Summary of Court of Appeal Judgment

Factual and Procedural Background

The Appellants (Company A, Company B and Company C) are providers of higher education. The Respondent assessed VAT on supplies of education made by the Appellants in the period 1 December 2012 to 6 August 2017 ("the relevant period"). The core question was whether those supplies were exempt from VAT under Article 132(1)(i) of Council Directive 2006/112/EC ("the PVD") and/or Group 6 of Schedule 9 to the Value Added Tax Act 1994. The Appellants argued that the UK implementation (Group 6) failed properly to implement Article 132(1)(i) (including breaching the principle of fiscal neutrality) and, alternatively, that their supplies fitted within particular notes to Group 6.

The First-tier Tribunal (the FTT) dismissed the Appellants' appeals on 3 May 2023. The Upper Tribunal (the UT) dismissed the Appellants' appeal from the FTT on 24 March 2025 but granted permission to appeal to the Court of Appeal on three grounds (concerning fiscal neutrality and the scope of the Group 6 eligible-body provisions). The Court of Appeal (Judges Lewison, Miles and Henderson) heard the appeal and allowed it on ground 1, concluding that an earlier Court of Appeal decision (referred to in the judgment as "LIFE") was binding and required application of the consumer-perspective test to the supplier condition.

Legal Issues Presented

1. Whether supplies of education by the Appellants during the relevant period are exempt for VAT under Article 132(1)(i) of the PVD and/or Group 6 of Schedule 9 to the 1994 Act.
2. Whether the UK implementation (Group 6) complied with the EU principle of fiscal neutrality, i.e. whether exclusion of the Appellants from the exemption breached fiscal neutrality.
3. Whether certain Appellants qualified as "eligible bodies" within the notes to Group 6 such that their supplies should be exempt (including whether one Appellant was a college of a university, and whether the teaching of English as a foreign language gave broader entitlement to exemption).

Arguments of the Parties

Appellants' Arguments

• Attorney Shaw and Attorney Blades submitted that, for the supplier condition in Article 132(1)(i), the correct test for fiscal neutrality is the consumer-perspective test from Rank: two supplies that are identical or similar from the point of view of the typical consumer and meet the same needs cannot be treated differently for VAT purposes.
• The Appellants contended that their HNC and HND supplies were sufficiently similar to those of recognised exempt providers from the consumer perspective and that differences in regulatory regimes would not significantly influence the choice of the typical consumer.
• The Appellants argued that the UT and FTT erred in excluding the consumer-perspective test from supplier-condition cases and that, had that test been applied, the UK implementation would be found to breach fiscal neutrality.

