DECISION
Introduction
1.
This appeal concerns a claim for repayment of VAT charged on supplies of
services made by the British Broadcasting Corporation ("the BBC") to
the Open University ("the OU") during the period 1 January 1978 to 31
July 1994, excluding supplies made in the VAT period ending 30 September 1981.
2.
Between 1 January 1978 and 31 July 1994, the BBC charged and accounted
for VAT on supplies of services to the OU. The services consisted of the
production and broadcasting of television and radio programmes relating to OU
courses. With effect from 1 August 1994, the Respondents (“HMRC”) accepted
that the services supplied by the BBC to the OU were exempt under item 4 of
Group 6 of Schedule 9 to the Value Added Tax Act 1994 ("the VATA94")
as services closely related to the provision of education by a university. In
2009, the BBC made a claim under section 80 the VATA94 for repayment of the VAT
that it had charged and accounted for on supplies made prior to 1 August 1994.
HMRC rejected the claim. This appeal has been brought by the OU as the
recipient of the supplies made by the BBC. The BBC has agreed to pay any
amount that it receives from HMRC by way of repayment to the OU. If the claim
is upheld, the amount repayable, excluding any interest, is just under £21
million.
3.
The claim for repayment of VAT charged by the BBC during the period
1 January 1978 to 31 July 1994 is based on the contention that the
supplies of services by the BBC during the period were exempt from VAT under
Article 13A(1)(i) of the Sixth Council Directive of 17 May 1977 on the
harmonisation of the laws of Member States relating to turnover taxes - common
system of value added tax: uniform basis of assessment, 77/388/EEC (“the Sixth
VAT Directive”). Among other supplies, Article 13A(1)(i) exempted services
closely related to university education provided by bodies governed by public
law having an educational aim or by other organisations defined by the Member
State concerned as having similar objects. HMRC accept that, during the period
covered by the claim, the United Kingdom’s legislation did not exempt the BBC's
services and that Article 13A(1)(i) had direct effect. HMRC maintain, however,
that the BBC's services did not fall within Article 13A(1)(i).
4.
This matter was previously considered by the VAT Tribunal in Open
University v HM Customs and Excise [1982] VATTR 29, VAT Decision 1196. HM
Customs and Excise (as HMRC then were) issued a ruling that VAT was chargeable
on services supplied by the BBC to the OU in respect programmes relating to the
OU’s courses. The OU lodged an appeal and contended that the services were
exempt from VAT. The VAT Tribunal dismissed the appeal. It held that the
services of the BBC did not qualify for exemption because the BBC was not
itself providing education. The VAT Tribunal's decision was based on the
premise that the person making the supply of closely related services must also
be supplying education to the students. Following the decision of the Court of
Justice of the European Communities (later the Court of Justice of the European
Union, together the "ECJ") in Case C-434/05 Stichting Regionaal
Opleidingen Centrum Noord-Kennemerland/West-Friesland (Horizon College) v
Staatssecretaris van Financiën [2008] STC 2145 ("Horizon
College"), it became clear that the VAT Tribunal’s premise was wrong.
Neither party in this appeal now supports the reasoning of the VAT Tribunal in
the 1982 case. The result of the appeal, which the OU did not seek to appeal,
is, however, binding on the OU and that is the reason why the September 1981
quarter is excluded from the claim which is the subject of this appeal.
5.
For the reasons set out below, I have concluded that services supplied
by the BBC to the OU during the relevant period fell within Article 13A(1)(i)
of the Sixth VAT Directive. Accordingly, the claim for VAT charged and
accounted for by the BBC between 1 January 1978 and 31 July 1994, excluding the
September 1981 quarter, is upheld and the appeal is allowed.
Law
6.
Article 4(5) of the Sixth VAT Directive provides as follows:
"States, regional and local government
authorities and other bodies governed by public law shall not be considered
taxable persons in respect of the activities, or transactions in which they
engage as public authorities, even where they collect dues, fees, contributions
or payments in connection with these activities or transactions."
7.
During the relevant period, Article 13 of the Sixth VAT Directive
provided as follows:
"Article 13 Exemptions within the territory of
the country
A. Exemptions for certain activities in the public
interest
1. Without prejudice to other Community provisions,
Member States shall exempt the following under conditions which they shall lay
down for the purpose of ensuring the correct and straightforward application of
such exemptions and of preventing any possible evasion, avoidance or abuse:
…
(i) children’s or young people’s education, school
or university education, vocational training or retraining, including the
supply of services and of goods closely related thereto, provided by bodies
governed by public law having such as their aim or by other organisations
defined by the Member State concerned as having similar objects;"
8.
I record for completeness that HMRC did not take any point on Article
13A(2) which provided for certain restrictions to the exemption.
9.
Article 13A(1)(i) of the Sixth VAT Directive was implemented in the
United Kingdom during the relevant period initially by Group 6 of Schedule 5 to
the Finance Act 1972 and, from 26 October 1983, by Group 6 of Schedule 6 to the
Value Added Tax Act 1983.
10.
It is not disputed that the United Kingdom legislation during the period
covered by the claim did not implement Article 13A(1)(i) correctly in that it
required "closely related" supplies to be provided by the person
supplying the education to which they were related. It is common ground that
Article 13A(1)(i) had direct effect during the period and this decision does
not consider the United Kingdom domestic legislation that applied during the
period covered by the claim any further.
11.
At some point prior to the enactment of the VATA94, HMRC conducted a
review of the United Kingdom legislation that implemented Article 13A(1)(i).
As a result of the review, Group 6 of Schedule 9 to the VATA94 differed from
its predecessors in that it introduced the concept of an "eligible
body". Eligible body for the purposes of the education exemption in the
VATA94 included a public body as defined by note 5 to Group 7 of Schedule 9.
Note 5 defined public body to include
"a body which acts under any enactment or
instrument for public purposes and not for its own profit and which performs
functions similar to those of a government Department or local authority."
12.
In 1997, HMRC accepted that the BBC Open University Production Centre
was a public body as defined by note 5 and determined that, as from 1 August
1994, the services provided by the BBC to the OU were exempt pursuant to item 4
of Group 6 of Schedule 9 to the VATA94. From that date to the present day, the
services supplied by the BBC to the OU have been treated as exempt. HMRC has
indicated to the OU that the exemption of the services may be reconsidered
following the decision in this appeal.
13.
The present appeal therefore solely concerns whether the supplies made
by the BBC to the OU during the period 1 January 1978 to 31 July 1994 were
exempt under Article 13A(1)(i) of the Sixth VAT Directive.
Issues
14.
