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HMRC v Brockenhurst College

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In HMRC v Brockenhurst College (Case C-699/15) (4 May 2017), the CJEU found that supplies of catering and entertainment services by a college, as part of the technical training of its students, were exempt supplies under the Principal VAT Directive Art 132(1)(i).

Brockenhurst College ran courses in catering, hospitality and the performing arts; this included a restaurant and stages performances, which were open to a limited public at a reduced price. The idea was to provide students with practical experience under the supervision of their tutors. The college contended that these supplies of catering and entertainment services were exempt as supplies ‘closely related’ to the provision of education.

The CJEU observed that, in order to be ‘closely related’ to education services, services must be ancillary to the education provided by the relevant establishment, which must constitute the principal supply. The court accepted that the practical training resulting from the supplies formed an integral part of the curriculum; the supplies of catering and entertainment services were essential in guaranteeing the quality of the principal supply of education.

The court also found that the basic purpose of the college was not to obtain additional income. The supplies were offered to a limited number of people and charged at 80% of their costs; they were not in direct competition with supplies by commercial providers.

Read the decision.

Why it matters: The CJEU has confirmed that the supplies of catering and entertainment services to third parties, by a college, were ancillary to the college’s principal supply of education to its students, even though the services were not provided to the same recipients. The appeal will now return to the Court of Appeal for determination and it may lead to further guidance by HMRC.

Also reported this week:

Issue: 1353
Categories: Cases