InFinance and Business Training v HMRC[2016] EWCA Civ 7 (19 January 2016), the Court of Appeal found that an institution which could not avail itself of the education exemption under domestic law, could not rely on EU principles to obtain the benefit of it.
The issue was whether Finance and Business Training (FBT) was entitled to the education exemption for courses which led to the grant of degrees by the University of Wales. FBT had failed to meet the domestic law conditions; however, relying on the EU principle of fiscal neutrality, it argued that to the extent that it supplied the same service as a university, it should be treated in the same way for VAT purposes. It also contended that VATA 1994 Sch 9 Group 6 did not comply with the EU principle of legal certainty, as it did not lay down the conditions which an institution had to satisfy to be treated in the same way as a university.
The Court of Appeal noted that MDDP (C-319/12) made it clear that a member state could set the conditions for bodies which are not governed by public law (non-public bodies) to be entitled to the education exemption. The UK Parliament had therefore rightly decided which non-public bodies qualified and had only included colleges, halls and schools which were integrated into universities and which were therefore imbued with their objects (note 1(b) of VATA 1994 Sch 9 Group 6). The court added that note 1(b), together with the integration factors established in School of Finance and Management [2001] STC 1690, achieved legal certainty, even though Item 1 ‘Education’ would not have done so if it had stood on its own.
Why it matters: The Court of Appeal recognised that Parliament had taken a cautious view of which institutions should be a non-public body entitled to the education exemption, especially when compared with Poland’s (non-compliant) law before the MDDP case. However, FBT had not shown that UK law was in breach of the principles of fiscal neutrality and legal certainty.
InFinance and Business Training v HMRC[2016] EWCA Civ 7 (19 January 2016), the Court of Appeal found that an institution which could not avail itself of the education exemption under domestic law, could not rely on EU principles to obtain the benefit of it.
The issue was whether Finance and Business Training (FBT) was entitled to the education exemption for courses which led to the grant of degrees by the University of Wales. FBT had failed to meet the domestic law conditions; however, relying on the EU principle of fiscal neutrality, it argued that to the extent that it supplied the same service as a university, it should be treated in the same way for VAT purposes. It also contended that VATA 1994 Sch 9 Group 6 did not comply with the EU principle of legal certainty, as it did not lay down the conditions which an institution had to satisfy to be treated in the same way as a university.
The Court of Appeal noted that MDDP (C-319/12) made it clear that a member state could set the conditions for bodies which are not governed by public law (non-public bodies) to be entitled to the education exemption. The UK Parliament had therefore rightly decided which non-public bodies qualified and had only included colleges, halls and schools which were integrated into universities and which were therefore imbued with their objects (note 1(b) of VATA 1994 Sch 9 Group 6). The court added that note 1(b), together with the integration factors established in School of Finance and Management [2001] STC 1690, achieved legal certainty, even though Item 1 ‘Education’ would not have done so if it had stood on its own.
Why it matters: The Court of Appeal recognised that Parliament had taken a cautious view of which institutions should be a non-public body entitled to the education exemption, especially when compared with Poland’s (non-compliant) law before the MDDP case. However, FBT had not shown that UK law was in breach of the principles of fiscal neutrality and legal certainty.
