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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Finance And Business Training Ltd v Revenue And Customs [2016] EWCA Civ 7 (19 January 2016) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2016/7.html Cite as: [2016] WLR(D) 14, [2016] 4 WLR 47, [2016] STC 2190, [2016] BVC 6, [2016] STI 211, [2016] EWCA Civ 7

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IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM Upper Tribunal Tax Chamber
Mr Justice Morgan
[2013] UKUT 594 (TCC)

		Royal Courts of Justice Strand, London, WC2A 2LL
		19/01/2016

LADY JUSTICE ARDEN:

Principal issue: Does EU law mean that a provider of university courses is entitled to the education exemption from VAT in the same way as a university even if not so entitled under UK VAT law?

1. Many providers of education are exempt from VAT because EU law, from which the VAT law is derived, contains an exemption ("the education exemption") for that purpose. But not all providers of education are exempt. The question on this appeal is whether, the appellant, Finance and Business Training Ltd ("FBT"), is entitled to the education exemption for courses which lead to the grant by the University of Wales of degrees. Universities are entitled to rely on the education exemption but FBT has failed to meet the conditions laid down in domestic law. It now seeks to rely on EU law principles, particularly the principles of fiscal neutrality and legal certainty. This Court has permitted FBT to argue this point even though it was not raised below because the Court of Justice of the European Union ("CJEU") handed down a decision on the education exemption, which, submits FBT, undermines the decisions of the First-tier and Upper Tribunal against it, just two days after the Upper Tribunal's decision was released.

EU legislation

2. The relevant EU legislative measure is the Principal VAT Directive ("PVD"). The relevant provision of the PVD is Article 132, which is to be read with Article 131. The material provisions of those Articles provide:

Article 131

The exemptions provided for in Chapters 2 to 9 shall apply without prejudice to other Community provisions and in accordance with conditions which the Member States shall lay down for the purposes of ensuring the correct and straightforward application of those exemptions and of preventing any possible evasion, avoidance or abuse.

CHAPTER 2

Exemptions for certain activities in the public interest

Article 132

1. Member States shall exempt the following transactions:

…

(i) the provision of children's or young people's education, school or university education, vocational training or retraining, including the supply of services and of goods closely related thereto, by bodies governed by public law having such as their aim or by other organisations recognised by the Member State concerned as having similar objects; …

Domestic legislation

3. As the PVD is a directive, the UK was bound to implement it by national law. The supply of education by a college of a university is exempt from VAT under item 1(a) of Group 6 in Schedule 9 to the Value Added Tax Act 1994 ("VATA"), when read with Note (1)(b) . So far as material, Group 6 of Schedule 9 provides as follows:
   

Item No.

1. The provision by an eligible body of –

(a) education

…

Notes:

(1) For the purposes of this Group an "eligible body" is –

….

(b) a United Kingdom university, and any college, institution, school or hall of such a university;

CJEU: development of its case law in its new decision

4. The relevant decision of the CJEU is Case C-319/12 Minister Finansow v MDDP sp z oo Akademia Biznesu, sp komandytowa [2014] STC 699 ("MDDP"). Polish law gave a general exemption from all supplies of education. This case concerned a reference from the Supreme Administrative Court of Poland for a preliminary ruling on the questions (1) whether a commercial body (which did not wish to benefit from the education exemption) was required to be excluded from the education exemption if it was profit-making and (2) whether it could still deduct input tax if the exemption was non-EU law compliant. Question (2) is not relevant to this appeal. Question (1) is, however, relevant because FBT is a profit-making enterprise.
5. Any exemption had to be construed strictly. It had also to comply with the doctrine of neutrality: [25].
6. The purpose of the exemption was to facilitate access to educational services: [26].
7. A profit-making enterprise could still meet the conditions for the exemption, unless the member state had chosen to use the option in Article 133 to exclude profit-making entities: [27]- [29].
8. The PVD did not permit member state to give a general exemption for all supplies of educational services without regard to the objects pursued by the non-public organisation providing the service: [35],[39]. To qualify for the exemption, the body in question needed to be recognised by the member state as a body having objects which were similar to those of a body governed by public law having such as their aim (see Article 132.1(i)): [35]. (The word "such" refers back to "the provision of children's or young people's education, school or university education, vocational training or retraining, including the supply of services and of goods closely related thereto"). I will call this "the PVD supplier condition".
9. Each member state had to lay down conditions for this purpose, to the extent that the conditions were not specified in Article 133.1(i). However, member states had a discretion as to what those conditions were (citing C- 498/03 Kingscrest Associates Ltd v HMRC [2005] STC 1547 at [49] and [51], and C-174/11 Steglitz v Zimmerman at [26]): [37].
10. National courts had to determine whether national law imposed EU law-compliant conditions (Kingscrest at [52]). The conditions had to comply with EU law principles, including the principle of fiscal neutrality: [38]. The national courts have to compare the activities of the person whose entitlement to the exemption is in issue with those of bodies who (1) are of the member state, (2) are governed by its public law and (3) provide educational services (see [54]).

