Customs and Excise Comrs v British Field Sports Society

For VAT purposes, the expression “facilities or advantages available to members” in the Value Added Tax Act 1983 section 47(2)(a) has a wide ordinary meaning. It can include professional services used by an association to campaign collectively on members’ behalf, although public campaigning may also benefit non-members.

The required direct link between subscription and benefit is fact-sensitive. Voluntary subscriptions paid under an association’s rules for benefits supplied in pursuit of a common purpose can satisfy it; benefits need not be individually delivered or tangible. A mandatory statutory levy funding industry-wide benefits is materially different. Supported tribunal findings that are not perverse should not be disturbed on appeal.

The Commissioners appealed from Mr Justice Hidden’s decision of 21 March 1997, which upheld the Value Added Tax Tribunal’s decision in favour of the Society. The Tribunal had found that members paid subscriptions for a package including collective campaigning, public relations, research, lobbying, printing and related professional services, and that there was a direct link between subscriptions and those benefits.

The Commissioners argued that campaigning for an ideological or public objective was not a facility or advantage under the Value Added Tax Act 1983 section 47(2)(a), and that no direct link existed between the subscriptions and the services. The central issue was whether the Society’s campaigning activities were deemed business activities and whether the associated input tax was recoverable.

Decision

Lord Justice Beldam delivered the leading judgment. Lord Justices Hutchison and Mummery agreed.

1. The phrase “facilities or advantages” in section 47(2)(a) of the Value Added Tax Act 1983 has a very wide scope. It bears its ordinary meaning and is not confined to tangible or individually delivered benefits.
2. Section 47(3) is instructive. It proceeds on the basis that, unless excepted, rights to participate in an organisation’s management and to receive reports on its activities may themselves be facilities or advantages obtained for a subscription. That supports a broad construction of section 47(2)(a).
3. The Tribunal was entitled to find that the Society’s members paid for a package whose principal benefit was professional collective campaigning on their behalf. The finding was supported by the evidence and was not perverse. It was therefore not open to appellate review merely because the Commissioners advanced a different characterisation.
4. The direct link between payment and benefit is fact-sensitive. Here, members voluntarily subscribed under the Society’s rules for benefits supplied in pursuit of a common purpose. The benefits accrued to members collectively and individually, even though the Society’s public activities could also benefit non-members.
5. The decision in Apple and Pear Development Council v Commissioners of Customs and Excise, [1988] STC 221, concerned mandatory statutory charges, industry-wide benefits and only indirect benefits to individual growers. It did not undermine the Tribunal’s conclusion on the materially different facts of voluntary subscriptions for member benefits. The Court also rejected the attempt to impose an additional requirement that services be individually identifiable in the sense of being individually provided.
6. The policy arguments concerning uncertainty could not narrow the statutory language. The circumstances in which associations provide facilities or advantages are variable, so no universal criteria can determine every case.

The appeal was dismissed with costs. Leave to appeal to the House of Lords was refused.

• Court of Appeal: Appeal dismissed with costs; leave to appeal to the House of Lords refused.
• High Court of Justice, Crown Office List: Mr Justice Hidden upheld the Tribunal’s decision on 21 March 1997.
• Value Added Tax Tribunal: Decision in favour of the Society on its appeals against VAT assessments.