What is closely related to education provision?

December 3rd, 2015 by James Goudie KC

What constitutes the provision of education, and of the supply of services and of goods closely related thereto, that is exempt from VAT?  This is the question that came before the Court of Appeal in HMRC v Brockenhurst College [2015] EWCA Civ 1196.

The College teaches courses in (a) catering and hospitality, and (b) performing arts. For the purpose of enabling the students enrolled in the course related to catering and hospitality to learn skills in a practical context, the College runs a restaurant. The catering functions of the restaurant are all undertaken by students of the College, under the supervision of their tutors. The public attend the restaurant and pay for their meal, the charge being around 80% of the cost of the meal. Similarly, for the performing arts course, in order to give practical experience to those students enrolled on those courses, the College – again through those students – stages concerts and performances for paying members of the public.

The issue on the appeal was whether the supplies the College makes of restaurant and entertainment services (that is to say, the supplies that are made by the College to those members of the public dining in the restaurant or attending the performances) are, as the College claims, exempt for VAT purposes, because they are “closely related” to the provision of education.

The Court of Appeal made a reference to the CJEU, because (paragraph 28) the interpretation and application of the exemption on the facts of the present case was not acte clair, and “the facts are not unusual and so the decision in the present case has a potentially wide impact”.

James Goudie QC