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	United Kingdom VAT & Duties Tribunals Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> Conservators of Ashdown Forest v Customs and Excise [2004] UKVAT V18796 (15 October 2004) URL: http://www.bailii.org/uk/cases/UKVAT/2004/V18796.html Cite as: [2004] UKVAT V18796

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18796

Input tax – Whether supply in course or furtherance of a business – Statutory body – VATA 1994 s.33 – Whether "local authority" – VATA 1994 s.83 – Grounds of appeal – Appeal dismissed

LONDON TRIBUNAL CENTRE

THE CONSERVATORS OF ASHDOWN FOREST Appellant

and –

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: DR K KHAN (Chairman)

MR S K DAS

Sitting in public in London on 2 June 2004

Mr R Thornley-Taylor for the Appellant

Mr Hugh MacKay for the Respondents

© CROWN COPYRIGHT 2004


 


DECISION

Appeal

The original disputed decision of the Commissioners is their ruling that the Conservators of Ashdown Forest ("the Appellants") are not a body to which Section 33(3) Value Added Tax Act ("VATA 1994") applies. This ruling is contained in a letter of 5 April 2002 where it was stated that the Appellants "do not satisfy the definition of either a joint committee or joint board in Section 96(4) of the VATA 1994" and therefore do not qualify as a "local authority". By a letter dated 13 June 2003 the Appellants subsequently amended their Grounds of Appeal to include an appeal by them as to the amount of input tax that may be credited to them.

Background

1. The Appellants are a statutory body whose duties and powers are set out in the Ashdown Forest Act 1974 ("the 1974 Act"), a private Act of Parliament. Their duties are to regulate and manage Ashdown Forest, subject to existing rights of common. They have the power to levy a rate on Commoners at a scale as agreed by Parliament and they can make by-laws to administer Ashdown Forest ("the Forest"). They have various powers to raise funds by means of say, the sale of wood and the issue of permits and grant of trading concessions. Any deficit is met by East Sussex County Council and Wealden Council.
2. The Forest is not really a forest as such but a large area of land, over 6,000 acres, situated in East Sussex and the common land is known as the Forest. It is an area of outstanding natural beauty. The Forest is managed as an "amenity and place of resort".
3. According to Section 3(1) of the 1974 Act the Conservators of Ashdown Forest are to be the Lord of the Manor, or his nominee, and ten appointed Conservators and five elected Conservators. By Section 7 of the 1974 Act, the elected Conservators are chosen by the Commoners, four of whom must be Commoners. Section 8 of the 1974 Act specifies that the appointed Conservators are to be eight nominees of East Sussex County Council and two nominees of Wealden District Council. None of the nominees are required to be a member of either authority.
4. The Appellants have wide powers in relation to the Forest, largely comprising non-commercial activities but some commercial activities as well. Section 17 of the 1974 Act provides, inter alia, that the Conservators shall have power in and in relation to the Forest from time to time:

(a) subject to the consent of the lord of the manor, to engage in tree conservation which shall include the planting, felling, cutting and looping of trees and shrubs, the enclosing of newly planted trees or groups of trees and the selling and disposing of timber:

provided that no more than ten acres of land shall be newly planted with trees and shrubs in any year and no plantation shall cover more than one acre of land;

(b) to protect any part of the Forest and erect fences therefore;

(c) to conserve fauna and flora and (so far as consistent therewith) to improve grazing;

(d) to conserve and maintain those parts of the Forest which are of historical, archaeological and physio-graphical interest;

(e) to provide and maintain vehicles, plant, machinery, apparatus and equipment and buildings required in connection therewith;

(f) to provide and maintain recreational facilities which (except with the consent of the Wealden Council in respect of buildings or structures on village recreation grounds) do not involve the erection of new buildings or structures of any kind, the siting of caravans or the provision of campsite;

(g) to make, provide, maintain and extend parking places for vehicles with means of access thereto and sanitary facilities for the convenience of the public;

(h) to appoint officers and staff for the purposes of more efficiently and properly carrying out the duties of the Conservators and for the proper regulation and management of the Forest and to allow or pay to them such fees and/or salaries as the Conservators shall think fit.

