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New Forest

01/07/2016

Brockenhurst College case - update

An interesting and potentially important VAT case was won twice against HMRC by Brockenhurst College. A final verdict should soon be given.

An interesting and potentially important VAT case was won against HMRC by Brockenhurst College at the First Tier Tax Tribunal.

The ruling may pave the way for academies to treat income earned by students as being part of the core, non-business activities of the school and thus achieve the dual benefits of a supply that is outside the scope of VAT, yet still permitting the recovery of any VAT incurred on making that supply.

This case involved supplies made by catering students as part of their studies and the Tribunal accepted that this was a supply closely-related to education, rather than one of standard rated catering, such that the income from the meals sold to the public did not attract a VAT charge.

Since the initial ruling the Revenue appealed and the case proceeded to the Upper Tax Tribunal, who also found that the supply was closely-related to education.

The Revenue wished to pursue the issue and so both parties agreed that the European Court of Justice (ECJ) should rule on the position. A hearing was scheduled for November 2016 and a decision is therefore expected soon. The ECJ rulings are generally binding, so further arguments in the UK courts are unlikely.

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