VAT: Finance and Business Training Ltd Court of Appeal Judgment

VAT: Finance & Business Training Ltd Court of Appeal

This case concerned whether the taxpayer was an eligible body, able to make exempt supplies of education.

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Article – Paragraph 1 (up to 150 words. This will also be used as the email text) The Court of Appeal has released its judgment in this case concerning whether Finance and Business Training Ltd (FBT) was an eligible body, able to make exempt supplies of education where the courses it supplied led to the grant of degrees by the University of Wales. Earlier decisions had concluded it did not meet the domestic conditions because it was not a college of a university. However, it had been given permission to argue its case at the Court of Appeal based on EU law, on the basis that the Court of Justice of the European Union’s (CJEU) Judgment MDDP (C-319/12) was released after the earlier Tribunals. It had no leave to appeal any of the issues decided by the Tribunals, only on whether the UK had failed to implement the EU exemption. The taxpayer’s appeal was dismissed.

FBT argued that where it supplies the same service as a university, neutrality demands the same liability should apply to its supply and that of the university. Also, UK law does not define in Note 1(b) (VATA1994, Sch 9, Group 6) what is meant by college of a university (which is a category of eligible body) and FBT argued this is a breach of certainty.

HMRC argued that universities and FBT have different objects and so a different liability for their services is justified under EU law. In response, FBT argued that the correct question was whether FBT had objects similar to the aims of a body governed by public law providing university education. But UK universities are of course not bodies governed by public law. UK law does not identify all eligible bodies by reference to their aims, so FBT argued this meant the UK had not implemented EU law properly.

HMRC argued that exemption is a two stage test – the supply and the supplier. FBT supplied university education, but could not show it had the required objects for that supply to be exempt.

In summary, the Court of Appeal decided that the UK law is EU compliant and FBT failed to meet the exemption conditions. The conclusion was that the UK is entitled to set conditions for bodies not governed by public law that are entitled to the education exemption. A list of qualifying non-public bodies in the law is fine. There must be a public interest element in the work of an exempt eligible body. Also, a college, hall or school of a university must be integrated into the university and imbued with its objects. Therefore, by its nature, its fundamental purpose would be university education and this while this is one of the factors to take into account, it is a mistake to interpret this as an ‘all or nothing’ rule. Further, Note 1(b) and the factors established in the School of Finance Management (London) Ltd (HC 2001) to identify whether a body is a college of a university together mean that it is possible to know which supplies and suppliers are exempt in this case. There is no distinction between profit and not for profit suppliers.

An application for a reference to the CJEU, about whether the concept of a body with similar objects is something a Member State can define and what should happen where there are no public law providers to use as a reference point, was rejected. To access the decision, click here.


For further information please contact:

Karen Killington

+44 (0)20 7694 4685

Steve Powell

+44 (0)20 7311 2746

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