The parties agreed that whether the services supplied by the BBC to the
OU were exempt under Article 13A(1)(i) turns on three issues, namely:
(1)
was the BBC a body governed by public law for the purposes of Article
13A(1)(i); and
(2)
did the BBC have the educational aim required by Article 13A(1)(i); or
(3)
if the BBC was not a body governed by public law with the required
educational aim, was it another organisation defined by the United Kingdom as having similar objects?
15.
It was common ground that, during the relevant period, the BBC provided,
for consideration and subject to VAT, various services to the OU, which was at
all material times (and still is) a university. HMRC accepted that the OU had
the educational aim required by Article 13A(1)(i). HMRC also accepted that the
services supplied by the BBC to the OU during the relevant period were closely
related to the university education provided by the OU.
Evidence
16.
There was no real dispute between the parties as to the facts, only as
to the interpretation to be placed on those facts. Witness statements were
produced on behalf of the OU by Mr Andrew Law, Mr Colin Robinson and Sir David
Attenborough. The witness statements of Mr Law and Mr Robinson stood as
evidence in chief and they were cross-examined (as Mr Peter Mantle, who
appeared for HMRC, put it) for clarification. The witness statement of Sir
David Attenborough was admitted. There were seven bundles of documents to
which both parties referred. On the basis of the evidence, I find the material
facts relating to the claim to be as set out below.
Facts
17.
The BBC was first established as a limited company in 1922. John Reith,
who subsequently became Lord Reith, was the first General Manager (later called
Director General) of the BBC. On 31 December 1926, the company was dissolved
and its assets were transferred to the BBC constituted under a Royal Charter
dated 20 December 1926. The BBC continued in existence by virtue of a
succession of Royal Charters.
18.
As is well known, Lord Reith stated that the BBC's purpose and duty was
to educate, inform and entertain. The BBC had an education director and
established an education department from its earliest days. The BBC made its
first broadcast for schools in 1924. In 1927, the BBC set up an adult
education department. By 1929, schools broadcasts and talks accounted for a
total weekly output of about 80 hours.
19.
In 1962, the Postmaster General granted the BBC the right to extend its
broadcasting hours on television for the purpose of adult education. This led
to the formation of a further education television department in the BBC which,
in turn, led to the creation of specialist education departments within the BBC
that produced 300 new television programmes annually.
20.
In March 1963, a Labour Party study group under the chairmanship of Lord
Taylor presented a report about the continuing exclusion from higher education
of people from lower income groups. It proposed a University of the Air to
deliver serious, planned, adult education by radio and television.
21.
The fifth Royal Charter, which was granted to the BBC in 1964, was the
one in force during the first part of the period covered by the claim. The
last recital stated:
"… whereas in view of the widespread interest
which is thereby and by other evidences shown to be taken by Our Peoples in the
broadcasting services and of the great value of such services as means of
disseminating information, education and entertainment, We believe it to be in
the interests of Our Peoples in the United Kingdom and elsewhere within the
British Commonwealth of Nations that the Corporation should continue to provide
broadcasting services pursuant to such licences and agreements in that behalf
as Our Postmaster General may from time to time grant to and make with the
Corporation."
22.
The first of the objects of the BBC set out in Article 3 of the Charter
was “to provide, as public services, broadcasting services …” The eighth object
was “to perform services in any part of the world for and on behalf of any
Department of the Government of Our United Kingdom …” Article 5 of the Charter
provided that the Governors of the BBC are appointed by the Queen in Council.
23.
The Prime Minister, Harold Wilson, asked Lord Goodman to consider the
technical means of transmitting programmes for the University of the Air. Lord
Goodman discussed how the arrangements might work with Sir Hugh Greene, the
Director General of the BBC. In a letter dated 29 March 1966 to Lord Goodman,
Sir Hugh Greene stated that the BBC had assumed that:
"… the relationship between the University and
the BBC would be one of close partnership between two educational bodies,
recognising on the one hand the sovereign authority of the University in
setting the degree requirements and the degree courses, and on the other that
the BBC will make an educational as well as a technical contribution."
The letter also referred to the possible use of existing
BBC adult-education programmes, which had been approved by the Further
Education Advisory Council, by the University for its courses.
24.
In September 1967, the Government appointed a Planning Committee to work
out a comprehensive plan for, what had come to be called, the OU. A report by
the Planning Committee in 1969 indicated that the Committee had already decided
to contract with the BBC for all production and transmission services, at least
during the early years of operation, in order to ensure a high standard of
production. The report set out the Planning Committee's view of the nature of
the relationship between the OU and the BBC as follows:
"The relationship between the University and
the BBC will be one of educational partnership, based on mutual confidence. …
The basic principles behind [the partnership] are that the University has the
ultimate responsibility for the academic content of course material and the
manner in which this material is taught, whilst respecting the BBC's judgment
and expert advice on matters relating to the preparation and presentation of
the broadcasts. This advice will not be set aside for any but cogent academic
reasons."
25.
The VAT Tribunal in the earlier appeal by the OU recorded the following
facts at pages 33 - 34 of the report:
"In February 1966, a Committee appointed by the
Government had made a number of recommendations to Parliament concerning a
proposal to establish a University which would present its courses through
television and radio, programmed learning and audio-visual aids. Whilst that
Committee was deliberating, the Government entered into discussions with the
broadcasting authorities concerning the arrangements for the television and
radio programmes that would form part of the structure of such a University. A
report of the General Advisory Council of the BBC made on the 28th June 1968
indicates the nature of those discussions between the Government and the BBC.
It states
'8. When the BBC was
first approached about participating in the project, it stipulated that it
should be regarded as contributing its skills in educational broadcasting as
well as its technical and engineering skills. This was agreed by describing
the BBC as being in a relationship of "educational partnership". The
interpretation of this phrase is obviously crucial and delicate. For, on the
one hand, the broadcasts will be, if not the main, at least a most important
element in teaching the University's courses, and will certainly be the element
that brings the University to the notice of potential students and to the
public as a whole. The University must therefore be vitally concerned that the
broadcasts project the University's policies, and must be deeply involved in
their content and pedagogic method. Moreover, the broadcasts must mesh in with
the correspondence courses. This implies a closer and different relationship
between the educational producer and the sponsoring body than is found in
school or Further Education broadcasting. On the other hand, if, as the BBC
would claim and the University appears to accept, successful educational
broadcasting involves the use of special talents and skills, the University
must secure for its educational partner the degree of freedom and initiative
that will allow these to be effectively used. Among these are judgements about
what is or is not suitable for broadcast transmission, the way the material
should be shaped and presented, and who the outside contributors should be.
