Fareham College v The Commissioners for HMRC
[2023] UKFTT 214 (TC)
St Patrick’s International College Limited & Ors v The Commissioners for HMRC
3 May 2023
[2023] UKFTT 408 (TC)
First-tier Tribunal
Three schools challenged the government's decision to tax their tuition fees. The judge ruled that even though the government's rules are a bit different from the general European rules, they aren't unfair. The schools didn't qualify for tax exemptions because they didn't meet all the requirements.
Key Facts
- •Three appellants (SPIC, LCCA, and IMAN) appealed VAT assessments on higher education course supplies (2012-2017).
- •Appellants argued for exemption under Article 132(1)(i) of the Principal VAT Directive (PVD) and/or UK domestic provisions (Group 6, Schedule 9, VATA 1994).
- •Appellants are part of the Global University Systems Group (GUS).
- •SPIC offered further and higher education courses, including HNCs and HNDs.
- •LCCA provided further and higher education courses in creative fields, partnering with other colleges after 2016.
- •IMAN offered undergraduate and postgraduate degrees, HNCs, HNDs, and English language courses, collaborating with UK and international universities.
- •Key issues included direct effect of Article 132(1)(i), whether appellants had similar objects to public law bodies, exemption under Item 5B (funds ultimately charged to the Secretary of State), IMAN's status as a college of a UK university, and the scope of exemption for IMAN under Note 1(f).
Legal Principles
Exemption from VAT for supplies of education.
Article 132(1)(i) PVD
Implementation of Article 132(1)(i) in UK domestic law.
Group 6, Schedule 9, VATA 1994
Fiscal neutrality.
EU law
Direct effect of EU law.
EU law
Definition of 'college of a UK university'.
SAE Education Ltd v HM Revenue & Customs [2019] UKSC 14
Outcomes
Appeals dismissed.
Appellants could not rely on the direct effect of Article 132(1)(i) as the UK's implementation, while not perfectly mirroring the Directive, didn't breach fiscal neutrality. Item 5B did not apply; the fees were not ultimately a charge to the Secretary of State's funds. IMAN wasn't a college of a UK university, and Note 1(f) exemption applied only to its TEFL supplies.
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