Direct effect – common ground

11. This much is common ground: if the defective implementation of the education exemption in the PVD resulted in FBT being improperly denied the exemption, FBT had an EU law right to the exemption which was directly enforceable against the UK state under the EU law doctrine of direct effect. Ms Hall cited authority on direct effect - C-453/02 and C-462/02 Finsmzamt Gladbeck v Linneweber [2008] STC 1069 – but I need not go to it as direct effect is not in issue.
12. The EU law issues have been raised only in this Court. However, as an appellate court, this Court is not concerned with any fact-finding unless a party successfully applies to put in further evidence. FBT attempted on this appeal to refer to further factual material as to the way in which HMRC applies the education exemption, though it was not clear to what issue on this appeal that evidence went. This Court is only concerned with whether FBT should have the exemption. FBT did not make any application to adduce fresh evidence and ultimately accepted that it did not need to refer to any further factual matter.

First-tier and Upper Tribunal decisions still relevant on factual points

13. Despite the change of direction in this case after MDDP, the findings of fact made by the Tribunals remain relevant to resolving this appeal. What follows is a summary of the presently relevant parts of the decisions.
14. The University of Wales had accredited FBT as a provider of education to a sufficient standard to prepare and examine candidates for its degrees. The First-tier Tribunal held that FBT provided a university education. However the FTT went on to hold that, to fall within Note 1(b) (paragraph 3 above), FBT had in essence to show that it was an integrated part of the University. It could not do that. The provision of university education was only a minor part of FBT's activities. Both the First-tier and Upper Tribunals applied the law as laid down in HMRC v School of Finance and Management (London) Ltd [2001] STC 1690. In that case, Burton J held that the tribunal was entitled to consider some other factors referred to below as the "SFM factors". The factors collectively enable the tribunal or court to ascertain whether the body which claims exemption as a "college or hall" of a university is sufficiently integrated with the university to meet that description for the purposes of Note 1(b).
15. The First-tier Tribunal made three important points in particular. The first related to the degree of permanence of the link between FBT and the University of Wales. It found that the parties had a commercial arrangement which was in essence quite short-term. The second was the nature of the link between FBT and the University of Wales. The link was held out to students as being one of partnership. FBT considered the Masters course to be "our MBA". The First-tier Tribunal concluded that it was not consistent with being a college or hall of a university that the parties were working in partnership. Third, FBT had other activities which did not involve the University of Wales. Those activities did not negate integration. However it was the primary purpose of FBT's activities and they were not part of university education (FTT, Judgment, para 49). In summary, the First-tier Tribunal concluded that the relationship was not close enough.
16. In the Upper Tribunal, Morgan J pointed out that there was no challenge in the tribunal to compatibility of Note 1(b) with Articles 131 and 132 of PVD. He recognised that on general principle the UK legislation had to be interpreted consistently with the PVD. He applied an "all or nothing" rule. In his words, a body could not be an eligible body in one capacity and an ineligible body in another capacity (Judgment, para. 37). Morgan J also agreed with the First-tier Tribunal that FBT could not meet the requirements of Note 1(b) on a weighing of the SFM factors. Therefore FBT was not entitled to the education exemption.
17. FBT has no leave to appeal any of the issues decided by the Tribunals.