This involves both academic and broadcasting judgements about which both the
BBC member of staff and the University representative may have views. No doubt
a harmonious working relationship will be established, but considerable care
will be needed in the early days.'"
26.
The OU opened to its first students in January 1971. The first
agreement between the BBC and the OU was entered into on 16 December
1971. Schedule 1 to the 1971 agreement, stated:
"The radio and television programmes required
by the University and provided by the BBC are to be planned on the basis of an
educational partnership between the University and BBC staff. In practice,
this partnership will extend over the whole range from the conception of the
course to the final production of the programmes. The success of this
partnership rests on the recognition by both parties that, while effective
education is the overriding objective, and the ultimate responsibility of the
University under its Charter, each has a specific professional role to play.
The University will prescribe the academic objectives and general character of
the broadcasts, in relation to the other component parts of each course, while
the BBC will provide the necessary presentation and production skills. In the
overlapping area - where the inter-relationship of content and presentation is
worked out - a reasonable degree of flexibility on both sides is essential in
order to secure the proper concern of the academic staff and the fullest use of
the experience of the broadcasting staff.
Within this area, such matters as the choice of
principal academic contributors to programmes and the inter-connection of
subject instruction and broadcasting method will be of first importance to both
partners. While the BBC recognises the right of the Open University finally to
determine any such points that may be at issue, the University agrees that full
participation of BBC staff in all discussions pertaining to these matters is a
necessary condition of working effectively together. The key relationship
between contributors and production staff jointly engaged in producing material
and programmes for broadcasting will thus be secured.
There will be a continuing need to secure the
educational effectiveness of the programmes by the application of organised
feedback, research and other evaluative procedures to all the elements of the
University courses, and appropriate provision will be made accordingly."
27.
Clause 2 of the 1971 agreement imposed an obligation on the BBC to
produce and broadcast programmes relating to the OU's courses. Throughout the
relevant period, the BBC operated a specific department for the production and
editing of OU programming: the BBC Open University Production Centre (“the
OUPC”). The OUPC was located initially at the BBC studios at Alexandra Palace and then, from 1980, on the OU campus at Milton Keynes. The functions of the
OUPC involved close co-operation between BBC and OU employees.
28.
Clause 3 of the 1971 agreement provided that the BBC would be
represented on the course teams. The concept of the course team was something
that had been a part of the OU since its beginning. A report by the OU's Vice
Chancellor called "The early development of the OU" described the
course team as composed of the OU academic staff, BBC production staff and
educational technologists who were responsible to the Senate of the OU for the
syllabus, detailed content and design of the integral parts of the course. He
stated that:
"Thus, the BBC producers have a voice, as do
the academics, in the overall content of the course as well as in the decision
about what elements of the course call for presentation by television or by
radio."
29.
What that actually meant in practice was described in the evidence of Mr
Law and Mr Robinson. Mr Law worked for the BBC in the OUPC from 1987 to 2000.
He is now employed by the OU. Mr Robinson was employed by the BBC in the OUPC
from 1969 to 1996. The course teams comprised both OU and BBC staff. They
determined the means by which the course material was to be communicated to the
students on the course, ie whether it was by print or broadcasting or other
means. All members of the course team were generally encouraged to
participate. Producers were equal members of the course teams and often
contributed much more to a course than just the design and production of broadcasts.
30.
The BBC decided from the early days that it should recruit people with
good academic knowledge and then train them in broadcasting techniques rather
than rely on people with experience in film, television and radio with no
academic background. Mr Law and Mr Robinson confirmed that this was what
happened. Mr Law’s evidence was that he was an academic when he joined the BBC
to work at the OUPC and that was the reason that he was recruited. He said
that he was trained as a producer at the BBC and at the OUPC. Mr Robinson’s
evidence was that the majority of producers working in the OUPC had a strong
academic background.
31.
Schedule 2 to the 1971 agreement contained copies of correspondence
between the Department of Education and Science and the BBC. The OU Planning
Committee had accepted the provisional estimates and financial arrangements
proposed by the BBC on the assumption that public funds would be made available
to the OU for this purpose throughout the period in question. The BBC was concerned
that it should not be left out of pocket and sought a commitment from the
Government in the form of a guarantee that the BBC would be reimbursed
expenditure incurred in relation to the OU. The eventual outcome of the
correspondence was that the Department of Education and Science gave an
undertaking that allayed the BBC's concerns.
32.
The BBC and the OU entered into a second agreement in February 1976
which was simply a continuation of the earlier agreement, with relatively minor
modifications and amendments.
33.
In 1981, a new Royal Charter was granted to the BBC. The material terms
were the same or very similar to the previous Charter. The first objective
was, again, to provide broadcasting services as public services.
34.
In May 1983, the BBC and the OU entered into a third agreement. The
second recital stated that the BBC:
"... has assisted in the planning and
development of the University and has collaborated in the design and
preparation of its courses and has had a responsibility for the production,
recording and transmission of the broadcast components of such courses."
35.
The last recital provided that the OU and the BBC jointly wished to
continue and to promote their partnership in the furtherance of the objects of
the OU and to that end to collaborate, inter alia, in the production and
recording of audio and audio-visual materials.
36.
Clause 1 of the 1983 agreement provided that:
"The working partnership between the [OU] and
the [BBC] which has been successfully created and developed in the first years
of the [OU]’s operation shall be continued and promoted in the light of that
experience and in accordance with the principles of the preceding Agreements,
the practices which have been accepted and the spirit of understanding which
has evolved."
37.
Clause 2 stated that the OU would provide the OUPC on the OU's campus at
Milton Keynes for the use of the BBC. The OUPC was to be developed . The
second schedule to the agreement provided that the head of the OUPC would be a
BBC employee, appointed under and subject to the usual practices, policies and
procedures of the BBC. The schedule also provided that the Head of the OUPC
and members of BBC staff at the centre would be invited by the OU to
participate in its affairs and activities.
Approach to the interpretation of exemptions in the Sixth VAT Directive
38.
It has been held on many occasions by the ECJ and was common ground
between the parties that the exemptions in the Sixth VAT Directive have their
own independent meaning in Community law and must, therefore, be given a
Community definition. The meaning of “education” in Article 13A(1)(i) was
considered by the ECJ in Horizon College which is discussed
further below.
39.
Further, it is settled law that the exemptions provided for by Article
13A(1)(i) of the Sixth VAT Directive are to be construed strictly but not
restrictively. This follows from the basic principle set out in Article 2 of
the Sixth VAT Directive that the supply of goods and services shall be subject
to VAT, if effected for consideration by a taxable person acting as such,
unless expressly exempted.