Respondent's Arguments

• Attorney Hill and Attorney Inglis for the Respondent submitted that the Rank test does not apply to supplier-condition exemptions and that ECJ case law concerning supplier conditions requires assessment of the comparability of suppliers (including regulatory and legal frameworks), not merely consumer-perspective similarity.
• The Respondent relied on ECJ decisions concerning other sub-paragraphs of Article 132 and argued those authorities supported the UT and FTT approach.
• The Respondent accepted that the Court of Appeal decision in LIFE was inconsistent with its position but submitted that this court was not bound by LIFE for reasons addressed in argument.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Company F v Respondent [2020] EWCA Civ 452 ("LIFE")	That when assessing similarity for fiscal neutrality in relation to a supplier-condition exemption the national court or tribunal must adopt the point of view of the typical consumer (part of the ratio decidendi of LIFE as described in the opinion).	The Court held LIFE to be binding authority on ground 1 and applied its reasoning: the Rank consumer-perspective test applies to the supplier condition at issue, rendering the UT and FTT approach incorrect on that point.
Rank Group Plc v Revenue and Customs Commissioners (Joined Cases C-259/10 and C-260/10) [2020] STC 23 ("Rank")	That fiscal neutrality requires that two supplies identical or similar from the point of view of the consumer and meeting the same needs should not be treated differently for VAT; similarity is assessed from the typical consumer's perspective and differences are relevant only if they significantly influence consumer choice.	The Court treated the Rank test as the appropriate test for assessing similarity for fiscal neutrality and, via LIFE, applied that test to the supplier condition.
JP Morgan Fleming Claverhouse Investment Trust Plc v Revenue and Customs Commissioners (Case C-363/05) [2008] STC 1180 ("JP Morgan")	That the principle of fiscal neutrality precludes treating economic operators carrying out similar transactions differently.	Referenced by lower tribunals and the Court as part of the principles governing fiscal neutrality; applied as background authority supporting the neutrality principle.
The University v Respondent [2009] EWHC 434 (Ch) ("Cambridge University v HMRC")	That UK universities are not governed by public law because they are legally independent and autonomous institutions.	Cited by the FTT (and referred to in the Court's summary) to explain why universities are recognised as eligible bodies by HMRC rather than being bodies "governed by public law".
SAE Education Ltd v Revenue and Customs Commissioners [2019] UKSC 14 ("SAE")	That activities carried out on a for-profit basis may nonetheless be exempt; Parliament did not limit the exemption to non-profit institutions (authority referenced at [25] of the FTT summary).	Referred to in the FTT's summary of common ground; used to support the proposition that profit-making does not automatically preclude exemption.
Finance and Business Training Ltd v Revenue and Customs Commissioners [2016] EWCA Civ 7 ([2017] 1 ALL ER 758) ("FBT")	That the UK was entitled to recognise universities and their colleges as having similar objects to bodies governed by public law for the purposes of the exemption.	The FTT relied on FBT to conclude the UK's recognition of universities/colleges was permissible; the Court recorded that reliance as part of the FTT's reasoning (subject to the Court's conclusion on LIFE).
Minister Finansów v MDDP sp z oo Akademia Biznesu sp komandytowa (Case C-319/12) [2014] STC 699 ("MDDP")	Discussed in relation to objectives of the exemption and limits on Member State discretion, and as an example where regulatory differences may be relevant; references to equal treatment and fiscal neutrality arise in the opinion.	Reviewed by the UT and referenced in the FTT's common-ground summary; the Court accepted MDDP as part of the ECJ case law background informing the analysis of supplier conditions.
TNT Post UK Ltd v Revenue and Customs Commissioners (Case C-357/07) [2009] STC 1438 ("TNT")	Recognised in the opinion as an ECJ decision concerning exemptions and considered in assessing how supplier conditions have been treated in ECJ jurisprudence.	The UT considered TNT among other ECJ authorities when concluding that supplier-condition cases are concerned with supplier comparability as well as supply similarity; the Court reviewed that analysis in light of LIFE.
Christoph-Dornier-Stiftung für Klinische Psychologie v Finanzamt Giessen (Case C-45/01) [2005] STC 228 ("Dornier")	One of the ECJ cases concerning exemptions in Article 132 sub-paragraphs; referenced in the UT's review of ECJ authority.	The UT cited Dornier as part of the body of ECJ case law it considered; the Court noted those authorities in framing the legal context but applied LIFE as binding.
Kingscrest Associates Ltd v Customs and Excise Commissioners (Case C-498/03) [2005] STC 1547 ("Kingscrest")	ECJ authority considered by the UT in the review of supplier-condition jurisprudence.	Included in the UT's and Court's review of ECJ case law; used as background authority in assessing how supplier conditions have been treated.
Finanzamt Steglitz v Zimmermann (Case C-174/11) [2016] STC 2104 ("Zimmermann")	ECJ case cited among authorities on exemptions and supplier conditions.	Considered by the UT in its review; referenced by the Court in setting out the ECJ background.
Pro Med Logistik GmbH v Finanzamt Dresden-Süd (Case C-454/12)	ECJ decision cited in the opinion as part of the jurisprudential background on exemptions.	Referred to by the UT and summarized in the Court's review of relevant ECJ cases; no separate detailed application in the opinion.
HMRC v Bridport and West Dorset Golf Club Limited (Case C-495/12) [2014] STC 663 ("Bridport")	ECJ reasoning concerning exemptions relied on by the Respondent in the UT and Court proceedings.	Cited by HMRC as supportive authority; the Court noted it among the authorities but concluded LIFE governs the present question.
Ambulanter Pflegedienst Kügler GmbH v Finanzamt für Körperschaften I in Berlin (Case C-141/00)	ECJ authority involving exemption questions referenced in the LIFE discussion and by parties.	Referred to in the opinion's review of ECJ jurisprudence; no distinct separate application beyond inclusion in the body of authorities.
Solleveld v Staatssecretaris van Financien (Joined Cases C-443/04 and C-444/04) [2007] STC 71 ("Solleveld")	ECJ decision where differences in legal/regulatory regimes were treated as possibly creating distinctions in the eyes of the consumer.	Discussed in LIFE and in the Court's review as an example of exceptional cases where regulation may affect consumer perception; cited in the opinion's analysis.
L.u.P. GmbH v Finanzamt Bochum-Mitte (Case C-106/05) [2008] STC 1742	One of the ECJ authorities considered in the broader review of exemption jurisprudence.	Cited by HMRC and considered by the UT; included in the Court's background review.
I GmbH v Finanzamt H (Case C-228/20)	ECJ decision referenced by the UT as consistent with its interpretation.	Used by the UT to support its approach; the Court noted it among ECJ authorities but nonetheless concluded LIFE was binding.
Happy Education SRL v Directia Generala Regionala a Finantelor Publice Cluj-Napoca (Case C-612/20)	ECJ decision referenced by the UT.	Considered by the UT in its survey; the Court recorded it among authorities but followed LIFE.
Young v Bristol Aeroplane Company Ltd [1944] KB 718 ("Young")	Domestic precedent on when this court is bound by its own earlier decisions (exceptions to binding precedent).	The Court considered Young when addressing whether it was bound by the earlier Court of Appeal decision in LIFE and concluded that Young did not displace the obligation to follow LIFE in the absence of recognised exceptions.
Minister of Justice and Equality, Commissioner of An Garda Siochana v Workplace Relations Commission (Case C-378/17)	ECJ discussion of the primacy of EU law and national courts' duty to give effect to directly applicable EU provisions.	Referred to in argument about EU primacy; the Court explained the difference between supremacy issues and the present precedent-following point and declined to accept the Respondent's submission that LIFE was not binding on that basis.
R v Secretary of State for Transport ex p Factortame (Case C-213/89) [1990] CMLR 1 ("Factortame")	Illustrates the primacy of EU law over incompatible national law.	Cited as background in submissions about EU primacy; the Court distinguished the Factortame issue from the binding-precedent issue it decided.

