Isle of Wight Council v HMRC

Public authorities

In Isle of Wight Council v HMRC (No 4) (and related appeals) (TC00558 – 13 July) a district council had accounted for VAT on its receipts from car parks. It claimed a repayment on the basis that it should have treated these receipts as outside the scope of VAT by virtue of Article 4(5) of the EC Sixth Directive. Customs rejected the claim and the council appealed.

The Ch D referred the case to the ECJ for a ruling on the interpretation of the phrase ‘significant distortions of competition’.

The ECJ held that Article 4(5) ‘is to be interpreted as meaning that the significant distortions of competition to which the treatment as non-taxable persons of bodies governed by private law acting as public authorities would lead must be evaluated by reference to the activity in question as such without such...