The issues on appeal in brief

18. In a nutshell FBT, for whom Ms Melanie Hall QC appears, contends that, to the extent that it supplied the same service as a university, it should be treated for the purposes of VAT in the same way (relying on the EU principle of fiscal neutrality). Furthermore, contends FBT, Note 1(b) in Group 6 of Schedule 9 does not comply with the EU principle of legal certainty because it does not lay down the conditions which an institution has to satisfy to be treated in the same way as a university.
19. FBT contends that the domestic legislation are inconsistent with the exemption as interpreted by the CJEU in MDDP. The exemption had to comply with the principle of fiscal neutrality. Conditions for exemption had also to be laid down by the member state. The question whether a person is entitled to the education exemption is an objective one, to be determined if necessary by the court. Here the UK VAT law failed to meet these principles and so FBT is entitled to the education exemption.
20. The respondent, Her Majesty's Revenue and Customs Commissioners ("HMRC"), for whom Mr Raymond Hill appears, does not dispute the application of the EU law principles that FBT relies on but contends that in this context they lead to a different result. Fiscal neutrality means not just that the service provided (university education) is the same but also that the suppliers have similar objects for the purposes of Article 132.1(i). As to that, the PVD gives member states power to determine whether a body is similar to a body governed by public law having the objects required by Article 132.1(i). The UK has exercised that power in an EU law-compliant manner.

Summary of my conclusions

21. In my judgment, for the detailed reasons given below, the jurisprudence of the CJEU supports HMRC's argument. Even though it is supplying educational services, FBT fails to meet the EU law-compliant supplier condition for the education exemption. FBT has fundamentally misunderstood the statutory scheme which in brief is that, in the case of university education, the UK has exercised a member state option to recognise non-public law bodies carrying on qualifying educational activities to a small group consisting of college and halls of universities which are integrated into the university's activities. This appeal must therefore be dismissed.

FBT's Grounds of Appeal

22. FBT has five grounds of appeal (as renumbered by me). I shall set out Ms Hall's submissions on them together. The five grounds are:

Ground 1: UK VAT law does not observe fiscal neutrality

Ground 2: A profit-making body can claim the education exemption

Ground 3: Education provided by FBT promotes the public interest

Ground 4: Parliament and the FTT failed to identify the comparator

Ground 5: Parliament has failed to identify the types of education which are to be entitled to the education exemption or appropriate criteria for ascertaining them

Ms Hall's submissions

Threshold issue: dissimilar treatment

23. Ms Hall's starting submission is that UK VAT law does not comply with the EU law principle of fiscal neutrality. This requires a member state to treat two similar bodies in the same way for tax purposes, and so a breach of the principle occurs when two relevantly similar bodies are treated in a different way for tax purposes. HMRC does not dispute the proposition that the member states must exercise their discretion under Article 132(1)(i) so as not to discriminate between relevantly similar bodies, which is ultimately a matter for the national court. I would add that, if authority were needed for these propositions, it would be found in one of Ms Hall's authorities which she cited for a different purpose, namely Case C-259/10 HMRC v Rank [2012] STC 23, concerning the application of fiscal neutrality to gaming machines.
24. Counsel are agreed that, if FBT is right on fiscal neutrality, there is no way that the UK legislation could be saved by what is often called a Marleasing construction, that is, a construction which ensures so far as possible that domestic legislation complies with EU law.
25. To get its argument on fiscal neutrality off the ground, FBT has to show that a similar body is treated more favourably than it. A university is, on its submission, a similar body. Ms Hall's argument is that FBT is, but universities are not, subjected to two rules, a "mainly acting" rule and an "all or nothing" rule.
26. The foundation for the argument is Ms Hall's reading of HMRC's decision letter dated 7 July 2010 and decision letter on review dated 10 August 2010. She identifies two rules in these letters: first, a rule that, once a person is entitled to the education exemption, all supplies of education are exempt (this is the "all or nothing" rule referred to above), and, second, a rule that to be entitled to the exemption a person must be mainly acting as an eligible body. So under the latter rule a body will fall outside the exemption if, like FBT, it is mainly providing some other form of education. Thus in its decision letter, HMRC wrote:

