VATGPB3250 - Non-business activities: whether provided as a public authority: other key Tribunal decisions
The question of whether a body is governed by public law has been considered by the VAT Tribunal in the following cases.
In the Arts Council of Great Britain (VTD 11991) the point at issue was whether the Council, in providing services to the Department of National Heritage and to the recipients of grants that it distributed, was carrying on a taxable business and therefore able to recover input tax.
Although the Arts Council is not referred to in section 33 of the VAT Act 1994, the chairman considered that the Council was
‘a public body, performing a public function, whose costs were paid out of public funds’.
In relation to those activities the Arts Council, an Executive Non-Departmental Public Body)was not, therefore a taxable person for the purposes of the VAT Act or Article 4(5) of the Sixth VAT Directive (now Article 13(1) of the Principal VAT Directive - see VATGPB2100). It was therefore unable to recover input tax.
In the Royal Academy of Music (VTD11871) the appeal primarily concerned a refusal to approve the issue of a certificate for the zero rating of alterations to a listed building which formed part of the Academy’s premises.
The Academy considered that the alterations to the property were eligible for zero rating on the grounds that the Academy was a registered charity and that the use of the premises was not in the course or furtherance of a business. It was also argued that if the provision of education in return for tuition fees was considered to be a business activity, albeit exempt for VAT purposes, then its status as a body governed by public law enabled it to treat the provision of education as an activity undertaken in its capacity as a public authority. The supply of education, as a result, being a non-business activity.
In dismissing the appeal, the Tribunal held that the Academy was not a statutory body. Its provision of education was not ‘in pursuance of any statutory duties’ and therefore its activities fell outside the scope of the then Article 4(5) of the Sixth VAT Directive (then Article 13(1) of the Principal VAT Directive and now Section 41A of the VAT Act 1994).