The issue was whether the commissioners correctly refused to allow the appellant to issue a certificate entitling it, under VATA 1994, Sch. 7A, Grp. 1, to pay a reduced rate of VAT on supplies to it of electricity.

The appellant was a charity providing higher education and carrying out research. It constructed a building to house its Faculty of Education and occupied the building for both of these purposes. Electricity was supplied to the building and the appellant applied to the commissioners for consent to issue a certificate to the electricity supplier requiring it to charge the fuel supplied for a qualifying use at the reduced rate of VAT. The commissioners ruled that the appellant was not entitled to issue such a certificate.

The appellant argued that, as a charity, it was entitled to pay the reduced rate of VAT on electricity which was for use ‘otherwise than in the course or furtherance of a business’ in accordance with Note 3(b) to Grp. 1 of Sch. 7A. In this case, the fuel was used to provide higher education to degree level. The appellant contended that it was a body governed by public law by reason of its statutory foundation and the public powers entrusted to it and that, in providing education, it was acting as a public authority by reason of the statutory regime under which it was governed and the funding and other regulations with which it was required to comply. Accordingly, it was not to be regarded as a taxable person in relation to its activities of providing education, by reason of art. 13 of Directive 2006/112, the 2006 VAT directive. If the appellant was not a taxable person then it was not, by reason of the definition of ‘taxable person’ in art. 9 of the directive, carrying out any economic activity. It followed, in the appellant's view, that if, in providing higher education, the appellant was not carrying out any economic activity, it was not then acting in the course or furtherance of a business. Therefore, it was entitled to pay the reduced rate of VAT on the supplies of electricity made to it.

The commissioners argued that art. 13 of the directive had more limited scope than the appellant asserted: by providing that a body governed by public law was not regarded as a taxable person in respect of activities in which it was engaged as a public authority, art. 13 looked only to the question of the supplies made by the public body when it was so engaged; in effect it treated them as outside the scope of VAT, or as exempt. Article 13 did not look to the question of whether the activities in which the public body was engaged were economic activities. Accordingly, the article did not have effect to entitle the appellant to claim reduced rate VAT on electricity supplies it received on the ground that the electricity was used ‘otherwise than in the course or furtherance of a business’. Notwithstanding the appellant's statutory foundation, it was not a ‘body governed by public law’ for the purposes of art. 13, so that even if art. 13 were in point, the appellant would not be within its ambit. The appellant, in providing education, did not engage in activities ‘as a public authority’ since it did not operate under a special legal regime, so for that reason also it fell outside the ambit of art. 13.

The tribunal identified three issues in the appeal. First, it was required to decide if it was correct to interpret and apply art. 13 so that a body within its ambit engaging in activities within its ambit was treated for VAT purposes as not carrying on an economic activity when it engaged in those activities. If the appellant failed on this issue its appeal must also fail. If the appellant succeeded on this issue then, in order to succeed in the appeal, it must succeed on both the second and third issues. The second issue was whether the appellant was a ‘body governed by public law’ for the purposes of art. 13 and thus within art. 13. The third issue was whether the appellant, in providing higher education, was engaging in activities ‘as a public authority’ for the purposes of art. 13 and thus engaging in activities within art. 13.

The tribunal dismissed the charity's appeal.

1. The appellant was not a ‘body governed by public law’ for the purposes of art. 13 of the 2006 VAT directive.
2. Should the tribunal be wrong in finding that the appellant was not a ‘body governed by public law’, the appellant, in providing higher education, was not engaged in activities ‘as a public authority’ for the purposes of art. 13.
3. Should the tribunal be wrong in finding that the appellant was not a ‘body governed by public law’ and was not engaged in activities ‘as a public authority’ for the purposes of art. 13, that article did not have the effect that, when the appellant engaged in such activities, it was to be treated for VAT purposes as not carrying on an economic activity.
4. In providing higher education the appellant was acting ‘in the course or furtherance of a business’ and, in consequence, supplies of electricity or other fuel which it used in providing higher education were not supplies for use ‘otherwise than in the course or furtherance of a business’.
5. Supplies of electricity to the appellant did not qualify as supplies at the reduced rate of VAT within Grp. 1 of Sch. 7A to VATA 1994.

No. 20,610