Customs & Excise v Pilgrims Language Courses Ltd [1999] EWCA Civ 1939 (23 July 1999)

Customs & Excise v Pilgrims Language Courses Ltd [1999] EWCA Civ 1939 (23 July 1999)

The Court of Appeal held that, applying the principles from the ECJ in the CPP case and Madgett and Baldwin, the provision of accommodation and meals in children's and young adults' residential English language courses, as well as excursions, airport transport, and related activities, are either integral to or closely related to the principal exempt supply of education (TEFL) and thus exempt from VAT. Note (2) to Group 6 should not be construed to exclude such supplies, as this would breach the Sixth Directive. The appeal by Pilgrims was allowed and the tribunal's decision restored.

Citation
[1999] EWCA Civ 1939
Parties
Appellant/respondent: The Commissioners of Customs & Excise; Respondent/appellant: Pilgrims Language Courses Limited
Jurisdiction
England and Wales
Judgment Date
23 July 1999
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal From High Court
Outcome
Appeal allowed; High Court judgment reversed in relevant respects; tribunal decision restored in favour of Pilgrims.
Legal Topics
Value Added Tax (vat) Exemption, Composite and Multiple Supplies, Interpretation of EU Directives, Education Services, Ancillary Services
Tax Law European Union Law Education Law Value Added Tax (vat) Exemption Composite and Multiple Supplies Interpretation of EU Directives Education Services Ancillary Services

Case Brief

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Parties

The Commissioners of Customs & Excise

Appellant/respondent

Pilgrims Language Courses Limited

Respondent/appellant

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal From High Court

Legal Issues

  1. 1 Whether supplies made by Pilgrims Language Courses Ltd as part of residential English language courses are exempt from VAT as education or closely related supplies under UK law and the Sixth EC Directive
  2. 2 Whether accommodation, meals, excursions, and other elements are integral or ancillary to the principal supply of education
  3. 3 Proper construction of Schedule 9 Group 6 of the Value Added Tax Act 1994 and its compatibility with the Sixth Directive

Ratio Decidendi

The Court of Appeal held that, applying the principles from the ECJ in the CPP case and Madgett and Baldwin, the provision of accommodation and meals in children's and young adults' residential English language courses, as well as excursions, airport transport, and related activities, are either integral to or closely related to the principal exempt supply of education (TEFL) and thus exempt from VAT. Note (2) to Group 6 should not be construed to exclude such supplies, as this would breach the Sixth Directive. The appeal by Pilgrims was allowed and the tribunal's decision restored.

Court Disposition

Appeal allowed; High Court judgment reversed in relevant respects; tribunal decision restored in favour of Pilgrims.

Orders

  • Pilgrims' appeal allowed with costs in the Court of Appeal and the High Court.
  • Order for costs in the tribunal varied: respondent to pay 90% of appellant's costs.