Court's Reasoning and Analysis

The Court confined its analysis to ground 1 because it concluded that the decision in the earlier Court of Appeal authority (LIFE) was binding and dispositive. The Court summarised the legal framework: Article 132(1)(i) contains a supply condition and a supplier condition; Member States have discretion how to recognise non-public-law organisations but must respect EU principles including fiscal neutrality.

The UT had adopted an approach focusing on comparability of suppliers (taking account of regulatory and legal frameworks) and rejected the Appellants' submission that the issue should be assessed from the typical consumer's viewpoint. The Court reviewed the ECJ case law and the decision in LIFE, where the Court of Appeal had held that the Rank consumer-perspective test applies to a supplier-condition exemption (in that case Article 132(1)(g)).

The Court concluded (following LIFE) that the Rank test — assessing whether two supplies are identical or similar from the point of view of the typical consumer and meet the same needs, such that differences do not significantly influence consumer choice — applies to the supplier condition in Article 132(1)(i). Because the UT and FTT had proceeded on a different legal test, they had erred in law. The Court accepted the Appellants' submission (and noted the Respondent did not contest) that had the lower tribunals applied the Rank/LIFE approach they would inevitably have concluded that the UK implementation breached fiscal neutrality in excluding the Appellants.

The Court addressed arguments that it was not bound by LIFE but rejected them: it found the reasoning in LIFE to be transparent and part of its ratio decidendi and held that, absent recognised exceptions to following precedent, the Court was bound by LIFE.

Holding and Implications

APPEAL ALLOWED on Ground 1.

Holding: The Court held that the decision in the earlier Court of Appeal authority (LIFE) is binding and that the consumer-perspective (Rank) test applies to the supplier condition in Article 132(1)(i). The UT and FTT erred in law by applying a different comparability test focused on regulatory distinctions between suppliers.

Implications: The effect of this decision is that the appeal is allowed on ground 1; the Court did not express views on the merits beyond this legal conclusion and therefore did not decide grounds 2 and 3. The Court followed existing Court of Appeal authority and did not purport to create a new principle beyond applying LIFE.

Case Participants and Anonymised Roles

• Appellants: Company A, Company B, Company C (providers of higher education).
• Respondent: Respondent (tax authority).
• Judges: Judge Lewison, Judge Miles, Judge Henderson (Court of Appeal); Judge Rajah and Judge Sinfield (Upper Tribunal); Judge Cannan (FTT).
• Counsel and representatives: Attorney Shaw, Attorney Blades (for the Appellants; instructed by Company D and Company E); Attorney Hill and Attorney Inglis (for the Respondent; instructed by Company F).