40.
The requirement of strict interpretation does not mean that the
provisions for exemption must be interpreted restrictively. As Chadwick LJ
said in Expert Witness Institute v Customs and Excise Commissioners
[2001] EWCA Civ 1882, [2002] STC 42 at [17]:
"A 'strict' construction
is not to be equated, in this context, with a restricted construction. The
court must recognise that it is for a supplier, whose supplies would otherwise
be taxable, to establish that it comes within the exemption, so that if the
court is left in doubt whether a fair interpretation of the words of the
exemption covers the supplies in question, the claim to the exemption must be
rejected. But the court is not required to reject a claim which does come
within a fair interpretation of the words of the exemption because there is
another, more restricted, meaning of the words which would exclude the supplies
in question."
That passage was endorsed by the Court of Appeal in Insurancewide.Com
Services Ltd v HMRC [2010] EWCA Civ 422, [2010] STC 1572 at [83].
Issue (1) - Was the BBC a body governed by public law?
41.
Dr Paul Lasok QC, who appeared with Mr Owain Draper for the OU,
submitted that the BBC was a body governed by public law, as that phrase is
used in Article 13A(1)(i) of the Sixth VAT Directive, during the period 1
January 1978 to 31 July 1994. HMRC contended that the BBC was not such a
body.
42.
The OU submitted that whether the BBC is a body governed by public law
depends on its legal status and not what it does. If the proposition is
limited to the BBC's legal status for the purposes of the Sixth VAT Directive,
I agree and I did not understand HMRC to argue otherwise.
43.
There is very little guidance from the ECJ on the meaning of body
governed by public law for the purposes of the exemptions despite the fact that
the phrase appears several times in Article 13A of the Sixth VAT Directive.
Article 4(5) of the Sixth VAT Directive provides that bodies governed by public
law are not taxable persons in respect of the activities or transactions in
which they engage as public authorities. Article 4(5) has been considered by
the ECJ in a number of cases which give some guidance. In Case 235/85 EC
Commission v Netherlands [1987] ECR 1471 ("Netherlands")
and Case C-202/90 Ayuntamiento de Sevilla v Recaudadores de las Zonas
Primera y Segunda [1993] STC 659 ("Seville"), the ECJ held
that two conditions must be fulfilled in order for the exclusion from the
concept of taxable person in Article 4(5) to apply: the activities or
transactions must be carried out by a body governed by public law; and they
must be carried out by that body acting as a public authority.
44.
In Netherlands, the issue was whether the official services
performed by notaries and bailiffs under Dutch legislation were an economic
activity subject to VAT or were excluded from being such an activity on the
ground that they were activities or transactions of bodies governed by public
law. At [21], the ECJ held that an activity carried on by a private individual
is not exempted from VAT merely because it consists in carrying out acts
falling within the prerogatives of the public authority. The ECJ concluded
that, even assuming that the notaries and bailiffs exercised the powers of a
public authority in performing their official services, those services were not
excluded from being an economic activity by Article 4(5) of the Sixth VAT
Directive. The ECJ stated, at [22], that the reason for its conclusion was
that the notaries and bailiffs pursued their activities "not in the form
of a body governed by public law, since they are not part of the public
administration, but in the form of an independent economic activity carried out
in the exercise of a liberal profession."
45.
The meaning of body governed by public law was also considered in Seville. The case concerned tax collectors appointed by the Commune of Seville who
were entitled to retain a percentage of the tax collected on behalf of the
Commune as consideration for their services. The Commune argued that the tax
collectors were not carrying on an economic activity because they were not
acting independently and, even if they were, their activities were the
activities or transactions of a public authority and excluded from being an
economic activity by Article 4(5) of the Sixth VAT Directive. The ECJ applied Netherlands and repeated, at [19], its dictum that "an activity carried on by a
private individual is not excluded from the scope of VAT merely because it
consists in the performance of acts falling within the prerogatives of the
public authority." At [20], the ECJ concluded that "if a commune
entrusts the activity of collecting taxes to an independent third party, [the]
exclusion from VAT provided for by [Article 4(5)] is not applicable".
46.
The High Court considered the meaning of "body governed by public
law" in University of Cambridge v HMRC [2009] EWHC 434 (Ch), [2009] STC 1288 ("Cambridge University "). Sir Andrew Morritt C
analysed the decisions of the ECJ in Netherlands and Seville as
well as two other cases that had been considered by the VAT and Duties Tribunal
in the case, namely Case C-359/97 EC Commission v United Kingdom [2000] STC 777, which concerned toll roads and bridges, and Case C-174/06 Ministero
delle Finanze-Ufficio IVA di Milano v CO.GE.P Srl [2008] STC 2744 which
referred to the letting of state-owned property. He concluded, at [38], that
the concept of a body governed by public law was a matter of Community law and
was not to be determined in accordance with the domestic law of each Member State.
47.
At [48] of Cambridge University, Sir Andrew Morritt C held that:
“The decisions of the European
Court of Justice … establish that 'a body governed by public law' must, as a
matter of Community law, be identified as part of the public administration of
the relevant member state. Whether or not any particular institution can be so
identified is a matter for the national court. The Tribunal considered that
the University could not be so identified. In my judgment they were right for
the reasons they gave.”
48.
Sir Andrew Morritt C did not expand on what was meant by “part of the
public administration of the … state” but he confirmed that the VAT and Duties
Tribunal was right to conclude that Cambridge University was not a part of the
administration of the United Kingdom for the reasons they gave. Those reasons
are set out at [76] – [91] of the Tribunal's decision, [2008-09] V & DR
579, VAT Decision 20610.
49.
At [86] of its decision, the Tribunal held that a body that is:
(1)
carrying out by delegation a public function which could be, and
sometimes is, carried out by the State itself;
(2)
entrusted with powers and duties of a public nature in the performance
of which it is amenable to judicial review in the English law context; and
(3)
highly regulated by the State and operates within a comprehensive
statutory regime
is not thereby a body governed by public law. In my
view, the Tribunal was not saying that the characteristics set out above were
irrelevant to or inconsistent with being a body governed by public law but that
they were not conclusive of such status.
50.
In [88], the Tribunal held that Cambridge University was not a body
governed by public law because the University is a legally independent and
autonomous institution; it is self-governing and independent in the management
of its affairs. The Tribunal did not consider that the receipt of public funds
through the Higher Education Funding Council for England on conditions designed
to ensure the implementation of certain government policies could result in the
University being part of the public administration.
51.
