Updates on some VAT appeals relevant to the sector

Update as at 14/10/21

Netbusters (UK) Ltd - HMRC granted permission to appeal to the UT.

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Anna Cook (2021) UKUT 15 (TCC) UT/2019/0097             

Upper Tribunal 28 January 2021             

The UT allowed HMRC’s appeal, setting aside and remaking the decision. Anna Cook seeking permission to appeal to the CoA.

This case considered whether the supplies of Ceroc dancing classes qualified for exemption as a supply of private tuition.

Update: KPMG report that "In remaking the decision, the UT concluded that on the basis Ceroc is a distinct form or style of dance it would be surprising to conclude that Ceroc is commonly taught in schools or universities. This is the end of this piece of litigation."

Chelmsford City Council (2020) UKFTT 432 (TC) TC/2011/7816   

First-tier Tribunal            17 October 2020             (There were three nominated cases for each of the territorial jurisdictions: (i) England & Wales (Chelmsford City Council v HMRC [2020] UKFTT 432 (TC)); (ii) Scotland (Midlothian Council v HMRC [2020] UKFTT 433 (TC)); and Northern Ireland (Mid- Ulster District Council v HMRC [2020] UKFTT 434 (TC)).

Appeal allowed. HMRC granted permission to appeal the Special Legal Regime (SLR) issue.

This case considers whether the provision of LA sports and leisure facilities are outside the scope of VAT.  HMRC argued that the charges are subject to VAT. The appellants argued that:

• its supplies of sporting and leisure activities to members of the public are outside the scpe of Vat because they are not “economic activities” within the meaning of article 9 of Directive 2006/112/EC; OR
• its supplies of sporting and leisure activities are provided under a special legal regime, and therefore it is not a taxable person in respect of those supplies – distortion of competition was considered; OR
• the supply was exempt as the LA was a sporting eligible body under VATA94, Sch 9, Group 10 Note 3 exempted from VAT the "supply by an eligible body to an individual of services closely linked with and essential to sport or physical education in which the individual [was] taking part". (Note 3 stated that a local authority was not "an eligible body", but has been overtaken by the CJEU decision in Ealing (Case C-633/15) – the fact that Note 3 has not been amended by Parliament is irrelevant.) .

The Tribunal rejected the first argument, accepted the second argument and (although not required) gave its opinion on the third argument concluding that LA’s constituted sporting “eligible bodies” under VATA94, Sch 10, Group 9.  HMRC are appealing against the “special legal regime” argument in the Chelmsford case and “distortion of competition” in the Mid Ulster case.

Netbusters (UK) Ltd (2020) UKFTT 438 (TC) TC/2018/05959 TC/2019/00214

First-tier Tribunal            2 November 2020          

Appeal allowed. HMRC seeking permission to appeal to the UT.

This case considers the exemption of the supply of football and netball pitches – even though they were hired in and then out by Netbusters.   The status of Netbusters customer was important in this case.

Royal Opera House Covent Garden Foundation (2020) UKUT 0132 (TCC)             

Upper Tribunal 22 April 2020     The UT allowed HMRC’s appeal. Royal Opera House appeal to the CoA heard 9 to 10 February 2021 – so decision awaited.

This case considers the treatment of overhead VAT in a partial exemption calculation.  Further information can be found in this News Article.