Neutral Citation Number: [2007] EWHC 612 (Ch)
Case No: CH/2006/APP/0719
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 23/03/2007

Before :

MR JUSTICE MANN
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Between :

	NEWCASTLE UNITED PLC	Appellant	
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	THE COMMISSIONERS FOR HER MAJESTY’S REVENUE & CUSTOMS	
Respondents	

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MR. D. MILNE Q.C. ans MR. J. HENDERSON (instructed by Blacket Hart & Pratt) for the Appellant.
MR. C. VAJDA Q.C. and MR. I. HUTTON (instructed by the Acting Solicitor for HM Revenue & Customs) for the Respondents.

Hearing dates: 15th, 16th and 19th February 2007
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Judgment

Mr Justice Mann : 
Introduction
1.	This is an appeal brought by Newcastle United plc (“the Club” or “Newcastle”) against a decision of the VAT Tribunal (Chairman Mr David Demack) given on 21 August 2006 (“the Decision”).  In the Decision the Tribunal determined that the Club was not entitled to deduct input tax in respect of certain sums paid to players’ agents.   Those agents are companies and individuals who represent clubs and players in professional football – they are described as players’ agents even though from time to time they represent clubs.   Newcastle claimed to have paid for the services of various agents in various transactions involving players, and paid VAT in doing so.  What was in issue was the input tax on 46 different transactions, whose net value totalled £3.1 million and the input VAT on which was £543,067.
2.	The version of the Decision used for this appeal was anonymised by using code-names for players and letters for agents.  This was apparently done to preserve the confidentiality of the players involved.  However, I am told that a non-anonymised version was originally posted on the internet, though it has now been replaced by an anonymised one.  Neither party maintained before me that it was necessary to preserve confidentiality in this appeal, but in order to maintain consistency between this judgment and the currently available versions of the Decision, I shall continue to use the existing code.
Factual background
3.	The Club is the well-known Premier League football club.  Like any other such club, from time to time it seeks to engage players and to renew the contracts of existing players.  Most of those players have engaged a player's agent to act for them.  In order to achieve the engagement or retention of the player, there usually has to be a negotiation. In most of the cases before the Tribunal, and in all the cases which are subject to the present appeal, the Club claims to have engaged the agent of the player in question to achieve the result that it wanted, in exchange for remuneration agreed and paid by the Club to the agent.  The agent charges VAT on its fees; that is the input tax which the Club seeks to deduct from the output tax for which it is accountable.  HMRC challenged that deduction and the Tribunal decided in its favour.  It seems to have done so primarily on the footing that the agent did not in fact act for the club; the VAT claimed was not the Club’s input tax; and therefore it was not recoverable.  Certain of the cases which were originally in issue were agreed by HMRC, and the Tribunal decided a small number against HMRC in favour of the club.  This appeal concerns the balance of those transactions.
4.	The activities of players' agents are regulated by the Players' Agents Regulations of FIFA.  It is not necessary for me to set out much of the provisions of these regulations verbatim.  If detail is required then a certain amount of it is given in the Decision, which is available on-line.  For present purposes I can summarise and set out the relevant provisions of the Regulations as follows:
a)	Article 1 allows players and clubs to call upon the services of a players' agent during negotiations provided the agent possesses a licence.  Non-licensed agents cannot be employed.
b)	Every agent is required to pass an examination and comply with a Code of Professional Conduct (Article 8).
c)	Under Article 11 a licensed agent has the right to represent the interests of any player or club that requests him to negotiate, and to conclude contracts on his or its behalf.
d)	Article 12 provides as follows:
“1.	A players' agent may represent or take care of the interests of a player or a club in compliance with art.  11 only if he has concluded a written contract with the player or club. 
2.	Such a contract shall be limited to a period of two years but may be renewed in writing at the express request of both parties.  It may not be tacitly prolonged.  The contract shall explicitly mention who was responsible for paying the players' agent's fee, the type of fee and the pre-requisite terms for the payment of a fee. 
3.	Only the client engaging the services of the players' agent, and no other party, may remunerate him.”
[Paragraphs 4 to 7 deal with remuneration due to a player's agent -- it is a mixture of a percentage of salary (typically 2.5% to 5% in the documentation before me) and lump sums.]
“8.	A players' agent who has been contracted by a club shall be remunerated for their services by payment of a lump sum that has been agreed upon in advance.”  
Under paragraph 9 it was provided that FIFA would provide its standard representation contract to the national associations.  Every player’s agent was required to use that standard contract, though the parties could arrive at additional agreements containing additional provisions consistent with their respective domestic legal systems.  
Under paragraph 10 the representation contract was to be issued in quadruplicate.
e)	Under Article 14 it is provided:
“A licensed players’ agent is required:
…(d)  to represent only one party when negotiating a transfer.
f)	Article 15 provides for sanctions for breach of the Regulations, including a withdrawal of the licence.
g)	Article 18 provides that clubs wishing to engage the services of a player may deal only with the player himself or his licensed agent.  It goes on:
“2.	 For every transaction in which a players’ agent represents the interests of a club, his name and signature shall, without fail, appear in the relevant transfer and/or employment contract(s).
If the Club does not use the services of a players’ agent, this fact shall also be explicitly mentioned in the relevant transfer and/or employment contract(s).”
h)	Annexe B to the Regulations contains a “Code of Professional Conduct”.  Under it the agent is to perform his occupation “conscientiously”, shall “adhere to the truth, clarity and objectivity in his dealings with his client, negotiating partners and other parties”, and shall “protect the interests of his client in compliance with the law and a sense of fairness, while creating legal relations.”
5.	Annexe C of the Regulations contains a form of representation contract, provided for by Article 12(10), albeit that (as the Tribunal observed) it does not actually describe the services to be provided under it.  It provides inter alia the following:
“2	Remuneration
Only the client may remunerate the players’ agent for the work he has accomplished exclusively for the player.
