Fareham College v The Commissioners for HMRC
Decision date: 21 February 2023
Neutral citation: [2023] UKFTT 214 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
Fareham College appealed HMRC's refusal to repay VAT charged on services supplied to the public by its student-run training restaurant, salons and performing arts centre (07/11–04/15), arguing those supplies were exempt as closely related to education. The Tribunal held Item 4 Group 6 Schedule 9 should be read to incorporate the Article 134(b) exclusion and, applying an objective “basic purpose” test, found the training restaurant supplies remained exempt but was not satisfied that the salon or performing arts supplies were not aimed at obtaining additional income in competition with commercial enterprises.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
The tribunal applied a purposive interpretation of the domestic exemption to give effect to the Directive’s Article 134(b) exclusion where consistent with the statute, and held that the Article 134(b) “basic purpose” inquiry is an objective, single question assessed from all relevant circumstances (including pricing and whether surplus income beyond attributable costs is generated) to determine if supplies are aimed at obtaining additional income in competition with commercial enterprises.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The judgment indicates (non-bindingly) that whether a supply is in direct competition with commercial enterprises may be judged from the perspective of a typical consumer and that features such as student-provision, supervision, limited hours and cost-oriented pricing can be relevant; it also observes that inadequate evidence (e.g. poor accounting apportionment or absent witnesses) can prevent a tribunal from concluding the exclusion does not apply.