5. In addition to money received from the Councils, the Appellants also receive income from Commoners rates, sums paid for existing rights of Common (grazing and taking estover), selling permits (horse riding) and sundry expenditure (such as from the information centre at the Forest). Grants are given by the Friends of Ashdown Forest who donate money or purchase assets for use by the Forest, the Department of the Environment Food & Rural Affairs (DEFRA), lottery funding, Ashdown Forest Trust and English Nature. They also receive bank interest on money deposits.

The main expenditure of the Appellants is on salaries, administration, forest expenses and the information centre.

6. The Appellants' main business activity is in selling permits and the collection of rent and wayleaves.
7. The Appellants were registered for VAT from 1 November 1988 and were initially treated as a local authority under Section 96(4) VATA 1994, that is to say, a body coming within what is now Section 33(3) VATA 1994. This treatment was later reconsidered by the Commissioners and the result of that reconsideration was notified to the Appellants by a letter of 15 November 2000 and reiterated by the disputed decision of 5 April 2002.

The Law

8. Section 24(1) VATA 1994 provides:

"24 Input tax and output tax

(1) 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) VAT on the acquisition by him from another member State of any goods; and

c) VAT paid or payable by him on the importation of any goods from a place outside the member States;

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."

9. Section 33 VATA 1999 provides:

"33 Refund of VAT in certain cases

(1) Subject to the following provisions of this section, where:

a) VAT is chargeable on the supply of goods or services to a body to which this section applies, on the acquisition of any goods by such a body from another member State or on the importation of any goods by such a body from a place outside the member States; and

b) the supply, acquisition or importation is not for the purpose of any business carried on by the body,

the Commissioners shall, on a claim made by the body at such time and in such form and manner as the Commissioners may determine, refund to it the amount of the VAT so chargeable.

(2) Where goods or services so supplied to or acquired or imported by the body cannot be conveniently distinguished from goods or services supplied to or acquired or imported by it for the purpose of a business carried on by it, the amount to be refunded under this section shall be such amount as remains after deducting from the whole of the VAT chargeable on any supply to or acquisition or importation by the body such proportion thereof as appears to the Commissioners to be attributable to the carrying on of the business; but where:

a) the VAT so attributable is or includes VAT attributable, in accordance with regulations under section 26, to exempt supplies by the body; and

b) the VAT attributable to the exempt supplies is in the opinion of the Commissioners an insignificant proportion of the VAT so chargeable,

they may include it in the VAT refunded under this section.

(3) The bodies to which this section applies are:

a) a local authority;

b) a river purification board established under section 135 of the Local Government (Scotland) Act 1973 and a water development board within the meaning of section 109 of the Water (Scotland) Act 1980;

c) an internal drainage board;

d) a passenger transport authority or executive within the meaning of Part II of the Transport Act 1968

e) a port health authority within the meaning of the Public Health (Control of Disease) Act 1984 and a port local authority and joint port local authority constituted under Part X of the Public Health (Scotland) Act 1897;

f) a police authority and the Receiver for the Metropolitan Police District;

g) a development corporation within the meaning of the New Towns Act 1981 or the New Towns (Scotland) Act 1968 a new town commission within the meaning of the New Towns Act (Northern Ireland) 1965 and the Commission for the New Towns;

h) a general lighthouse authority within the meaning of Part VIII of the Merchant Shipping Act 1995;

i) the British Broadcasting Corporation;

j) a nominated news provided, as defined by section 31(3) of the Broadcasting Act 1990; and

k) any body specified for the purposes of this section by an order made by the Treasury.

(4) …

(5) …

(6) References in this section to VAT chargeable do not include any VAT which, by virtue of any order under section 25(7), is excluded from credit under that section."

10. Section 96(4) VATA 1994 provides:

"(4) In this Act "local authority" means the council of a county, [county borough], district, London Borough, parish or group of parishes …, the Common Council of the City of London … and any joint committee or joint board established by two or more of the foregoing…"

11. With regard to the appeal on input tax, the provisions of Section 83(c) VATA are relevant:

"83 Appeals

Subject to section 84, an appeal shall be to a tribunal with respect to any of the following matters:

(a) …

(b) …

(c) the amount of any input tax which may be credited to a person."