“3) a. Player as client
The players’ agent shall receive commission amounting to _______________ + VAT of the gross value of the contract, comprising annual salary, signing on fee and negotiated bonuses due to the player as a result of the employment contract negotiated by the players’ agent.
“3) b.  Club as client
 The players’ agent shall receive commission in one lump sum amounting to £….”
6.	Forms have to be supplied to the Football Association on the transfer or engagement of a player.  The first of those forms provides Yes/No entries so that the Club can indicate whether the club and player used the services of an agent, and if so the form is to indicate the name of the agent and contain his or her signature.  The second requires the identification of any agent involved and for whom any agent was acting.  A third form contains a declaration by the football club as to whether or not it had engaged an agent, requiring the identity of the agent to be disclosed and specifying the fee agreed.  The fee is to be paid to the FA, who then transmit it to the agent concerned.
7.	The Tribunal had before it various forms of contract which were entered into between player and agent.  Two such forms are set out in the Decision.   They each provide for the agent to represent the player in commercial matters, whether in relation to playing or in relation to such things as product endorsement.  Remuneration is on the basis of a percentage of the sums earned, that percentage varying as between the source and types of income and money involved.  One of the sets of terms (“B’s contract”) describes the agents as “exclusive agents”; the other does not.  The Tribunal seems to have misread this.  The Tribunal found that this meant that the agents were exclusive in the sense that they were not to act for any other player or person.  It is common ground that that is wrong.  The exclusivity related to a prohibition of the player from appointing another agent – he was not allowed to do so.  In addition, the Tribunal found:
“We consider the exclusivity provisions explicit in B’s contract to be implicit in A’s contract.”
No reason is given for that conclusion.  In my view it is another error. The Decision does not refer to any evidence from which such an implication could arise, and I was not referred to any.  For my part I cannot see why it should be implied into the arrangements.
8.	Two more forms are referred to, but not set out, in the Decision.  One refers to the agent as being the “exclusive representative” of the player; the other appointed the agent “sole and exclusive representative”.  Based on this contractual material the Tribunal held:
“23.  There being no evidence to the contrary, we assume all four contracts to be representative.  We therefore find that players’ agents contract with players to act exclusively on their behalf.”
I do not consider this to be an appropriate approach to the question of the content of contracts.  If the terms of contracts are important then the actual contracts should be found by reference to what the contracts actually were on a case by case basis.  However, the important feature about this finding is the determination that agents were to act exclusively for the agents in the mistaken sense referred to above.  That was not the right way round so far as there was exclusivity.  
9.	I shall have to consider the Tribunal’s findings in a little detail in due course, but what it was considering at this point was what happened when a player sought to negotiate a new contract with the Club, when the Club was seeking to procure a transfer of a player who was, at the time, with another club, or when a player was out of contract with another club and negotiating a free transfer to Newcastle.  The Club wished to have the services of an agent on these transactions.  On some occasions it approached and engaged the services of an agent other than the agent already acting for the player concerned.  By the time the matter came before me none of those transactions was in issue.   However, on other occasions the Club approached the same agent as the player had already engaged.  All the alleged contracts between the Club and the agent were oral; none were in writing.  When the transaction with the player was successfully concluded a fee was invoiced by the agent to, and was paid by, Newcastle.  The fee included VAT.  Having paid that VAT, Newcastle claimed it as deductible input tax.  That claim was rejected by HM Commissioners for Customs and Excise.  Whether that claim and that rejection were correct was the issue that came before the Tribunal.
The Tribunal’s Decision
10.	On 26th November 2004 HMRC determined that in the transactions which are the subject of this appeal, because of non-compliance with the Regulations, because of what it thought were the exclusivity obligations, and (perhaps) because of the conflicts of interest that would arise, the agent could not have represented the Club.  It followed that there was a supply of services to the player only, irrespective of who was paying the consideration.   It therefore disallowed the deduction of input tax and assessed the Club accordingly.  The Club appealed to the Tribunal.  The Tribunal was faced with VAT claims in respect of 46 transactions.  Some were settled, but most were ruled on.  The Club succeeded on some claims, but not on most.  I shall confine my attention to the latter. 
11.	The statutory provisions relevant to the Decision are the EC Sixth Directive 77/388/EC) and the Value Added Tax Act 1994.  
12.	Article 2 of the EC Sixth Directive (77/388/EC) states:
"The following shall be subject to value added tax
1. The supply of goods or services effected for consideration within the territory of the country by a taxable person acting as such."
Section 5(2) of the Value Added Tax Act 1994 ("VATA 1994") states that:
"(2) Subject to any provision made by that Schedule and to Treasury orders under subsections (3) to (6) below—
(a) 'supply' in this Act includes all forms of supply, but not anything done otherwise than for a consideration;
(b) anything which is not a supply of goods but is done for a consideration (including, if so done, the granting, assignment or surrender of any right) is a supply of services."
Article 11(A)(1)(a) of the Sixth Directive provides:
"The taxable amount shall be:
(a) in respect of supplies of goods and services … everything which constitutes the consideration which has been or is to be obtained by the supplier from the purchaser, the customer or a third party for such supplies including subsidies directly linked to the price of such supplies …"
Section 24(1) of VATA 1994 provides:
"Subject to the following provisions of this section, "input tax", in relation to a taxable person means the following tax, that is to say—
(a) VAT on the supply to him of any goods or services;
(b) …
(c) …
being (in each case) goods or services used or to be used for the purpose of any business carried on or to be carried on by him."
13.	The question in this case was whether the tax paid to agents on invoices submitted for fees was input tax within the meaning of section 24, which involves considering whether there was the supply of services to the Club, and whether the moneys received by the agent were consideration obtained by the agent for supplies within Article 2.
