New Judgment: SAE Education Ltd v The Commissioners of HMRC [2019] UKSC 14
20 Wednesday Mar 2019
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On appeal from: [2017] EWCA Civ 1116
This appeal considered whether the appellant was a college of Middlesex University and therefore an ‘eligible body’ within the meaning of the Value Added Tax Act 1994, Sch 9, Group 6, Item 1, exempting its supplies of education from VAT.
The Supreme Court unanimously allowed the appeal.
The Court considered that the starting point considering the proper interpretation of Sch 9 is arts 131 to 133 of the Principal VAT Directive, under which member states must exempt transactions involving the provision of, among other things, university education by bodies governed by public law having such education as their aim. The Court held that Parliament has chosen to exercise its discretion by exempting from VAT the provision of education by a UK university and any college of such a university.
The Court held that, to fall into the definition of “college of such a university”, the body must provide education; be governed by public law or by other bodies recognised by the member state as having similar objects; and need not be a constituent part of a university in a constitutional or structural sense. It stated that it is necessary to examine the characteristics of the educational services and the context of delivery rather than the precise nature of the relationship between the university and college.
The Court held that the presence of a foundation or constitutional document establishing the college as a constituent part of the university is sufficient to prove that it is a college of the university, but not a necessary condition. The Court found that five broader questions could be asked to determine whether a college formed a constituent part of a university:
- whether there is a common understanding that the body is a college of the university;
- whether the body can enrol students as students of the university;
- whether the students are generally treated as students of the university;
- whether the body provides courses of study approved by the university; and
- whether the body can present its students for examination for a degree from the university.
Answering these questions, the Court concluded that the appellant was a college of Middlesex University, and therefore that its supplies of education are exempt from VAT.
For judgment, please download: [2019] UKSC 14
For Court’s Press Summary, please download: Court’s Press Summary
For a non-PDF version of the judgment, please visit: BAILII
To watch the hearing, please visit: Supreme Court Website (30 Oct 2018 morning session) (30 Oct 2018 afternoon session)