The Appellant's Case

In their original Notice of Appeal, the Appellants explained that they should be considered a joint board or committee appointed by East Sussex County Council and Wealden District Council and so a "local authority" within Section 96(4) VATA 1994 and therefore a body coming within Section 33(3) VATA 1994. By their amendment to their Notice of Appeal, the Appellants added that they where appealing under Section 83(c) VATA 1994 but did not explain this amendment in detail.

The Commissioners' Case

12. The first submission is that since Section 83 VATA 1994 does not provide a statutory right of appeal against a ruling from the Commissioners that a body does not come within Section 33(3) the Tribunal has no jurisdiction to hear the appeal against the Commissioners' decision. The proper course is to seek judicial review.
13. The Commissioners' second submission concerns the meaning of input tax and how it relates to Section 33(1) VATA 1994. VAT on supplies of goods and services to a person can only be described as "input tax" where that person receives goods and services for the purposes of that person's business. If it is not for the purposes of the taxable person's business it cannot be input tax: Section 24(1) VATA 1994. They further contend that the Appellants are not seeking to recover input tax but rather sums of VAT chargeable on goods or services supplied to them where those supplies were not for the purposes of any business carried on by them such sums cannot be input tax.

Decision

14. The Appellants are a body created by statute. They have a statutory obligation to regulate and manage Ashdown Forest as an amenity and place of resort for the public. There is a budget pursuant to the provisions of the 1974 Act for meeting expenses incurred for their statutory obligation. In this sense, the activities for which they reimbursed are not business activities (a business or economic activity is largely taken to mean exploitation of tangible or intangible property for the purposes of obtaining income therefrom on a continuing basis, Article 4 Directive 77/388/EEC).
15. The fact that services are supplied in performing a statutory duty does not prevent these being supplied in the course of a business (National Water Council v Commissioners of Customs & Excise 1979 STC 157). A supply cannot except in certain circumstances, be a taxable supply unless it is made for a consideration (VATA 1994 Section 5(2)(a)). However, a statutory payment or reimbursement cannot amount to consideration if that payment is made either to meet expenditure or provide funds for undertaking statutory obligations (Commissioners of Customs & Excise v Apple & Pier Development Council 1998 STC 221). Further, the fees which are paid by the Appellants are normally fixed beforehand in the budget agreed between the Appellants and the Council.
16. The Appellants make taxable and exempt supplies. They conduct a partially exempt business. A calculation would have to be done to determine how much input tax they are allowed to recover. The standard method of calculation is normally used unless this does not produce a fair and reasonable result. In the Appellants' case they would also have to be taken into account any supplies which are outside the scope of VAT (eg commoners rates) and these values are normally excluded from the calculations. It is not necessary for the purposes of this decision to do a calculation for the Appellants but suffice it to say that they were registered for VAT since 1988 and have been treated as a partially exempt business.
17. The Appellants already recover input tax on that part of their activity which is considered a business activity. With regard to the VAT paid and sought to be recovered on its non-business activity, this can be done if a valid claim can be made pursuant to Section 33 VATA 1994. Section 33 does not deal with input tax – it refers to VAT chargeable on goods and services supplied to a body to whom the Section applies, where these services were not for the purposes of any business carried on by that body.
18. It is clear that the amount sought to be recovered is not input tax since this term refers to VAT paid where a person receives goods and services for the purposes of that person's business (Section 24(1) VATA). The sums sought to be recovered are in fact sums chargeable on goods and services supplied to them where those supplies were not for the purpose of any business carried on by them. They were supplied to the Appellants in order to fulfil their statutory obligations under the 1974 Act and the money came from the budget agreed with the Council.
19. The second point which has to be addressed is the question of Section 33 and whether the Appellants are a local authority. Section 83 of the VAT Act does not provide a statutory right of appeal against a ruling from the Commissioners where they have decided the body does not come within Section 33 of VATA 1994. The Tribunal has no power to hear or decide on this ground of appeal, that is a question for judicial review (R V HM Treasury Ex Parte Service Authority for National Crime Squad and others (2000) STC 638).
20. One must sympathise with the Appellants' position and understand the financial burden which this decision may place upon them.

For the reasons given above, this appeal would be dismissed. No order will be made as to costs.

DR K KHAN CHAIRMAN RELEASED: 15 October 2004

LON/03/359