United Kingdom VAT & Duties Tribunals Decisions

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Cite as: [2004] UKVAT V18708

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Ball v Customs and Excise [2004] UKVAT V18708 (21 July 2004)

18708

VAT— claim for exemption for supplies allegedly made by members club satisfying conditions in the two indents to Article 13A(2)(a) VAT Sixth Directive — holding that club did not satisfy second of those indents — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

BRIAN BALL Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: Mr J D Demack (Chairman)

Sitting in public in Manchester on 30th June 2004

The Appellant in person

Mr Nigel Poole of Counsel instructed by the Solicitors office of HM Customs and Excise for the Respondents

DECISION

The Appellant, Mr Brian Ball, appeals against assessments to tax of £2405 (and interest) notified on 16 July 1999. They covered the consecutive periods from 07/96 to 04/99 inclusive.

The assessments were made to recover VAT on supplies allegedly made by Mr Ball, but which he contended were made not by him but rather by a non-profit making members club providing sporting or physical education services. (The relevant legislative provision, item 3 of Group 10 of Schedule 9 to the Value Added Tax Act 1994, as enacted at the time, exempted from VAT "the supply by a non-profit making body to an individual, except, where the body operates a membership scheme, an individual who is not a member, of services closely linked with and essential to sport or physical education in which the individual is taking part").

Mr Ball appeared in person; the Commissioners of Customs and Excise were represented by Mr Nigel Poole of counsel. The latter produced the Commissioners' bundle of copy documents, and we had before us a copy of a document said to be the constitution of a club known as Body & Soul Fitness Club ("the Club") and a licence which Mr Ball claimed to have granted to the Club.

Mr Ball claimed in opening that once the Club had been formed, its operation was handed over to its administrator and committee, adding that he personally thereafter had no input in its day to day running. He accepted that the Club had no bank account, all moneys due to and from it passing through his personal account. He explained that the fees due under the licence, which related to the occupation of the premises from which the Club operated, were paid regularly, but, in order not to breach the Club's non-profit status, he made no further drawings from its income.

The scheme under which the Club operated was explained by Mr Ball as having been devised by VAT consultants, who had informed him that to be tax effective certain conditions had to be met. One of them was that the Commissioners would insist on VAT being paid on supplies made by the Club coffee shop and in respect of the use of sun beds. Of that condition, Mr Ball explained, "Because this was such a small amount collected, I allowed the administrator and committee to use my VAT registered number, this seemed reasonable at the time". Mr Ball maintained that by behaving as he had done the two indents of Article 13A(2)(a) of the EC Sixth VAT Directive, they being the European provisions which Group 10 implemented had been satisfied. (The two indents in question read as follows:

" — they [bodies providing certain services closely linked to sport or physical education supplied by non-profit making organisations to persons taking part in sport or physical education] shall not systematically aim to make a profit, but any profits nevertheless arising shall not be distributed, but shall be assigned to the continuance or improvement of the services supplied.

— they shall be managed and administered on an essentially voluntary basis by persons who have no direct or indirect interest, either themselves or through intermediaries, in the results of the activities concerned.").

We pointed out to Mr Ball that, in our judgment, whilst the constitution of the club he had produced might satisfy the first of those indents, it did not satisfy the second. We so indicated because, as Mr Colin Bishopp, the learned chairman of the tribunal which earlier dealt with Mr Ball's appeal, but whose decision was later set aside, explained:

"It describes the club as "a members' club formed for mutual benefit" and it provides that, in the event that the club should be dissolved, any surplus of funds over liabilities is to be distributed equally between the then members. Save for those two features, the proposed constitution bears none of the characteristics one would expect of the constitution of a members' club. There is no provision for a chairman, secretary or a committee. Existing members are given no say in the admission of new members, nor in the level of membership subscriptions or the purposes to which those subscriptions are to be put. Instead, the constitution provides that "the management and administration of the club and its property shall be vested solely and without constraint in Brian Ball or his successor ('the Administrator')."

The constitution goes on to confer upon the Administrator the power to collect membership fees and, one must infer – since there is no other relevant provision – to fix their amount. Similarly the Administrator is granted the power to employ staff and to run the club entirely as he thinks fit. There is no provision whatever for the members to contribute in any way to the running of the club – on the contrary, they are precluded from doing so. Similarly it is the Administrator rather than the members who makes the rules for the day-to-day running of the club, dealing with such matters as the booking of facilities, the hiring of towels and the use of lockers. "

(Ordinarily, we should not have referred to Mr Bishopp's decision, but in his opening statement Mr Ball specifically did so; of necessity we do likewise).

We pointed out to Mr Ball that, in the event he were to give evidence which we accepted to contradict the contents of the written constitution, it might be possible for us to find that the Club operated as a members' club. But, after considering the matter, he declined to give evidence, leaving us with no alternative but to conclude that the Club did not operate as a members' club.

Mr Ball's decision not to give evidence effectively concluded the appeal. We hold that the Club did not qualify for exemption from VAT; that the supplies the subject of the assessments under appeal were standard rated supplies made by Mr Ball himself; and that, since the amount assessed was based solely on figures included in returns made by Mr Ball, the assessments should be confirmed as made.

We dismiss the appeal.

DAVID DEMACK

CHAIRMAN

RELEASE DATE:21/07/2004

MAN/00/41