14.	The Decision sets out some of the documentary background.  At paragraph 26 it dealt with the question of what happened where a player sought to renew a contract.  The precise terms of this paragraph are important.  The Tribunal stated as follows:
“26.  A club to whom a player is under a contract of employment may charge a fee for his transfer to another club during his contract period. But once his contract has expired, the player may enter into a new contract of employment with any club, and his former club is not entitled to charge a fee to that other club. Consequently, if the Club wishes to retain the services of a member of its squad of players, it will usually offer him a new contract of employment no later than the penultimate year of his existing contract. The negotiations leading to and events concerned in such an offer, as described by Mr Cushing [an officer of the Club], typically take the following form. And, with the exception of those transactions relating to contracts of employment to which the invoices listed in paragraph 134 of in our decision refer, we find that all did take that form. Notwithstanding that a number of agents may claim to represent a particular player, the Club identifies the one agent by whom he is truly represented, i.e. the one it knows to have entered into FIFA's standard representation contract with him. (In evidence, Mr Cushing claimed that in a number of instances the Club instructed the players' agent and it was only later that the player concerned entered into a contract with the agent. Having considered his evidence in conjunction with all the documents before us, we are unable to accept it). In most, if not all, cases, the player and agent will have entered into two written contracts, FIFA's standard representation contract and another agreement for which clause 5 of the standard representation contract provides. (It may be that that other agreement is made between the company by which the agent is employed and the player. Where that is so, we consider that nothing turns on it). The player's standard representation contract will have been registered with the FA. Depending upon which agent is involved, the supplemental agreement provides for the agent and/or the company employing him to represent the player in, inter alia, negotiations relating to contracts of employment and transfers. Notwithstanding the existence of the representation contracts, the Club, orally by a representative, approaches the agent without reference to the player and claims to invite him to act jointly for it and the player in negotiating the terms of the player's new contract. Assuming the agent accepts the invitation, he does not terminate his contract with the player or otherwise suspend it, nor, further assuming he has no written contract with the Club to act for it, does he enter into such a contract. The agent agrees with the Club the terms of his alleged appointment including the fee he is to receive from it if the player signs a new contract, but neither the Club nor the agent informs the player of those terms, including how much the agent is to be paid. The agent's fee, which may be payable by instalments, is, according to Mr Cushing, generally based on how successful an agent is in "getting to where the Club wants to be". The agent is considered to continue to act for the player in all matters other than the negotiation of the terms of his new contract of employment, but in relation to that contract, notwithstanding the alleged joint instructions, the agent and the Club act as if he were instructed solely by the Club. To quote Mr Cushing, "The Club wants to be in control of the agent". The Club then indicates to the players' agent that it is prepared to increase the player's basic weekly wage from, say, £700, to, say, £1,200, but instructs the agent initially to offer him, say, £900. Following negotiations, said by the Club to be between the agent acting for it on the one hand and the player on the other, the player agrees to accept, say, £1,000. Next, the Club prepares the player's new contract of employment, and he signs it. After he has done so, the Club completes the Transfer Form or Form H1 (the two forms appear to be used interchangeably) and Form G2. The former states that the Club used the services of a players' agent, but that the player did not; and by way of confirmation of those statements, the form is signed on behalf of the Club and by the agent. The latter states that the agent was involved in the registration and acted for the Club. The Declaration contains details of the fee to be paid to the agent and a declaration by the Club that the agent acted for it and his fee is to be paid in accordance with a written agreement between the Club and the agent. The Club lodges the various documents with the FA together with the player's new contract. The Declaration is accompanied by the payment due to the agent (which has to be paid via the FA). The agent is then said to resume his former role as agent for the player in all matters.”
15.	It then reached a conclusion as to what the analysis of the situation was in those circumstances, which conclusion was applicable generally.  It concluded that the agent had not acted for the club, and had not supplied services to the club.  
“27.  In our judgment, in those circumstances, the players' agent has not acted for the Club either jointly with the player or alone. He has not supplied services to the Club. We so conclude for the following reasons. For one thing, he has no written contract with the Club – see the requirement of article 12.1 of the Regulations; and, for another, far more importantly, he is contracted in writing exclusively to the player and throughout remains so contracted.  The agent is legally obliged to act in accordance with his contract with the player; and whilst he may at times act in accordance with the Club’s wishes, he is not obliged to do so.  The player alone has the power to give binding instructions to the agent. He also, alone, authorises each and every activity undertaken by the agent as the result of those instructions. The player determines which agent is to take part in negotiations. (By way of confirmation of that fact, we observe that were the player to change agents mid-transaction, the Club would not continue to deal with the old agent, but would approach the new agent and offer to instruct him). The agent continues to act for the player, who is liable to pay his fees: "only the client engaging the services of the players' agent, and no other party, may remunerate him", article 12.4 of the Regulations. (In the absence of that article, we accept that the Club could enter into an agreement to make a third-party payment to the agent). The Club is in breach of clause 5 of its contract with the player having failed to observe the rules of the FA as represented by the Regulations. If the agent did act both for the player and the Club, he would be in breach of his contract explicitly or implicitly to act exclusively for the player, in inter alia, contract negotiations.”
16.	In relation to transactions that were before the Tribunal, the club or the agent had completed the forms which I have identified above as being required by the FA to state whether an agent was used, and if so by whom.  In paragraph 29 of the Decision the tribunal found that Newcastle had falsely declared in the various forms that the player did not use the services of a player's agent, but the club did.  That is in the nature of a consequential finding, reflecting the general conclusion which the Tribunal seems to have reached as to whom the agent was acting for.  In paragraph 30 the Tribunal relates an inconsistency in what it perceives to be the case of the Club, but stated that it did not affect the Tribunal's decision, adding:
"We repeat, since the agent is contracted in writing exclusively to the player he does not act for the Club, either alone or jointly with the player: the agent does not supply services to the Club."
17.	It therefore seems that at this stage of the reasoning two important factors have led the Tribunal to consider that the agent cannot have been acting for the Club.  First, and "far more importantly", the agent is said to have been contracted exclusively to the player.  Second, there was no written contract, contrary to the provisions of FA regulation 12.
