Messenger Leisure Developments Ltd v HM Revenue & Customs [2005] EWCA Civ 648 (26 May 2005)

Messenger Leisure Developments Ltd v HM Revenue & Customs [2005] EWCA Civ 648 (26 May 2005)

Messenger Leisure Developments Ltd did not qualify as a non-profit making body for VAT exemption because, despite its constitution, the reality of its group structure allowed profits or surpluses to be distributed or applied for the benefit of its parent company, Leisure, either directly (through interest-free loans) or indirectly (through capital improvements to land owned by Leisure). The ability of Leisure to alter Developments' constitution at any time and the lack of independent business purpose meant Developments' purposes were as commercial as those of its parent. The Tribunal and the judge were entitled to find that Developments was not a non-profit making organisation within the...

Citation
[2005] EWCA Civ 648
Parties
Appellant: Messenger Leisure Developments Ltd; Respondents: The Commissioners for Her Majesty's Revenue and Customs
Jurisdiction
England and Wales
Judgment Date
26 May 2005
Procedural Posture
VAT Appeal (civil) / Court of Appeal Judgment on Appeal From High Court, Which Affirmed VAT Tribunal Decision
Outcome
Appeal dismissed; order of Hart J affirmed; VAT exemption denied.
Legal Topics
VAT Exemption, Non Profit Making Organisations, Interpretation of Article 13 a Sixth Directive, Distribution of Profits, Corporate Structure and Fiscal Advantage
Tax Law European Union Law VAT Exemption Non Profit Making Organisations Interpretation of Article 13 a Sixth Directive Distribution of Profits Corporate Structure and Fiscal Advantage

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Parties

Messenger Leisure Developments Ltd

Appellant

The Commissioners for Her Majesty's Revenue and Customs

Respondents

Procedural Posture

VAT Appeal (civil) / Court of Appeal Judgment on Appeal From High Court, Which Affirmed VAT Tribunal Decision

Legal Issues

  1. 1 Whether Messenger Leisure Developments Ltd qualifies as a 'non-profit making body' for VAT exemption under Group 10, Schedule 9, Value Added Tax Act 1994, as interpreted in light of Article 13A of the Sixth Directive
  2. 2 Whether the company's structure and operations resulted in de facto or potential profit distribution to its parent or members, disqualifying it from exemption

Ratio Decidendi

Messenger Leisure Developments Ltd did not qualify as a non-profit making body for VAT exemption because, despite its constitution, the reality of its group structure allowed profits or surpluses to be distributed or applied for the benefit of its parent company, Leisure, either directly (through interest-free loans) or indirectly (through capital improvements to land owned by Leisure). The ability of Leisure to alter Developments' constitution at any time and the lack of independent business purpose meant Developments' purposes were as commercial as those of its parent. The Tribunal and the judge were entitled to find that Developments was not a non-profit making organisation within the...

Court Disposition

Appeal dismissed; order of Hart J affirmed; VAT exemption denied.

Orders

  • Messenger Leisure Developments Ltd's appeal is dismissed.
  • The order of Hart J is affirmed, upholding the VAT Tribunal's decision.