Messenger Leisure Developments Ltd v HM Revenue & Customs

Messenger Leisure Developments Ltd v HM Revenue & Customs

Messenger Leisure Developments Ltd is not a 'non-profit-making organisation' for VAT exemption purposes because, despite constitutional restrictions on profit distribution and the stated intentions of its controller, the company is part of a commercial group, its activities confer financial advantages on the group, and the group can alter its constitution to allow profit distribution. The economic reality and objective assessment of the company's aim show it furthers commercial interests, not non-profit objectives.

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
Civil Appeal / Appeal From High Court (chancery Division) to Court of Appeal
Outcome
Appeal dismissed
Legal Topics
Value Added Tax (vat) Exemption, Non Profit Making Organisations, Interpretation of EU Directives, Corporate Structure and Tax Liability
Tax Law European Union Law Value Added Tax (vat) Exemption Non Profit Making Organisations Interpretation of EU Directives Corporate Structure and Tax Liability

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Parties

Messenger Leisure Developments Ltd

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Civil Appeal / Appeal From High Court (chancery Division) to Court of Appeal

Legal Issues

  1. 1 Whether Messenger Leisure Developments Ltd qualifies as a 'non-profit-making organisation' under Article 13A(1)(m) of the Sixth EC Directive and Group 10 in Schedule 9 to the Value Added Tax Act 1994, and is thus entitled to VAT exemption for supplies of sporting facilities.

Ratio Decidendi

Messenger Leisure Developments Ltd is not a 'non-profit-making organisation' for VAT exemption purposes because, despite constitutional restrictions on profit distribution and the stated intentions of its controller, the company is part of a commercial group, its activities confer financial advantages on the group, and the group can alter its constitution to allow profit distribution. The economic reality and objective assessment of the company's aim show it furthers commercial interests, not non-profit objectives.

Court Disposition

Appeal dismissed

Orders

  • Messenger Leisure Developments Ltd's appeal is dismissed.