18.	Similar factors underpin the Decision of the Tribunal in relation to these payable on the occasion of a transfer.  The Tribunal deals with the evidence about this in paragraph 31:
“Mr Cushing also dealt in evidence with the way in which the Club goes about the acquisition of the services of a player under contract to another football club. We accept his evidence as fact. Again, with the exception of the transfers to the Club of the players Orange and Chestnut, we find the transactions to take a single form. Having ascertained from that other club that an approach may be made to the player, initially the Club approaches the players' agent it either knows beforehand or as a result of enquiries truly to act for the player in question. The Club knows, or chooses to ignore, that the player is under written contract to the agent. As with the negotiation of terms of a new contract of employment, the Club, again without reference to the player, claims orally to invite the agent to act jointly for it and the player in negotiating terms on which the player's existing club would agree to his transfer and on which the player would be prepared to join the Club. Assuming the agent accepts the invitation, he does not terminate or suspend his contract with the player, nor does he have or enter into a written contract with the Club. The agent agrees with the Club the terms on which he is said to have been appointed including the fee he is to receive if the player is transferred to it, which fee may be payable by instalments. Neither the Club nor the agent tells the player the contract terms, including how much the agent is to be paid. The agent is considered to continue to act for the player in all matters other than his proposed transfer to the Club, but in relation to that matter, notwithstanding the alleged joint instructions, the agent and the Club act as if he were instructed solely by the Club. If terms are agreed and the transfer is completed, the Club prepares the Form G2, the Form H1 and the Declaration. In the Form G2, the Club states that the agent was involved in the transfer, and acted for the Club in the transaction. In the Form H1 the Club states that the player did not use the services of a players' agent, but the Club did, and the agent signs the form to confirm that he acted for the Club. That part of the Form G2 which the agent would have been required to sign had he admitted acting for the player is left blank and unsigned. In the Declaration, the Club confirms that the fee due to the agent is to be paid "in accordance with the written agreement between the Club and [the agent]". The Declaration may state that the agent's fee is to be paid by instalments. The various forms, together with the player's new contract of employment, are then sent by the Club to the FA, and the transfer is registered. The Club pays the agent via the FA and the agent is considered to resume his position under his contract with the player.”
19.	Conclusions are drawn in paragraph 32:
“32.  Again, the documents and behaviour of the Club and the agent present a very misleading picture. Once more, in our judgment, the players' agent has not acted for the Club, either jointly with the player or alone. He has not supplied his services to the Club. The agent has no written contract with the Club (as required by Article 12.1 of the Regulations), and is throughout engaged by the player. Under the contract, the agent is legally obliged to act in accordance with the instructions of the player, but is not so obliged to act for the Club. The agent continues to act solely for the player, who is liable to pay his fees. As in the case of contracts of employment, the player determines which agent takes part in negotiations. He alone has the power to give binding instructions to the agent, and authorise every activity undertaken by the agent as the result of those instructions. If the agent did act for the Club and the player, he would be in breach of his contract with for the player. (The agent may well be, and probably is, also in breach of his fiduciary duty to the player to obtain for him the best possible contract terms in the form of signing-on fees and remuneration). Further, and in our judgment fatally from the Club's point of view, if the agent does represent the Club and the player, he is in breach of Article 14.d of the Regulations in representing more than one party in the transfer negotiations.”
20.	Thus once again the tribunal relies on the absence of a written contract as required by the Regulations, and the (non-existent) obligation of exclusivity which the Tribunal has found to be imposed on the agent.  In paragraph 29 the Tribunal had found that the various declarations submitted to the FA were completed inaccurately in so far as they purported to show that the agent acted solely for the Club.
21.	Thus far the Tribunal has dealt with the matter on the basis of the overall structure of what it perceived was common to all the deals.  In paragraph 34 it introduces individual transactions which it was called upon to rule on in the following terms:
"Having dealt with the transactions at issue in the appeal in general terms, we find it helpful to look at a number of individual transactions, the documents relating to which, in our judgment, viewed collectively clearly confirm the findings of fact we earlier made, deal with other points we consider it necessary to make, or indicate that an agent acted for the Club. Included in them are some of the transactions and invoices referred to in paragraph 5 of our decision. We prefer to rely on the documentary evidence, which clearly reveals the relationships between agents and players, rather than the oral evidence of Mr Cushing and X, which sought to ignore the documentary evidence almost in its entirety and concentrate on what was described as "industry practice".”
22.	The manner in which the Tribunal went on to consider each of the individual cases does indeed demonstrate that the Tribunal tended to move from the findings it had already made and to deal with the various cases on the basis of those findings, rather than treating each case as separate and considering it on its self-contained merits, albeit against a background of fact (as opposed to a background of fact and legal conclusion) which it had already determined.  Thus in the case of the first of the individual cases that it considered (code-named Chestnut) there was a letter from the agent written to HMRC in response to a query which stated that: 
"Please note D [a codename for the agent] were acting on behalf of the above player for all football contracts incurred with Newcastle United Football Club plc."
In relation to this letter the Tribunal found:
“41.  In evidence, Mr Cushing maintains that that letter had been written by "a mere clerk" within D, and should be ignored as being incorrect.  As we believe it to be correct, we declined to act as Mr Cushing suggested.
42.  In Chestnut’s case, in our judgement that evidence confirms that D1 and/or D2 of D acted exclusively for Chestnut; that neither acted as agent for the club; that the VAT on D's  invoices was not input tax in the hands of the Club; and that the Club is therefore not entitled to recover the VAT as input tax."
23.	In the case of the player code-named Black, the Tribunal demonstrated again the central importance to its deliberations of the apparent exclusivity obligations of the agent to the player, and of the non-compliance with Regulations.  Thus:
"47.  On the basis of an admission by Mr Cushing that he and the club knew that Black was contracted to F1 of F, we infer, and thus find, that F1 was exclusively engaged to represent the player in negotiations with the Club.  We so infer because any player entering into a representation contract with an agent would understand that arrangement to give him the exclusive rights to receive the services of the agent concerned in any negotiations relevant to his transfer contract of employment.
