited. The wedding guests were visitors to Leez Priory.

The problem in this appeal is that the provision of wedding services in places licensed under the Marriage Act 1994 as approved premises are subsequent to the provisions of Group 1 to Schedule 9 to the Value Added Tax Act 1994 which relate to this appeal. However, that fact cannot dispense the service provided from being examined in accordance with those provisions. The Marriage Act had allowed places not traditionally used for the celebration of marriages to offer facilities for that purpose. It is clear from the facts before the Tribunal and the cases which have been cited to it that such facilities can be provided by hotels and by other establishments such as Leez Priory. The Tribunal here refers to the opinion of the Advocate General relied on by the European Court of Justice in the case of Blasi that the words "sectors with a similar function" should be given a broad construction their purpose being to ensure that the provision of temporary accommodation similar to and hence in potential competition with that provided in the hotel sector should be subject to tax. It may seem to the Appellant hard that taking advantage of the provisions of the Marriage Act by providing facilities for weddings in premises which are not a hotel should be considered to be in competition with similar facilities provided in hotels but that conclusion is inevitable. It follows that, giving the words "similar establishment" the broad construction which the European Court of Justice envisages, Leez Priory is a similar establishment in providing accommodation in rooms which are provided for the purpose of a supply of catering, and also of sleeping accommodation, that sleeping accommodation being used by and held out as being suitable for the persons who visit Leez Priory.

The Appellant is making a supply of wedding functions, which are not an exempt supply. This appeal is dismissed.

PAUL HEIM CMG

CHAIRMAN

RELEASED:11 June 2003

LON/02/181