Colchester Institute Corporation (No 2) v The Commissioners for HMRC
Decision date: 4 March 2024
Neutral citation: [2024] UKFTT 191 (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
Colchester Institute appealed a VAT assessment charging Lennartz output tax and disallowed input tax; the Tribunal, bound by the Upper Tribunal on the "Consideration Point", found grants from the EFA/SFA were properly characterised as consideration for the educational supplies and so CIC succeeded on that point. Because those supplies were for consideration and thus constituted (exempt) supplies, Paragraph 5(4) did not give rise to a deemed output tax liability, and the assessment was reduced to £24,676.66 (the input tax element was not pursued). The appeal therefore succeeded in part.
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 the Upper Tribunal’s binding determination that funding grants can amount to "consideration" for education supplies; where supplies are for consideration and therefore fall within VAT's concept of economic activity but are exempt, a deemed supply under Paragraph 5(4) does not create an output tax liability in respect of that non‑business characterization.
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 decision notes that factual features such as standard-form, non‑negotiable funding agreements, operation under a national funding formula, and restrictions on charging fees are relevant contextual factors when assessing whether grants constitute consideration. It also comments that administrative processes (PESM approvals, timing of repayments and statutory time‑limits) affect recoveries under the Lennartz mechanism.