48.  Further, F's fee was payable by two equal instalments of [  ]: one on 1 April 2003 and the other on 1 August 2003.  And since only a player is allowed to pay an agent's fee by instalments (see article 12.5 of the Regulations), in our judgement that is further evidence of the agent acting only for the player.
49.  For those reasons, and because by article 14.d of the Regulations an agent can represent only one party were negotiating a transfer, we find that F1 acted for Black in his transfer to the Club, and that the VAT paid by the Club was not its input tax.  It is not entitled to credit for it."
24.	I do not need to go to any more of the individual transactions at present.  Several of them demonstrate and rely on the misconception as to exclusivity.
25.	Having dealt with the case thus far on that basis, the Tribunal then went on to describe what it considered to be the Club’s alternative case based on Commissioners of Customs & Excise v Redrow Group plc [1999] STC 161, and WHA Ltd v Commissioners of Customs & Excise [2004] STC 1081.  The Decision records that the Club submitted, on the basis of those decisions, that even if there were no supply to the Club, nevertheless the Club received a benefit sufficient to bring it within what it is recorded as having said were the principles to be extracted from those cases.  The Club relied on a “mutuality of interests” between itself and the player in the transaction contemplated by the Club, so there was no conflict of interest.  The Tribunal found that the tripartite situation involving club, player and agent was not one in which there was a trade custom permitting the conflict of interest which it seems to have found to exist if the agent were acting for both club and player, so that conflict was not permitted (or at least not without full disclosure to both sides).  It concluded:
“ 132….. given the players' agent’s duty to act exclusively for his client, the player, the agent cannot engage to become the agent of the Club.  He cannot supply his services to the Club for a consideration; and the VAT on his services cannot be the club's input tax.  We consider that to be so notwithstanding that the Club obtains a benefit from the players' agent's services.
133.  We accept there may be cases where a third-party payment results in the payer receiving a supply of services so that the tax on those services becomes his input tax.  But, in our judgement, this is not one of those cases."
26.	Thus again the exclusivity point seems to be the basis of the Tribunal's Decision.
The basis of this appeal
27.	On behalf of the Club, Mr David Milne QC claimed that the Decision was fundamentally flawed.  The Tribunal contradicted its own findings of primary fact, made the "classic mistake" of basing its VAT analysis exclusively on what written contracts say should be done instead of what was actually done, and completely misunderstood the application of the decision in Redrow.  The important findings of fact are said to be set out in paragraphs 26 and 31 above.   Those findings are said to include a finding that the agent had agreed to act jointly for the Club and the player in the circumstances described in that paragraph; the important part is reference to the agent agreeing to act for the club.  The agent had agreed to perform services that were partly for the benefit of the club, and had performed the services.  Having been paid by the Club, the Club is entitled to deduct the VAT comprised in that payment.  It had received a genuine benefit from the transaction, and so fell within the principles in Redrow and WHA which deployed benefit as a touchstone for the existence of a supply.  The essence of the Club’s case was that I should substitute my decision for that of the Tribunal, that decision being that there was a taxable supply of services by the agent to the Club, so the input tax was deductible.  My decision could and should be based on what the Club said was the Tribunal’s findings of fact. In the alternative, even if the agent technically contracted only with the player, the arrangement made with the Club clearly produced a benefit for the Club, so that within what are said to be the principles in Redrow a taxable supply was made.
28.	Mr Christopher Vajda QC, for HMRC, does not seek to support the Tribunal’s determination in exclusivity.  However, he said that the agent was not allowed to act so as to give rise to a conflict of interest, and so could not act for the club.  The word “implicitly” in the last sentence of paragraph 27 of the Decision should be understood as involving a prohibition on giving rise to conflicts.  He supported the determination that the Club could not contract with the agent because it was already engaged to the player, but said this was more of a practical impossibility than a legal impossibility – every pound that the player sought to extract was a pound that the Club did not wish to pay.
29.	It is clear to me that the expressed rationale of the Decision cannot stand.  In reaching its Decision the Tribunal was relying on several propositions or bases that are not correct:
a)	First, it made a fundamental mistake about exclusivity.  It misunderstood the express exclusivity provisions that it saw and assumed that there was a contractual obligation that the agent would not act for another.  It got the exclusivity the wrong way round.  The exclusivity operated (where it operated at all) so as to prevent the player from engaging another agent.  As I have indicated, HMRC accept that the Tribunal did that.  
b)	It found that there was an implied exclusivity obligation of the kind that it relied on even where there was not an express one.  That is a misplaced assumption, as I have already observed.
c)	It seems to have considered that that sort of exclusivity obligation automatically prevented any contract existing between the Club and the agent.  That is not correct.  Even if such an obligation existed it would not necessarily prevent a contract arising.  It would merely mean that the second contract was a breach of the first.
d)	It may also have assumed that the conflict of interest that would arise if the agent acted for both Club and player would prevent there being a contract between Club and agent.  If so that is wrong.  It seems to me to be highly likely that a conflict would arise.  As Mr Milne observed, it might well expose the agent to claims from the player, because it is apparent from the Tribunal’s findings that there was no disclosure of the terms on which the agent was acting for the Club.  Its existence might even mean that on the facts it would not be right to find that a conflicting contract had come into existence.  However, it does not automatically mean that the Club/agent contract did not or cannot exist.  As is observed in Bowstead & Reynolds on Agency, 18th Edn at para 2-013:
“Agent acting for both parties to a transaction.  The agent of one party is not incompetent to act as agent of the other.  Thus solicitors frequently act for both the buyer and the seller of a house, though there are many traditional warnings as to the dangers of this practice.  It is perhaps more likely that an agent can unacceptably acquire the second capacity after the conclusion of the contract negotiated.  Where there is no conflict of interest, the matter is straightforward.  But an agent who does act in this way runs great risks of finding himself in a position in which his duty to one party is [in]consistent with his duty to the other, for example as regards information coming into his possession.  In such a case he will be in breach of his duty to his first principal, and are liable accordingly, unless that principal has given his informed consent to the transaction with the other principal …”
e)	The Tribunal also apparently found that a Club/agent contract could not exist because that would be breach of the FA and FIFA regulations.  Again, that is wrong.  The Regulations do not regulate the technical capacity of the agent to enter into contracts.  The Regulations are no more than a form of contract themselves, and they impose obligations, but an apparent breach of them does not necessarily mean that the breaching act did not in law happen (though the fact that a club/agent contract would be a breach might be a relevant factor in determining where in fact there was such a contract).  So entering into a contract with the Club might be a breach of the Regulations, but it is a contract nonetheless.
