VAT — Legitimacy of UK legislation — Seasonal pitches for caravans subject to VAT under Value Added Tax Act 1994 — Appellant caravan park owner held liable to VAT — Whether UK legislation within powers conferred by VAT Sixth Council Directive 77/388/EEC — Whether reference should be made to European Court of Justice — Appeal dismissed
The appellant operated a number of caravan parks in which many of the pitches were let to caravan owners on licences terminable by notice. The appellant’s customers were given no interest in land. In addition, they were prohibited from living in the caravans as a permanent address and from staying overnight for three months from December to February.
The VAT Tribunal determined that the services provided by the appellant were chargeable to VAT under Group 1 of Schedule 9 to the Value Added Tax Act 1994. Under that provision, the grant of any interest in, or licence to occupy, land was exempt from VAT, with certain exceptions, including “the provision of seasonal pitches for caravans, and the grant of facilities at caravan parks to persons for whom such pitches are provided”. The 1994 Act purported to implement the VAT Sixth Council Directive 77/388/EEC, which, by Article 13B(b), exempted from VAT the letting of immovable property, excluding, by Article 13B(b)(1), “the provision of accommodation in the hotel sector or in sectors with a similar function, including… in holiday camps or on sites developed from use as camping sites”. Article 13B further included a “tailpiece”, providing that “Member States may apply further exclusions to this exemption”. In reaching its decision, the tribunal rejected an argument by the appellant that the seasonal pitches exclusion went beyond the powers given by the directive. It was unsure whether the seasonal pitch provisions were justified by the hotel sector exclusion in the directive, but considered that it was covered by the tailpiece.
The appellant appealed, and contended that it had a sufficiently good point for reference to the European Court of Justice.
Held: The appeal was dismissed.
It was not clear that the UK provision bringing seasonal pitches into tax were legitimised by Article 13B(b)(1), and, had that been the key question, it would have been appropriate to make a reference to the European Court of Justice. However, the case centred on the tailpiece, and that provision clearly justified the taxing of seasonal pitches. The general principle of construction of EU instruments, that exceptions were to be narrowly construed, did not apply to the tailpiece because it was not an exception, but, on the contrary, empowered member states to derogate from an exception. There was clear authority that that power was a wide one: Blasi v Finanzamt München I C-346/95 [1998] All ER (EC) 211 and Amengual Far v Amengual Far C-12/98 [2002] STC 382 considered. Moreover, in the latter case, the court held that it was acceptable to except all non-dwelling uses from the VAT exemption, whereas all the UK had done, in the case of seasonal pitches, was to except a particular example of non-dwelling use from the VAT exemption; since the greater included the lesser, the UK provisions were also legitimate. There was no question of irrational discrimination between equivalent types of transaction on the ground that long-stay hotel accommodation was VAT-exempt and seasonal caravan pitches were not. Seasonal pitches had much in common with the sort of thing excluded from the exemption in Article 13B, and there was no reason why the UK should not tax them if that was the policy decided upon: Lubbock Fine & Co v Commissioners of Customs & Excise C-63/92 [1994] QB 571 distinguished. The matter was clear, and a reference to the European Court of Justice was not required.
Roderick Cordara QC and David Scorey (instructed by Eversheds, of Cardiff) appeared for the appellant; Rupert Anderson (instructed by the solicitor to Customs & Excise) appeared for the respondents.
Sally Dobson, barrister
