University of Cambridge v Revenue and Customs

For Article 13 of the EU Principal VAT Directive, “a body governed by public law” is an autonomous Community-law concept. The body must be part of the public administration of the relevant Member State. Domestic classification, statutory incorporation, regulation, public funding or amenability to judicial review is not, by itself, decisive.

The conditions in Article 13 are cumulative. A body must both fall within that public-law concept and act as a public authority. Where Article 13 applies, its effect is to remove the body’s status as a taxable person for the specified activities; it does not necessarily deem those activities non-economic. The appeal was dismissed.

The University appealed under s.11 of the Tribunals and Enquiries Act 1992 against a VAT and Duties Tribunal decision. The Tribunal had rejected its claim for the reduced VAT rate on electricity supplied to a faculty building.

The University accepted that its higher-education activities were business activities. It relied on Article 13 of the EU Principal VAT Directive, contending that it was an “other body governed by public law”, acted as a public authority, and should therefore be treated as not carrying on an economic activity for VAT purposes.

The central issues were whether the University satisfied those Article 13 conditions and what legal consequence Article 13 had for the reduced-rate provisions in s.29A and Note 3 of Group 1 to Schedule 7A of the VAT Act 1994.

1. Appeal dismissed. The Tribunal had been right in point of law to reject the University’s claim.
2. Article 13 contains cumulative conditions. The claimant had to show that it was a body governed by public law, that it acted as a public authority, and that the Article had the asserted VAT consequence.
3. “A body governed by public law” is a Community-law concept, not one whose content is determined by the domestic law of each Member State. This follows from the direct effect and uniform application of the Directive and from the principle of fiscal neutrality. The relevant concept requires the institution to be part of the public administration of the Member State.
4. The distinction between the two Article 13 conditions is important. National law may assist the national court in deciding whether activities are carried out under a special legal regime and therefore as a public authority. It does not determine whether the body itself has the Community-law attributes of a public-law body.
5. The University was legally independent and autonomous, self-governing, and not part of the public administration. Its statutory regulation, public funding through HEFCE and possible amenability to judicial review did not alter that conclusion. Consequently, it failed on the first condition and necessarily on the second.
6. Article 13 does not, on its wording, deem the activities of an otherwise qualifying body to be non-economic activities. It provides that the body is not regarded as a taxable person in respect of activities carried on as a public authority. The University’s broader construction was unsupported.
7. Article 13 therefore could not prevent the electricity being supplied in the course or furtherance of a business. The reduced VAT rate under s.29A and Note 3 of Group 1 to Schedule 7A of the VAT Act 1994 was unavailable.

• High Court (Chancery Division): appeal from the VAT and Duties Tribunal dismissed. The Tribunal had rejected the University’s appeal against HMRC’s refusal of the requested reduced-rate VAT treatment.