Whitbread Group Plc v Customs & Excise

Whether a food supply is made in the course of catering is ordinarily a question of fact, once the statutory concept has been identified. Under Note (3) to Group 1 of Schedule 8 to the Value Added Tax Act 1994, the relevant premises may extend beyond the supplier’s kiosk or concession area. The whole of an airport departure area may constitute premises where food is supplied and consumed. Supplies of cold food to customers who intend to eat it on an aircraft, and to staff who consume it outside the relevant concession and departure area, are not catering supplies and are zero-rated, provided the relevant sales can be proved.

Whitbread appealed against the VAT Tribunal’s dismissal of its appeal concerning the refusal to repay £235,310.69 in VAT. The supplies were mainly pre-packaged cold sandwiches and similar products sold by Costa Ltd, Whitbread’s subsidiary, from outlets in airside departure areas at several United Kingdom airports.

The Tribunal held that the supplies were catering, either in the ordinary sense or because the kiosks, carts and departure areas were premises on which the food was supplied and consumed under Note (3) to Group 1 of Schedule 8 to the Value Added Tax Act 1994. The central issues were whether that conclusion involved an error of law and whether the whole departure area could constitute the relevant premises.

1. The appeal was dismissed on the evidence before the Tribunal. Under section 11(1) of the Tribunal’s and Enquiries Act 1992, the High Court could entertain only an appeal on a point of law. A finding presented as fact could be challenged only where no reasonable tribunal properly instructed in law could have made it.

2. The Tribunal had correctly understood that whether a supply was catering was to be assessed by reference to the ordinary meaning of that term. Dictionary definitions were of limited assistance. Once the relevant meaning was identified, whether the activity constituted catering was a question of fact.

3. The Tribunal was entitled to find that supplies made from outlets with dedicated accommodation for tables and chairs were catering. The closed nature of the airside departure areas and the common purpose of the relevant customers supported that conclusion. The description of the arrangements as catering in the concession agreements was not conclusive, but was a strong indicator.

4. Alternatively, the Tribunal was entitled to apply Note (3) to Group 1 of Schedule 8 to the Value Added Tax Act 1994. The identification of premises was a question of fact and degree. The Tribunal’s conclusion that the whole departure area constituted premises could not be faulted. The contractual concession arrangements did not alter that conclusion.

5. The Tribunal had failed to address adequately customers who bought food to consume on aircraft and staff who bought food under concessionary discount cards. Supplies to those categories, where consumption occurred outside the concession and airside departure area, could not be described as catering. Whitbread could establish entitlement to zero-rating for those supplies if it produced sufficient evidence; the appeal itself was nevertheless dismissed.

• High Court (Chancery Division): Whitbread’s appeal on a point of law was dismissed. The decision of the VAT Tribunal dated 4 June 2004 was upheld, subject to the observation that proven supplies to aircraft-bound customers and qualifying staff consuming outside the relevant premises should be zero-rated.