Anglia Ruskin Students' Union, R (on the application of) v The Commissioners for HMRC

An extra-statutory concession extending VAT exemption to student-union catering must be construed according to its ordinary language. A “bar” may supply both drinks and food, including catering; it is not excluded from that description merely because it supplies catering or because food sales exceed drink sales. The concession does not create a turnover-based predominance test. HMRC must apply that construction rationally to the premises’ features and activities. Evidence of past administrative interpretations is generally irrelevant absent a legitimate expectation based on representations. Differential treatment is unlawful only where the claimant is materially identical to the comparator. Fiscal neutrality does not displace the ordinary meaning of the concession or make student unions equivalent to universities, which are eligible bodies under the statutory scheme.

The claimant, a student union, operated Café 92 at a university campus. It supplied food and alcoholic and non-alcoholic drinks. HMRC decided that the premises was a “bar” within the exclusion in section 5.5 of VAT Notice 709/1, so its catering supplies were standard-rated rather than exempt.

After Sheldon J refused permission to apply for judicial review, the claimant renewed the application. The renewal was treated as a rolled-up hearing. The claimant argued that “bar” meant a place that did not supply catering, or alternatively one whose predominant or main supplies were alcoholic or other drinks. It also alleged irrational differential treatment compared with universities.

1. Disposition. Permission to apply for judicial review was refused on both grounds. The prior costs order remained in place, with written submissions invited on the costs of the hearing.
2. Construction of “bar”. The meaning of section 5.5 of VAT Notice 709/1 was a question of law. The concession had to be read as a whole and according to ordinary everyday usage. A bar is somewhere where alcoholic and non-alcoholic drinks, as well as food, may be obtained. The concession expressly contemplated supplies in the course of catering from outlets excluding bars. That wording showed that a bar could provide catering, although its catering supplies did not benefit from the concession.
3. Application. The claimant’s proposed requirement that a bar supply no catering, or only a limited proportion of catering, was artificial and inconsistent with ordinary usage. No percentage or “predominant supply” test appeared in the concession. Sales proportions could vary with demand, season, pricing, strategy and competition. Café 92 was properly treated as a bar having regard to its physical arrangement, drinks facilities, sales data and self-description.
4. Administrative material. Historical HMRC approaches and treatment of other unions were irrelevant to construction and application, absent a classic legitimate-expectation case based on representations. The court adopted the approach to ordinary language illustrated by HMRC v Dolphin Drilling Limited [2024] EWCA Civ 1.
5. Irrationality and fiscal neutrality. Differential treatment may constitute a public-law error where materially identical entities are treated differently, but material identity is the essential starting point. Student unions were not eligible bodies and their catering would not otherwise be exempt under the statutory scheme. Universities differed because their catering could be closely related to education supplied by an eligible body. Fiscal neutrality was not a free-standing rule of construction requiring different entities to receive identical treatment.

After Sheldon J refused permission to apply for judicial review on 14 May 2024, the claimant renewed the application. The Administrative Court conducted a rolled-up hearing and refused permission on the merits.