The Tribunal concluded, at [91], that a body which is not inherently and
by its nature a creature or extension of the State is not part of the public
administration and is not a body governed by public law for the purposes of
Article 13 of the Sixth Directive.
52.
The issue in this case is whether the BBC is a body governed by public
law for the purposes of the Sixth VAT Directive. I am bound by the decision of
the High Court in Cambridge University that, in order to be a
body governed by public law, the BBC must, as a matter of EU law, be part of
the public administration of the United Kingdom. The phrase was first used by
the ECJ in Netherlands but it provided no guidance in that case or
subsequently as to what is meant by part of the public administration of the
member state. If the ECJ in Netherlands had intended to limit “body
governed by public law” to bodies that are part of the state, regional and local
government authorities then it could easily have said so. For that reason, I
do not consider that the term “public administration” simply refers to the
state, regional and local government authorities in Article 4(5).
53.
It may be argued that the cases of Netherlands and Seville are not entirely on point because they concerned individuals rather than
legal persons. The final sentence of [22] of Netherlands could be read as
saying that the notaries and bailiffs do not carry out their activities in the
form of a body governed by public law because they carried out the activities
not as employees of the public administration but as independent providers of
professional services. The cases of EC Commission v United Kingdom and Ministero delle Finanze-Ufficio IVA di Milano v CO.GE.P Srl, in which
the ECJ applied the reasoning in Netherlands and Seville to
corporate entities, show that the ECJ’s analysis was not restricted to natural
persons.
54.
It seems to me that "bodies governed by public law" in Article
4(5) embraces not only states, regional and local government authorities but
another, undefined, class of public body that can act as a public authority.
It is clear from Article 4(5) that a body governed by public law can carry out
a range of activities. Article 4(5) contains two distinct conditions. The ECJ
cases show that, in order for Article 4(5) to apply, the activities must be
carried out by a body governed by public law and they must be carried out by
that body acting as a public authority. Both conditions must be fulfilled and,
as the ECJ held in Netherlands at [21], the fact that a person performs
acts falling within the prerogatives of the public authority is not sufficient
to make that person a body governed by public law. The ECJ in Netherlands focused on the form of the body that carried out the activities rather than the
type of activities carried out. I consider that it follows that the specific
activities or transactions of a body neither designate nor disqualify it as a
body governed by public law. It is the “form” of the entity which determines
its status.
55.
It appears to me that the ECJ in Netherlands regarded the states,
regional and local government authorities as the public administration of the
member state. It follows that other bodies governed by public law, if they are
part of the public administration, must refer to bodies that are similar in
form to states, regional and local government authorities. In my view, this is
why the ECJ in Netherlands and Seville, as well as the other two
cases referred to, excluded the independent providers of services from Article
4(5). Even though they exercised the powers and performed the functions of the
states, regional and local government authorities, the notaries, bailiffs and
tax collectors did so in the form of an independent economic activity ie as
taxable persons. They were not similar to states, regional and local
government authorities because they were, in United Kingdom terms, businesses.
I conclude that a body that carries on an independent economic activity cannot
be regarded as a body governed by public law in respect of that activity even
if the activity is of a type performed by states, regional and local government
authorities acting as such.
56.
The use of the word “part” in the phrase “part of the public
administration” indicates that the body must not be independent of or separate
from the public administration of the state or regional and local government
authorities. I consider that this means that the body must be within the
public administration by reason of organisational or legal relationship. Such
relationships may take different forms, eg ownership or employment, but may not
be merely commercial. A commercial relationship would indicate that the body
was engaged in an independent economic activity and, therefore, was not similar
to state, regional and local government authorities.
57.
In my view, the term “public administration” refers to a function
normally carried out by the state, regional and local government authorities.
I consider that the body governed by public law must be concerned with the
general administration or management of the state or authority or its
interests
58.
The OU submitted that the BBC was a creation of the state in that the
state established the BBC and determined its constitution, namely the Royal
Charters. The Royal Charters provided that the BBC's governors were appointed
by the Queen in council and the BBC's funds were paid out of monies provided by
Parliament which, through the Postmaster General, could examine the BBC's
accounts and require financial information. The OU submitted that the BBC was
controlled by the Government through the Royal Charters. The BBC was
ultimately responsible to Parliament through the Postmaster General, later the
Secretary of State. The OU also contended that the BBC was created was for a
public purpose. The public purpose was not simply broadcasting; it was
broadcasting information, education and entertainment.
59.
Although the BBC's constitution is its Royal Charter which is determined
by the Government, I do not consider that the BBC can be described as
controlled by the state. As the OU properly acknowledged, the BBC is
organisationally and editorially independent of the Government. Independence from the state, regional and local authorities is clearly an important
indicator that the body is not part of the public administration of the state
but it is not conclusive. It would be surprising if only bodies that were
directly controlled by the authorities could be regarded as part of the public
administration of the state. In the United Kingdom, many agencies of the
Government are operationally independent but they are undoubtedly part of the
public administration of the state. I consider, however, that the independence
of the BBC is such that it is a strong indicator that the BBC is not part of
the public administration of the United Kingdom.
60.
The OU submitted that the BBC's role was entirely state-financed in that
the BBC was financed either by the OU paying it or by direct subvention by the
Government to the BBC under the guarantee given by the Department of Education
and Science. I do not consider that the fact that the BBC is reliant for the
majority of its funding on the licence fee which is collected and dispensed by
the Government means that it is a body governed by public law. Nor do I accept
that the fact that all of the financing of the OUPC comes from the Government
either indirectly via the OU or directly under the Department of Education and
Science guarantee means that the BBC is part of the public administration of
the United Kingdom. Both public and private bodies may receive funding from a
variety of sources. Further, the BBC, in common with the University of Cambridge and many other organisations, receives both public and private funding. The ECJ in Netherlands and Seville did not refer to the source of the payments to the notaries,
bailiffs and tax collectors as a factor in determining whether they were bodies
governed by public law. In my view, the source and nature of the funding of a
body are factors to be taken into consideration in determining whether it is
governed by public law but the fact that a body is state-financed is not
determinative.
61.
The OU also relied on a guide to public bodies published by the Cabinet
Office in 2006. At section 7.6, the guide refers to the BBC as a public
broadcasting authority. Dr Lasok submitted that the concept of public law has
not been harmonised at EU level and that concept differs from one Member State to another. He contended that the guide was a statement by the United Kingdom
Government of what constituted a public body. The OU also relied on the fact
that the BBC is classified as a public authority for the purposes of the
Freedom of Information Act 2000.
62.