30.	All these errors underpin the determination of the Tribunal that no contract existed both in its general conclusion and in its individual conclusions about particular transactions.  It is true that in some of the individual cases it found specific factors which supported its conclusion, but it is equally apparent that its starting point was the erroneous view to which I have referred.   Its conclusion in relation to each of the individual cases determined against the Club is therefore, for that reason, flawed.  A similar misconception underlies the Tribunal’s Decision on what it described as the Club’s alternative case – see paragraph 132.
The effect of that determination on this appeal
31.	Mr Milne submitted that if I accepted that the Decision was flawed in the respects found above then I should go on to decide the case myself on the primary facts found by the Tribunal.  Those facts all demonstrated that the agent was acting for the club, even if he was still acting for the player, and that the agent provided services to the club under that contract.  Redrow was said to provide great assistance in reaching the conclusion that services were provided.  I should also consider the transactions on a case by case basis.  If it was apparent that he should succeed on at least some of them (in the sense of the input tax being deductible) then he should succeed on at least those.
32.	Mr Vajda submitted that if the Decision could not be upheld as it stands then it would be proper to uphold it on a different analysis in that it was sufficiently apparent that there were no contracts, despite the acknowledged errors of the Tribunal.  Otherwise it would be appropriate to remit it.  He said that some of the findings of fact relied on by the Club were not, on proper analysis, findings of fact, and could not be relied on as such.  
33.	I therefore have to consider whether I can reach my own conclusions as to the questions which arose on the appeal in the light of the findings made by the Tribunal, and in the light of such evidence as it is proper for me to take into account.  I express myself in that cautious manner in relation to evidence because I did not have all the evidence before me, and was taken to very little of what evidence I had.  I had what I understand to be the witness statements of the witnesses who gave evidence, but I did not have any transcripts of the cross-examination that took place, or indeed the evidence in chief which I understand supplemented the witness statement of Mr Cushing.  Very limited reference was made to Mr Cushing’s witness statement.  A large part, if not all, of the documents that were before the Tribunal were before me, and I was directed to the transaction documents which related to the individual disputed transactions, but I was not otherwise taken to the documents which might bear on the matters in question other than to two or three of the specific contracts between players and agents.  I therefore do not have a full, or even good, evidential picture.  I must therefore be cautious about deciding this appeal on the basis of what the evidence showed, and my main source must be the express findings of the Tribunal.
34.	The first thing to do is to remind myself of the statutory context in which all of this matters.   It is set out above.  
35.	The next thing that I have to do is to consider what the findings were.  As I have indicated, there is a dispute about that.  Mr Milne says there are findings of primary fact to the effect that the Club and the agent agreed that the latter would act for the former, and therefore that that the Club contracted with the agent.  That finding is said to be contained in paragraphs 26 and 31 of the Decision.  Those paragraphs (or their relevant parts) are set out above. Mr Milne relies on what the Tribunal records of what occurred in the generalised cases described by Mr Cushing.  The Club relies on those sentences as amounting to a determination that there was a contract been club and agent, appointing the agent to act for it in the relevant transaction.  As well as relying on it as a proper basis for deciding the rest of the appeal, it relies on what it says is an inconsistency between this finding and the findings that in the individual cases there was no contract.  
36.	Mr Vajda says that, properly read, those words do not amount to a finding of a contract between Club and agent as relied on by the Club.  Each of the relevant findings contains the word “claims” or other qualifying words.  That is said to demonstrate that the Tribunal is recording a claim or evidence, not making a finding of fact. It is a record of what Mr Cushing said had occurred, not what the Tribunal found to have occurred. 
37.	The form of expression used by the Tribunal is not without its difficulties.  There are various instances where it might be said that the Tribunal is recording what is being said to it, rather than making a finding of what is true.  Thus the use of the word “claims” in the important sentences is something that more naturally suggests a record of what was said rather than a finding.  Other references might be said to give the same impression.  Paragraph 26 refers to “his alleged appointment”; the instalments are “according to Mr Cushing” generally based [etc]; the Decision says “the agent is considered” and “Following negotiations, said by the Club to be between the agent [etc]”.  The same applies to paragraph 31 where similar wording occurs.  It is necessary to go on to read the rest of the judgment to ascertain what the Tribunal should be taken as finding and to consider its effect.
38.	Thus Mr Vajda was able to submit that the Tribunal did not make findings that there was an agreement between Club and agent.  He said that the language of the relevant paragraphs did not support that, and that the Tribunal recorded elsewhere that it did not accept the evidence of Mr Cushing.  He also said that such a finding would be at odds with the findings on the individual transactions.
39.	The Tribunal’s phraseology has to be approached with some care.  It is true that on one reading paragraphs 26 and 31 record what it was being told, rather than what it is finding.  However, I think that on a fair reading it is going beyond that.   It does say in paragraph 31 that it accepts the evidence of Mr Cushing “as fact”.  That means that it accepts that what he was saying did happen, to the extent that he gave evidence which could amount to that.  In my view that is what it was doing in paragraph 26 as well.  The references to “claims”, “alleged” and so on are qualifications designed to indicate that they did not accept the way he put it.  Thus it is accepting that there is an approach by the Club to the agent, which is interpreted by Mr Cushing as being one in which the agent is invited to act jointly for player and Club.  That interpretation is not accepted.  Similarly, the Tribunal accepts that the agent does something to indicate that he accepts terms, but does not accept that they amount to agreed terms.  And so on.
