Court of Appeal judgment

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GRT100456
Summary
The issue in this case was. in
essence, whether a commercial
provider of educational courses to
degree level should be regarded for
VAT purposes as a college of the
University of Wales.
UK law stipulates that for the
provision of education to be exempt
from VAT, the supplier must be an
eligible body. Finance & Business
Training Ltd argued that, even
though it was a commercial
provider, nevertheless it ought to be
recognised as a college of the
university otherwise the principle of
fiscal neutrality would be offended.
In a unanimous 3-0 judgment the
Court of Appeal held that the
company was not an eligible body
and that, as a result, its supplies of
education were not VAT exempt.
27 January 2016
Court of Appeal
The EU principle of fiscal neutrality dictates that, in a VAT context, supplies of the
same or very similar goods or services should not be treated differently for VAT
purposes. In other words, if a supply is treated as exempt when supplied by one person,
all things being equal, it should be treated as exempt when supplied by another.
This was the issue at stake in this case. As its name suggests, Finance & Business
Training Ltd (FBT) is a commercial provider of finance and business training. However,
in association with the University of Wales (UoW), it also provides university level
education –to masters degree level – which leads to a degree awarded by UoW. FBT
argued that, as a consequence, when providing these university level courses, it should
be regarded for VAT purposes as an eligible body. According to FBT, the failure of the
UK to recognise it as an eligible body in this regard offends the principle of fiscal
neutrality. In addition, FBT argued that the UK's failure to correctly implement the
provisions of the EU VAT Directive in this regard also breached the EU principle of
legal certainty. As a consequence of these purported breaches of EU law principles,
FBT asserted that it was entitled to rely on the direct effect of EU law which would
confer VAT exemption for its supplies of university education. The Court of Appeal
dismissed FBT's assertions. Essentially, the court held that, as far as fiscal neutrality was
concerned, not only must the goods or services being supplied be the same (or similar),
but the objects of the person providing the education must also be the same or similar.
This was not the case here. Accordingly, FBT could not be regarded as a college of
UoW and its supplies of university education could not therefore benefit from VAT
exemption.
Comment – This is a disappointing judgment from the Court of Appeal
especially given that the Court of Justice ruled the opposite way in the recent
case of MDDP. In the circumstances, an appeal to the UK Supreme Court and a
possible referral to the Court of Justice – which the Court of Appeal declined to
do - cannot be ruled out.
Financial & Business Training Ltd v
HMRC
Case Alert
Contact
Stuart Brodie Scotland stuart.brodie@uk.gt.com (0)14 1223 0683
Karen Robb London & South East karen.robb@uk.gt.com (0)20 772 82556