I do not accept that the concept of a body governed by public law can be
determined by reference to the status of a body under national law. The High
Court in Cambridge University at [38] – [48] authoritatively
demonstrated that the concept of a body governed by public law is a matter of
Community law and is not to be determined in accordance with the domestic law
of each Member State.
63.
In my view, the expression “body governed by public law” in Article
13A(1)(i) does not necessarily have the same meaning in Community law as it
does in English law. It follows that the Cabinet Office guide and the listing
in the Freedom of Information Act are not useful in determining the meaning of
body governed by public law for the purposes of the Sixth VAT Directive. The
guide represents the Cabinet Office's view of what is a public body for the
purposes of United Kingdom law and makes no reference to VAT or Community law.
The fact that the BBC was included in the Freedom of Information Act indicates only
that it was considered to be a public body for the purposes of that legislation
and says nothing about its status for VAT purposes.
64.
Article 4(5) of the Sixth VAT Directive also provides that bodies
governed by public law shall be considered taxable persons in relation to the
activities listed in Annex D to the Directive, provided they are not carried
out on such a small scale as to be negligible. Annex D includes transactions
of radio and television bodies other than those specified in Article 13A(1)(q).
Article 13A(1)(q) exempts activities of public radio and television bodies
other than those of a commercial nature. It follows that Annex D contemplates
a television body that is governed by public law and engages in transactions of
a commercial nature. The OU submitted that the reference in Annex D to the
Sixth VAT Directive showed that radio and television bodies could be bodies
governed by public law.
65.
In my view, the fact that Annex D refers to television transactions does
not indicate anything about the status of the BBC. All that can be derived
from Articles 4(5) and 13A(1)(q) with Annex D is that a television body may be
a body governed by public law and it may carry out commercial and
non-commercial activities. Those provisions do not state (and the OU did not
contend) that television bodies, whether commercial or non-commercial, must be
bodies governed by public law. The provisions say nothing about the meaning of
"bodies governed by public law" generally.
66.
As I have already stated, I am bound by the decision of the High Court
in Cambridge University in considering whether the BBC is part of
the public administration of the United Kingdom. The OU accepts that Cambridge
University is binding on this Tribunal but, in case there is a further
appeal, reserved the right to argue that the High Court's conclusion that “a
body governed by public law” must, as a matter of Community law, be part of the
public administration of the Member State was not correct.
67.
Applying the case-law to the present appeal, I conclude that the BBC is
not a body governed by public law. The BBC is not similar to the state or any
regional or local authority because it provides the services to the OU for
consideration ie in the form of an independent economic activity. In entering
into an agreement with the OU, the BBC was not acting as part of the public
administration of the United Kingdom: it was free to choose whether or not to
provide services to the OU and, having chosen to do so, it could agree how it
would provide those services and at what cost. Further, the BBC is not a part
of the public administration of the United Kingdom. The BBC does not carry out
a function of the United Kingdom Government. It does not administer the
country or manage its interests. The BBC does not implement policy as an
instrument of the Government. The BBC enabled the OU to implement the
Government's policy of widening access to university education but the BBC did
not itself implement that policy as an instrument of the Government. Some of
the BBC's activities may be consistent with or further Government policy but
the evidence shows that the BBC engages in those activities because it chooses
to do so and not at the direction of the Government.
68.
For the reasons set out above, my conclusion on this point is that the
BBC is not a part of the public administration of the United Kingdom and,
accordingly, is not a body governed by public law for the purposes of Article
13A(1)(i) of the Sixth VAT Directive.
Issue (2) - Did the BBC have the required educational aim?
69.
Given that I have decided that the BBC is not a body governed by public
law for the purposes of Article 13A(1)(i) of the Sixth VAT Directive, it is not
strictly necessary for me to consider whether the BBC had the required aim.
However, in case I am wrong on that point and also because it is relevant to
the question of whether the BBC had similar objects in issue (3), I turn now to
consider whether the BBC had the required educational aim.
70.
This raises two questions, namely what aim is required by Article
13A(1)(i) of the Sixth VAT Directive and did the BBC have that aim?
71.
It was common ground that the term “having such as their aim” in Article
13A(1)(i) refers to the opening words of the article, namely “children’s or
young people’s education, school or university education, vocational training
or retraining”. Accordingly, the aim required by Article 13A(1)(i) is
education at school or university and training.
72.
The meaning of education in Article 13A(1)(i) of the Sixth VAT Directive
was considered by the ECJ in Horizon College. The ECJ, at [20], accepted
the submissions of the Commission and held that education in Article 13A(1)(i)
consists of a combination of elements including those relating to the
teacher/student relationship (ie the transfer of knowledge and skills between a
teacher and students) and also those which make up the organisational framework
of the establishment concerned. The Advocate General (Sharpston) set out the
Commission's submissions in more detail at [49] of her opinion as follows:
"… as the Commission pointed out at the
hearing, the ‘education, vocational training or retraining’ which students
receive in an educational establishment is not merely what is provided by
teachers from their own knowledge and skills. Rather, it includes the whole
framework of facilities, teaching materials, technical resources, educational
policy and organisational infrastructure within the specific educational
establishment in which those teachers work."
73.
In Horizon College, the ECJ decided that the term education in
Article 13A(1)(i) of the Sixth VAT Directive does not cover the making
available, for consideration, of a teacher to an educational establishment but
held that such services may be exempt as closely related to education when
provided by an organisation defined by the Member state as having education as
its aim. In Horizon College, the supplier was an educational
establishment. The ECJ held, at [33] – [35], that:
"33. However, the benefit of the exemption [for
the supply of services closely related to education] provided for under art
13A(1)(i) of the Sixth Directive is subject to certain conditions which stem
from that article.
34. First, both the principal activity of education
and the supply of goods or services which are closely related to that activity
must be provided by one of the bodies referred to in art 13A(1)(i) of the Sixth
Directive.
35. Indeed, as may be seen from the wording of art
13A(1)(i), in order for the making available of teachers for the benefit of the
host establishments to be exempted under that provision, it is necessary for
the activity to be provided by a body governed by public law that has an
educational aim, or by another organisation defined by the member state
concerned as having similar objects. As is apparent from the order for
reference and, in particular, from the third question raised, that condition is
likely to be satisfied in the main proceedings."
74.
In this case, there was no dispute that the BBC provided programmes with
educational content to the OU and generally. It was common ground that the
services provided by the BBC to the OU were closely related to education. It
was also common ground that the fact that a supply of closely related services
has some educational value or content is not enough to establish that the
supplier has an educational aim. The issue was whether the BBC had the
required educational aim.
75.