40.	So there is a degree of acceptance of the accuracy of what Mr Cushing said had happened as a matter of fact.  This is not inconsistent with the later rejection of his evidence.  In paragraph 30 the Tribunal determines:
“We prefer to rely on the documentary evidence, which clearly reveals the relationships between agents and players, rather than the oral evidence of Mr Cushing and X., which sought to ignore the documentary evidence almost in its entirety and concentrate on what was described as "industry practice". 
In that sentence the Tribunal is referring to the evidence given by Mr Cushing and agent X about individual transactions, not about how things purported to work generally.  It does not detract from the evidence of Mr Cushing and X about how things tended to seem to work generally.  So far as the findings on individual transactions are concerned, I have already indicated that these are dealt with on the basis that the evidence confirmed a finding already reached about the possibility of there being a contract between agent and Club, rather than being separate findings which can be measured for consistency against earlier findings.
41.	All this means that the Tribunal’s findings seem to tread a fine line.  The Tribunal was prepared to accept that as a matter of generality what Mr Cushing said happened did appear generally to have happened.  It was not prepared to find that that led to a contract.   This was because of its misconceptions about the effect of other matters – see above.  However, it does not follow that it would be right to remove the misconceptions and treat the findings of the Tribunal as requiring the finding of a contract.  This is for a number of reasons:
a)	Whether there was a contract or not in any individual case will depend on the facts of an individual case.  The cases may be similar, but they all have their particular facts.  Whether there actually was an agreement to provide services may vary from case to case.  The Tribunal has made no sufficiently independent findings about that.  If, as may be the case, Newcastle claims that it has little detail about the particular arrangements in any individual case, then it would be open to it to call evidence from the agent in those cases.  That was not done.  On the evidence that I have seen I am not prepared to assume that the generalised description of what tended to happen was the same in every case and conclude there was a contract in every case.
b)	If one turns to such evidence of the individual cases as is referred to in the Decision, there are indications that the arrangements were such that the agent considered that it was acting solely for the player, or that the player considered that the agent was acting for him.   
i)	In the case of the player Chestnut HMCE had written a letter to the agent asking for whom the agent was acting in the relevant transaction.  The agent replied that he was “acting on behalf of the above player for all football contracts incurred with [Newcastle].”
ii)	In the case of player Purple a letter from the agent to Mr Cushing stated:
“I enclose herewith a letter from [Purple] confirming his acceptance of the contract terms that you have proposed and look forward to receiving the contract in due course”;
and a letter from the player to Mr Cushing stating:
“I am writing to accept the contract terms that have been offered to me. I will leave trust in you and my agent E1 to arrange a date in which the contract can be signed.
There are other examples of that sort of thing.  They are not determinative, but they are plainly relevant.  These sort of matters have to be investigated carefully.  In addition to the relationships involved, a tribunal hearing the matter would have to consider carefully what services were actually being provided to the Club on a case by case basis.  
c)	Even in the apparently simple arrangements as set out in paragraphs 26 and 31 of the Decision, one cannot automatically go on to find that there was definitely a contract in each case.  I have held that the conflicts of interest that would be likely to arise, the exclusivity provisions and non-compliance with the provisions of the Regulations do not by themselves necessarily mean that there was no contract.  However, they cannot be ignored in the inquiry.  Any inquiry as to whether there was a contract in any individual case will not only involve an investigation of what happened, but will also require that to be put in the context of the first and third of those matters (the exclusivity obligations, properly construed, are not relevant to the inquiry).   It will be necessary to consider whether the agent really did intend to enter into obligations, or agree to provide services, which might put him in such a conflict position, or whether the parties really did intend a contract when the Regulations required a contract to be in writing, and so on.  If and insofar as there was no practical conflict in any given case then it will be necessary to consider whether the agent provided consideration if he was doing what his obligations to his player-client required him to do anyway.  Putting it another way, did he really provide services to the Club?    Mr Cushing’s witness statement provides an indication of the sort of things that it is said an agent would do for the club, and the sort of benefits that the Club would obtain, but these need to be tested and considered in individual cases.  This is an important point, and the Decision does not really go into that question.   The inquiry will also have to consider the real significance of the fact (which appears to be the case) that in the majority of cases a fee was not agreed up front, but was only agreed later in the day.  I would have thought that that would be a significant matter in a contractual analysis.  
42.	I do not know the full extent to which these sort of points were canvassed before the Tribunal but it is certainly the case that the findings made by the Tribunal do not enable me to reach a conclusion on them on this appeal.  Nor does the evidence that I have seen enable me to deal with the points.  In the circumstances, if it is necessary to reach a conclusion on these points then the matter will have to be remitted to the tribunal so that it can be done there.
43.	There also has to be an active analysis in order to consider the effect of Redrow and WHA in all these cases.  The point arising from these cases in a contractual context is, briefly, as follows.  HMRC argue that even if there were contracts of the nature relied on by the Club, then it was not the case that services were provided under them for VAT purposes because there was no material benefit to the Club.  It was necessary to find a benefit, and the only benefit that the Club could be seen to have had was “adventitious” (to use an expression of Neuberger LJ in WHA because of the duties owed by the agent to the player and the results of the fulfilment of those duties).  
