TMI Blog1999 (3) TMI 624X X X X Extracts X X X X X X X X Extracts X X X X ..... this appeal. The first is whether section 4 of the Value Added Tax Act 1994 and article 4 of the Sixth Council Directive (77/388/ E.E.C.) of 17 May 1977 make chargeable to VAT certain activities carried out by the Institute of Chartered Accountants in England and Wales with the consequence that the Institute can claim repayment or set-off of input tax paid on goods and services supplied to the institute, the latter being the real purpose of these proceedings. If the activities are chargeable to tax, then the second question arises as to whether the institute is a body governed by public law and whether it engages in these activities as a public authority, in which case the institute is not considered a taxable person in respect of these activities. If they are not so chargeable to tax (as the Commissioners, the V.A.T. Tribunal, Tuckey J. [1996] S.T.C. 799 and the Court of Appeal [1998] 1 W.L.R. 315 held) then the second question does not arise for decision. By the Directive, the supply of goods or services effected for consideration . . . by a taxable person acting as such is subject to VAT (article 2) and by article 4: (1) 'Taxable person' shall mean any person who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through a recognised professional body recognised by the Securities Investment Board as delegate of the Secretary of State (Financial Services Act 1986 (Delegation) Order 1987 (S.I. 1987 No. 942). To be recognised, a1 body must regulate the practice of a profession (Schedule 3, paragraph 2) and be able effectively to monitor the person certified by it under the Act and to maintain high standards of integrity. The institute's Capital Investment Business Regulations were approved by the Board so that the Institute was recognised as a body able to issue certificates of authorisation to its members so that they could carry on investment business. Under those regulations an authorisation committee was established which, through its delegate, Joint Monitory Unit Limited, issued or refused, renewed or revoked authorisations to carry on such business, and which monitored the activities of authorised firms. Fees, fixed in part by reference to the type of authorisation granted and to the size of the firm, were payable by authorised firms to meet the costs of implementing the regulation. The guidance Notes attached to the regulations provided in note 115: The purpose of the Act is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... La Comercial Internacional de Alimentacion S.A. (Case C-106/89) [1990] E.C.R. I-4135. It does not seem to me that there is any difficulty here in doing that and one would expect the same result to follow from the application of either approach. If read literally, it can be argued as Mr. Andrew Thornhill has done, that in granting these licences for a fee, the institute is supplying services in the course of a business, or is supplying services for consideration in the carrying on of an economic activity. But so far as the Directive is concerned, the European Court of Justice has made it clear that it is not enough merely to point to the fact that there is a supply of services in return for a money payment and some loose economic connection, but that the activities must be of an economic character: Polysar Investments Netherlands BV v. Inspecteur der Invoerrechten en Accijnsen, Arnhem (Case C-60/90) [1993] S.T.C. 222. The European Court has had to deal with cases on both sides of the line. Thus, in Commission of the European Communities v. Kingdom of the Netherlands (Case-235/85) [1987] E.C.R. 1471, the question arose whether notaries and bailiffs supplying services to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Community rules on competition. Similarly, in SAT Fluggesellschaft mbh v. European Organisation for the Safety of Air Navigation (Eurocontrol) (Case C-364/92) [1994] E.C.R. I-43 powers were conferred on Eurocontrol by public authority for the exercise of navigation control. The charges collected were the consideration for the obligatory and exclusive use of air navigation control facilities and services. The activities were typically, the court found, the activities of a public authority and not of an economic nature which fell within the competition provisions of the E.E.C. Treaty. In a different area of activity, the court held in the Polysar case [1993] S.T.C. 222 that the mere holding of shares in other companies from which a company received dividends and from which it paid dividends to its own parent company, did not make the Polysar case a taxable person for the purposes of article 4 of the Directive. It did not follow that the mere acquisition and holding of shares was to be regarded as an economic activity, nor did it constitute the exploitation of property. A similar result was reached in Wellcome Trust Ltd. v. Customs and Excise Commissioners (Case C-155/94) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess' is or may be in particular contexts a word of very wide meaning, but that the ordinary meaning of the word 'business' in the context of this Act excludes, in my judgment, any activity which is no more than an activity for pleasure and social enjoyment, though the fact that the pursuit of profit or earnings was not the motive did not prevent an activity from being a business if in other respects it plainly was. He referred, at p. 245 to six indicia listed by counsel for the Commissioners as the test as to whether an activity was a business was it (a) a serious undertaking earnestly pursued; (b) pursued with reasonable continuity; (c) substantial in amount; (d) conducted regularly on sound and recognised business principles; (e) predominantly concerned with the making of taxable supplies to consumers for a consideration; (f) such as consisted of taxable supplies of a kind commonly made by those who seek to make profit from them. The tribunal in this case accepted that in deciding whether an activity was a business, the first four tests referred to by Ralph Gibson J. were satisfied and discussion turned first on whether there were here supplies commonly made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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