Dr Lasok contended that it was not necessary for the BBC, as a supplier
of closely related services, to provide university education in order for the
BBC to have the required educational aim. The OU’s case was that the BBC had
the necessary aim in relation to all forms of education mentioned in the
opening words of Article 13A(1)(i), namely:
(1)
it had the aim in relation to university education in that it made
supplies with the aim that the OU would supply university education; and
(2)
it had the aim of providing education and training more generally as
distance learning through its programmes on television and radio.
76.
The OU also submitted that the requirement that the supplier of closely
related services should have an educational aim can be satisfied in either of
two ways, namely:
(1)
an aim embodied institutionally in the supplier; or
(2)
the aim of the supplier when engaging in making the supply
and that the BBC had both types
of educational aim.
77.
Dr Lasok submitted that the aim of the OUPC was the provision of
university education. The integration between the BBC and the OU at the OUPC
was such that BBC staff were intimately involved in the provision of university
education. The OU contended that the evidence showed that the BBC made a
single supply of services to the OU which was an activity that extended from
devising courses all the way through production to transmission of the
programmes for those courses. The BBC did much more than simply film and
broadcast the programmes.
78.
Dr Lasok submitted that the evidence showed that the BBC provided a
range of schools and adult education programmes. These programmes were not
one-off events but were structured courses. The OU contended that the
education programming was a form of distance learning which constituted
education in the Horizon College sense.
79.
HMRC did not contend that the BBC must have an educational aim as its
sole object. Mr Mantle submitted that the BBC must have the aim of providing
education in the sense explained by the ECJ in Horizon College and that
the BBC did not have the aim of providing such education. HMRC contended that
if the OU is right then the exemption would apply to any provider of goods or
services closely related to education or training.
80.
HMRC did not dispute that the BBC’s purpose and remit was to inform, educate
and entertain. HMRC contended that the BBC has never aimed to provide
university education. HMRC accepted that one of the BBC's aims as a public
service broadcaster was to provide programmes with educational content,
including content aimed at those studying at university. The BBC provided
services relating to the production, recording and transmission of television
and radio programmes and other audio and audio-visual materials to the OU. Mr
Mantle submitted that the fact that the BBC had an aim to provide such services
to the OU and an aim to provide educational content to students of the OU (and
other universities) did not mean that the BBC had university education as one
of its aims.
81.
It is clear from [34] of Horizon College that the supplier of
closely related services must be a body within Article 13A(1)(i) of the Sixth
VAT Directive. This means that the supplier must be a body governed by public
law that has the required educational aim (or another organisation defined by
the Member State as having similar objects). I consider that the aim, or one
of the aims, of the supplier of closely related services must be to provide
education of a type described in Article 13A(1)(i) of the Sixth VAT Directive.
Horizon College shows that it is not enough for the provider of
closely related services to have the aim that the recipient should provide
education. The fact that the OU provides university education in the Article
13A(1)(i) sense does not mean that the BBC, merely by providing services to the
OU, has the required educational aim.
82.
The requirement to have an educational aim does not, in my view, mean
that a supplier of closely related services must supply education of the same
type as the recipient of the supply or that it must supply the education to the
recipient of the services. In my view, the provision of closely related
services by a university to a primary school would still satisfy the condition
in Article 13A(1)(i) even though the educational aims of the two entities
relate to very different types of education. Specifically, I do not consider
that it is necessary for the BBC to supply university education to students
generally or to the OU in order to come within the exemption. It is, however,
necessary in my view that the supplier of closely related services should have
education, in the sense explained by the ECJ in Horizon College (because
exemptions must be construed strictly), as its aim.
83.
Article 13A(1)(i) refers to "children’s or young people’s
education, school or university education, vocational training or
retraining". The ECJ in [18] and [19] of Horizon College stated
that the transfer of knowledge and skills between a teacher and students is an
important element of educational activity but is not, by itself, education in
the Article 13A(1)(i) sense. The ECJ in [20] of Horizon College held that the educational activity in Article 13A(1)(i) refers to a combination of
elements. Those elements are the transfer of knowledge and skills between
teachers and students as well as the organisational infrastructure in which the
teaching takes place.
84.
I find that, since its creation, the BBC has had education, in a broad
sense, as one of its aims. Throughout its history, the BBC has provided a
range of programmes aimed at educating or training persons of different ages.
I do not consider, however, that the BBC has provided or ever aimed to provide
education in the sense explained by the ECJ in Horizon College. The BBC's educational broadcasts, whether for the OU or more generally, do not
provide the necessary combination of teaching and organisational infrastructure
within which teachers transfer knowledge and skills to students to constitute
education in the Horizon College sense. My view is that the BBC
provides only a part of the package and its educational broadcasts must always
be complemented by the activities and infrastructure of other institutions such
as schools, colleges and the OU in order to provide the viewers and listeners
with education in the Article 13A(1)(i) sense.
85.
My conclusion on this point is that the BBC did not have the required educational
aim and, accordingly, did not satisfy the condition in Article 13A(1)(i) of the
Sixth VAT Directive.
Issue (3) - Was the BBC an organisation defined by the United Kingdom as having similar objects?
86.
The conclusion that the BBC was not a body governed by public law with
the required educational aim does not necessarily determine this appeal.
Article 13A(1)(i) of the Sixth VAT Directive also exempts the provision of
services closely related to education by other organisations defined by the Member
State concerned as having similar objects. There is no doubt that the BBC is
an "other organisation", ie an entity other than a body governed by
public law, for the purposes of Article 13A(1)(i). As stated above, HMRC
accepted that the services supplied by the BBC to the OU during the relevant
period were closely related to the university education provided by the OU.
Accordingly, those supplies would fall within the exemption if the BBC was
defined by the United Kingdom as having objects similar to the required
educational aim.
87.
The OU submitted that the United Kingdom has "defined" the BBC
as having "similar objects" (that is, objects similar to the
provision of education etc.) by creating the BBC and entrusting it with an
educational function or remit.
88.
Alternatively, the OU contended that the fact that the United Kingdom has not defined the BBC as having similar objects does not preclude the
exemption from applying. Dr Lasok submitted that the language used in Article
13A(1)(i) does not give a Member State discretion to pick and choose what are
or are not "organisations … having similar objects". The function of
Member States is simply to identify, in the national legislation implementing
the Sixth VAT Directive, organisations falling within that description.
89.
