Eynsham Cricket Club v Revenue & Customs

A registered community amateur sports club cannot also qualify as a charity for VAT purposes under Part 1 of Schedule 6 to the Finance Act 2010. Section 6 of the Charities Act 2011 is a general deeming provision. Unless expressly disapplied, it means that a registered sports club is treated as not established for charitable purposes and therefore fails the statutory charity definition. The EU principle of equal treatment does not require identical treatment of charities and CASCs where Parliament has created distinct regulatory regimes with different burdens and benefits. The fiscal-neutrality argument was not pressed on appeal. The appeal was dismissed.

Eynsham Cricket Club, a registered community amateur sports club, challenged VAT charged on construction services for a replacement pavilion. It argued that the services qualified for zero-rating because the Club was established for charitable purposes and satisfied the other statutory conditions.

The First-tier Tribunal dismissed the appeal on a charitable-purpose ground that HMRC later accepted was erroneous. The Upper Tribunal upheld the result on the basis that section 6 of the Charities Act 2011 prevented the Club from being a charity under Schedule 6 to the Finance Act 2010. It also rejected arguments based on equal treatment and fiscal neutrality. The central issues before the Court of Appeal were the construction of section 6 and Schedule 6, and whether denying zero-rating breached EU law principles.

1. Appeal dismissed. Lady Justice Simler gave the judgment, with Singh and Henderson LJJ agreeing.
2. The modern purposive approach to statutory interpretation requires the court to ascertain Parliament’s purpose by reading the disputed provision in the context of the legislation as a whole and its historical setting. Tax legislation is subject to the same approach. A construction producing an absurd, unworkable, anomalous or illogical result is presumed not to have been intended. The approach was stated by reference to [2003] UKHL 13, [2013] EWCA Civ 753 and [2018] UKSC 23.
3. Section 6(1) of the Charities Act 2011 is expressed generally. It provides that a registered sports club established for charitable purposes is to be treated as not being so established and accordingly cannot be a charity. Nothing in Schedule 6 to the Finance Act 2010, or in the 2012 Order bringing the tax definition into force, expressly disapplies or limits section 6. The Club therefore failed the charitable-purpose condition in paragraph 1(1)(a) of Schedule 6 and could not obtain domestic VAT zero-rating.
4. The jurisdiction-condition point did not provide an independent ground. It followed from the conclusion that the Club could not be a charity and added nothing to the statutory construction analysis.
5. The equal-treatment principle did not require the same treatment. This was a domestic VAT relief permitted by Article 110 of the Principal VAT Directive, not a harmonised exemption engaging the analysis in [2005] STC 1547. A charity and a CASC operated under materially different regulatory regimes. The resulting difference in VAT treatment was objectively justified by the different burdens and benefits associated with those regimes.
6. The fiscal-neutrality argument, which concerns similar competing supplies, was not pressed on appeal and was reserved for a possible future case.

1. Court of Appeal (Civil Division): Dismissed the appeal.
2. Upper Tribunal: On 1 October 2019, upheld the result reached below on different statutory grounds and rejected the EU-law arguments.
3. First-tier Tribunal (Tax Chamber): Dismissed the Club’s appeal, but its finding that the Club was not established for charitable purposes was later accepted to contain an error of law.