Brockenhurst College - Final Verdict - Catering

The long running case involving the VAT treatment of catering and theatrical performances sold to the public as part of the study course of students has finally reached a positive conclusion.

Our earlier news item on the Brockenhurst College case suggesting that the European Court of Justice was likely to refuse schools and colleges from applying the rules relating to supplies that are "closely-related to education" has been surprisingly reversed in their final judgement, which overrules the opinion of their own Advocate General.

This surprising U-turn allows schools to treat supplies of catering services and admission charges to theatrical performances to be "closely-related" to the main supply of education.

This verdict should allow the supply of services delivered by students to be considered a non-business supply, with the benefit that the income is not subject to VAT (outside the scope) and all VAT incurred on the related costs can be recovered as Input Tax.

Although the ruling does include some conditions, such as ensuring the operation is not structured as a money-making enterprise and that the supply is made to those known to the school or college, this final and binding ruling may open the way for more semi-commercial activities undertaken by pupils to be treated in a more beneficial way for VAT purposes.

Care will still be required to ensure the correct treatment is followed.

The CJEU's decision is here.