In support of his submission, Dr Lasok relied on the interpretation
given by the ECJ to the word "defined" in Article 13B(d)(6) of the
Sixth VAT Directive, in Case C-363/05 JP Morgan Fleming Claverhouse
Investment Trust plc and another v HMRC [2007] ECR I-5517, [2008] STC 1180
("JP Morgan Fleming"). The ECJ stated as follows at [40] –
[42]:
“40. The United Kingdom government, for its part,
argues that a wide interpretation of the words ‘special investment funds’ in
art 13B(d)(6) of the Sixth Directive must necessarily be combined with an
interpretation of the phrase ‘as defined by member states’ according to which
member states are given a wide discretion to select the funds eligible for the
exemption.
41. At the outset it must be observed that the task
of defining the meaning of the words ‘special investment funds’ does not in any
way permit the member states to select certain funds located on their territory
and grant them exemption and exclude other funds from that exemption. It follows
from para 21 of this judgment that the terms ‘special investment funds’ must be
the starting point for the discretion conferred on the member states.
42. The interpretation according to which it is for
the member states to select the investment funds which are eligible for the
exemption and exclude others would negate the significance of the terms
‘special investment funds’ in art 13B(d)(6) whose objective is to prevent
discrepancies in the application of VAT to such funds.”
90.
The ECJ went on to hold in JP Morgan Fleming, at [58] – [61],
that Article 13B(d)(6) of the Sixth VAT Directive allowed Member States some
discretion, in defining special investment funds, but did not prevent persons
concerned from relying directly on that provision where a Member State had not
implemented it correctly.
91.
The OU contended that, viewed objectively, the BBC has objects that are
similar to the provision of education and, accordingly, it falls within
Article 13A(1)(i) as an other organisation having similar objects. In this
case, Group 6 of Schedule 5 to the Finance Act 1972 and Group 6 of Schedule 6
to the VAT Act 1983 designated schools, universities and some other
institutions but not the BBC, for the purposes of the education exemption. The
OU submitted that, if United Kingdom legislation fails to mention an
organisation that may properly be described as "an organisation having
similar objects", namely education, then the direct effect of Article
13A(1)(i) may be invoked, as happened in JP Morgan Fleming.
92.
HMRC submitted that the United Kingdom’s VAT legislation in force in the
relevant period defined organisations with similar objects for the purpose of
the education exemption. It designated schools and universities defined by
reference to the Education Acts. The BBC was not included in those
definitions. HMRC contended that, notwithstanding JP Morgan Fleming,
the United Kingdom had a discretion to recognise or not to recognise the BBC as
a body having similar objects to the required educational aim. The United Kingdom did not fail to define “other organisations” for the purpose of the
education exemption but had simply not defined the BBC as an “other
organisation” for that purpose. The fact that the BBC was the United Kingdom’s
public service broadcaster and had an aim to educate, as well as inform and
entertain, did not mean that the United Kingdom had defined the BBC as an
organisation with similar objects to the required educational aim. HMRC also
submitted that the BBC did not have the provision of education, in the Horizon
College sense, or a similar object as one of its objects.
93.
I take the phrase "defined by the Member State concerned as having
similar objects" to mean that the Member State, in this case the United
Kingdom, has specified that the objects of the organisation shall or must be
similar to the required educational aim.
94.
I do not consider that the United Kingdom had defined, by which I mean
specified, the objects of the BBC as similar to the required educational aim
during the period 1 January 1978 to 31 July 1994. The Royal Charters referred
to education in the context of the value of broadcasting as a means of
disseminating information, education and entertainment. I consider the
reference, which appeared only in the recital, falls a long way short of
defining an aim or object of the BBC.
95.
With the introduction of the VATA94, however, HMRC defined other
organisations having similar objects for the purposes of the education
exemption by reference to note 5 to Group 7 of Schedule 9. Note 5 defined a
public body in terms that went beyond states, regional and local government
authorities. In 1997, HMRC accepted that the OUPC was such a public body. As
there had not been any material change in its constitution, the BBC (of which
the OUPC was part) must have been capable of being defined as one of the other
organisations having similar objects before the introduction of the VATA94. It
follows from JP Morgan Fleming that the United Kingdom was not permitted
to select certain entities, which had the required objects, as defined
organisations for the purposes of the exemption while excluding other entities
which had the necessary objects. If the United Kingdom had not implemented
Article 13A(1)(i) of the Sixth VAT Directive correctly then the BBC could rely
on it directly provided that the BBC had similar objects to the required
educational aim.
96.
I have already concluded that education is one of the aims of the BBC
but not education as described by the ECJ in Horizon College.
Education in the Horizon College sense is the required aim of bodies
governed by public law but Article 13A(1)(i) only requires other organisations
defined by Member States to have "similar objects". That wording
suggests that the other organisations can have something other than “children’s
or young people’s education, school or university education, vocational
training or retraining” as described by the ECJ in Horizon College as their objects. I have found on the evidence that, from its earliest days, the
BBC had education as one of its objects. The object was not simply education
in a broad sense of information provided to the general public but education
aimed specifically at schools and adult further education colleges through
targeted programmes designed to supplement the education of the pupils and
students provided by the teachers. From the conception of the OU, the BBC also
had university education as one of its aims. The BBC’s aim was not the
provision of education in the Horizon College sense by the BBC but I consider
that it was close enough to such education to be a similar object. In my view,
the BBC had objects similar to the required educational aim.
97.
My conclusion is that, although it does not provide or aim to provide
education in the Horizon College sense, the BBC had education of a type
similar to that described in Article 13A(1)(i) of the Sixth VAT Directive as
one of its objects. I also hold that the BBC can rely on the direct effect of
Article 13A(1)(i) for the same reasons as in JP Morgan Fleming. In
conclusion, I consider that the services supplied by the BBC to the OU during
the relevant period were exempt as services closely related to university
education supplied by an organisation, other than a body governed by public
law, that had objects similar to the required educational aim under Article
13A(1)(i).
Decision
98.
For the reasons given above, I hold that the services supplied by the
BBC to the OU during the relevant period were exempt under Article 13A(1)(i) of
the Sixth VAT Directive. Accordingly, the claim for repayment of amounts
charged and accounted for as VAT by the BBC between 1 January 1978 and 31 July
1994, excluding the VAT period ending 30 September 1981, is upheld and the
appeal is allowed.
Rights of appeal
99.
This document contains full findings of fact and reasons for the
decision. Any party dissatisfied with this decision has a right to apply for
permission to appeal against it under Rule 39 of the Tribunal Procedure
(First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be
received by this Tribunal not later than 56 days after this decision is sent to
that party. The parties are referred to “Guidance to accompany a Decision from
the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this
decision notice.
GREG
SINFIELD
TRIBUNAL JUDGE
RELEASE DATE: 3 June 2013
