Loughborough Students’ Union v HMRC

In Loughborough Students’ Union v HMRC (Upper Tribunal – 21 October) a university students union appealed against a ruling by HMRC that its entertainment events (mainly balls) were taxable supplies. The union contended that these events were exempt from VAT either under the ‘cultural services exemption’ (VATA 1994 Sch 19 Group 13 item 2(b)) or under the ‘fund raising exemption’ (article 13A 1(0) of the Sixth VAT Directive). The executive committee of the union (which was responsible for the day-to-day management) included nine ‘sabbatical officers’ (mainly graduates) who were paid a salary equivalent to two thirds of what they could have obtained on the open market.

The Upper Tribunal upheld the decision of the FTT in favor of HMRC in relation to the cultural services exemption noting that the salaries paid were sufficiently substantial to preclude the union from being administered on an ‘essentially voluntary basis’. The tribunal...