44.	In each of those cases there was a contract between two parties which produced a benefit for a third.  In Redrow the contract was between a developer and an estate agent which procured the payment of agency fees for the sale of a property of a third party (a house owner who was minded to buy a house from Redrow).  In WHA there was a contract between insurers (or a related company) and a garage to carry out work to the car of a third party.  In Redrow the question was described as being whether or not the expenditure by Redrow was incurred in the supply by the estate agents of services to Redrow (per Lord Hope at page 164e).   In each case the court found that there was a sufficient relationship between the two contracting parties, and sufficient benefit to the developer and WHA, to result in services being provided to each of them for VAT purposes.  The conclusion was arrived at by looking at such matters as control and the power to direct.   The Club says that it had such powers; HMRC contest that. 
45.	The contractual relationships on the cases before the Tribunal are not clearly parallel to those in Redrow and WHA.  In those cases there seems to have been just one contract (between developer and agent in Redrow and between WHA and the garage in WHA).  In the various cases before the Tribunal, if there was a contract between agent and club there may well also have been a subsisting relevant contract between agent and player.  That may or may not make a difference to the Redrow and WHA principles.  However, all this requires a proper factual analysis.  Furthermore, if those cases have anything to say about the club/agent contract (if any) then their application must depend on a proper analysis of what services were being provided under it (if any) and an analysis of the relationship.  Yet again, I do not have the material which would enable me to begin to embark on that sort of analysis.  It must be determined in the light of a proper consideration of the facts and the legal principles.   
46.	Mr Milne also had an alternative argument which he said got him home even in the absence of an established contract.  He said that even if there were no contract between the agent and the club, and the agent was acting solely for the player, the Club had still received and paid for services.  The Club wanted the player to sign for it, or to continue its contract with it.  The agent was to receive a payment (often unspecified at the outset) if this happened.  If the services resulted in the player signing for the Club, or continuing his contract, then it was agreed that the agent would be paid and the Club had received a benefit.  He relied on Redrow and WHA in support of his case that this was sufficient to enable his client to deduct the input tax in question in the present appeal.  It had received a benefit within the reasoning of those two cases and was entitled to succeed on that basis.  This was the case even if there were no contract between Club and agent, and if the only contract were between agent and player and the agent was representing the player alone throughout.   
47.	This argument presents an initial difficulty.  For the purposes of  section 5(2) services have to be provided “for a consideration”, and while that expression has to be construed in a Community sense rather than in a strict English legal sense, there still seems to me to be some element of exchange involved.  If there is no contract it is not apparent what that exchange could be.  I also have difficulty in seeing how the club is a purchaser for the purposes of Article 11(A)(1)(a). 
48.	Redrow and WHA do not help to overcome this difficulty.  They deal with a different point. As I have pointed out, in each of those cases there was a contract between the taxpayer and another person, pursuant to which a third party was ostensibly the person who benefited in practical terms.  In Redrow, if the sale was achieved, and if the house owner bought from the developer, then the agreement was that the developer would pay the agents' fees plus VAT.  The question was whether or not the expenditure by Redrow was incurred in the supply by the estate agents of services to Redrow.  It was held that it was.  As Lord Hope put it at page 166a:
"I do not see how the transactions between Redrow and the estate agents can be described other than the supply of services for a consideration to Redrow.  The agents were doing what Redrow instructed them to do, for which they charge a fee which was paid by Redrow."
49.	The test which Lord Hope proposed was:
"Was something done for [the taxpayer] which, in the course or furtherance of a business carried on by him, he has had to pay a consideration which has attracted VAT?" (page 166d).
It is hard to see how that sort of test makes sense unless there is a form of contract, or at least some form of arrangement under which the fee is a quid pro quo for some benefit.  The Tribunal found that there was no contract, and unless I am prepared to find one in any given case (which, as I have said, I am not), or unless I am prepared to find some other form of arrangement short of a contract which can somehow nevertheless amount to a quid pro quo arrangement (which again I do not consider to be open to me in the absence of findings of fact, or evidence, which will allow it) I do not think that the dicta have any application.
50.	The same applies to WHA, where the arrangement was between WHA on the one hand and the garage on the other.  In this case too there was plainly an arrangement between WHA and the garage.  I do not think that this case helps Mr Milne over his difficulty if there is no proven contract or binding arrangement between the Club and the agent in any given case.
51.	I therefore have difficulty in seeing how Mr Milne’s alternative case helps him in the event of his not establishing the contract that he would otherwise seek to rely on.  However, I do not need to rule formally on this because it has to be considered in the context of the proper facts.  Those facts include a consideration and finding of who agreed to do what, and what was actually done, in all these transactions.  As I have already pointed out more than once, these are facts that have not yet been properly considered or dealt with.  
52.	It therefore follows that Mr Milne’s alternative case does not fill for him the gap left by the absence of a finding of a contract between Club and agent.  
Conclusions
53.	For the reasons appearing above, therefore, I shall allow this appeal.  The reasoning of the Tribunal cannot be sustained, but neither its findings nor the material before me enable me to make a determination of the question of the existence of contracts, or Mr Milne’s alternative case.  The only satisfactory way in which the issues can be resolved is by my remitting the matter to the Tribunal for further consideration of the relevant points on a case by case basis.   Whether that can be done on the basis of the evidence already given, or whether there will have to be a fresh evidential case mounted, is something that the parties will have to determine in and with the Tribunal.   The Tribunal will have to approach any re-hearing on a proper legal and factual basis, that is to say on the footing that the exclusivity aspect is approached on the correct basis, and on the footing that it is not necessarily legally or factually impossible for there to be a Club/agent contract in cases where a breach of the Regulations or a conflict of interest exists.  Whether there is a contract in any given case will depend on the facts of that case.  Those two factors (breach of the Regulations and potential conflicts) may be a relevant part of the factual background to any case, along with other factors such as whether a fee was initially agreed or not and what was said about fees.   Inevitably a proper identification of the services in each case will be central to the existence of a contract and the proper application of Redrow and WHA.  I make these remarks in the hope that they will assist the Tribunal in embarking on a fresh consideration of these cases.  It may or may not be useful to identify sample cases in order to limit the scope of the further hearing.  That, again, is a matter for the parties to consider with the Tribunal.