The consideration for eligible body status for the purpose of the exemption description above states, under Item 1[a] and Note 1(b), that all businesses supplies must be examined. Consequently, as in the case of FBT Limited we cannot determine status based solely on supplies/courses made to the University of Wales – the nature of all other supplies have to be taken into consideration…

27. That she submits represents an all or nothing rule. In addition in its review decision, HMRC wrote:

…a consequence of falling within Note 1(b) is that all supplies of education are exempt. Given that your client is not primarily concerned with the provision of university education, they are not an eligible body and their supplies of education are liable to VAT at standard –rate.

28. That passage, submits Ms Hall, represents a "mainly acting" rule. Ms Hall submits that this is not applied to comparators. When a local authority asks to be recognised as an eligible body, as providing education, it has many varied activities. So it could never get exemption if it were governed by private law.
29. Ms Hall then elides this mainly acting rule with a test as to fundamental purpose which she submits is new and non-EU law compliant. She submits that FBT has to show that providing degree courses is its fundamental purpose. As evidence of this test, Ms Hall relies on paragraph 41 of the First –tier Tribunal's decision. Article 41 reads:

41. Burton J in the SFM case confirmed that the test, which the United Kingdom has imposed in the legislation, is simply whether a particular college is a college of a university, and that that is done by weighing the factors as described above and, (crucially for this case), then the Tribunal, as in the SFM Tribunal's case is entitled to be influenced by the "fundamental purpose" of the body in question. Burton J was referred to the Tribunal's conclusions as to the fundamental purpose of SFM at paragraph 94 of the Tribunal decision (Decision number 17182). That Tribunal found that "the fundamental purpose of [SFM] is to provide education services leading to a university degree". We are not bound by, but note that at 94(iv), that Tribunal stated explicitly "In our view the everyday understanding of the word 'college' would not include it being part of a company providing totally different education services to a different age group." That is a view with which we agree and which we adopt.

30. Ms Hall also submits that the "mainly acting" rule fails to observe the EU law principle of legal certainty, that is, requirement that the law be "neutral, abstract and defined in advance". As I am not satisfied that the "mainly" acting rule as such exists and this legal certainty point cannot succeed if the legal certainty points under Ground 4 succeed, I do not take this point further.
31. Mr Hill submits that the contention of differential treatment is not made out.
32. As the question of differential treatment is a threshold point, I shall set out my conclusion on it at this stage. I agree with HMRC's position on this. In my judgment, Ms Hall has misread HMRC's statements quoted above. In the passage quoted from the decision letter, HMRC states correctly that to determine whether the education exemption applies it has to examine all the circumstances. The First-tier Tribunal also took this approach. HMRC proceeds to mention one of those circumstances, namely that FBT's are primarily (non-university related) activities. HMRC's reference to that one factor signals that it took that factor to be the most important indication that FBT was not an eligible body. In the context of its decision, I do not consider that HMRC can be read as saying that there is some rule that only those whose activities are primarily the provision of university education could apply.
33. Likewise there is no evidence that HMRC applies an all or nothing rule in practice. Indeed Ms Hall took us to HMRC v Open University [2015] UKUT 263 (TCC) where the HMRC accepted that the body can be exempt in respect of some only of its activities. Moreover, a university may also be a research institution but the education exemption would not apply to its research activity (as Mr Hill confirms): see Case C 297/00 EC Commission v Germany [2002] STC 982. It would only be exempt for university education activities. I would therefore respectfully disagree with the Upper Tribunal's conclusion on this point. However, that does not get Ms Hall home as FBT also lost before the Tribunals on the SFM factors (which is as I have explained essentially an integration test).
34. The logical consequence of the all or nothing rule if FBT were right would be that FBT would be entitled to the education exemption for all its activities. That is not what FBT claims. FBT is only claiming an exemption for university activities.
35. I will proceed, however, to consider Ms Hall's wider submission on fiscal neutrality on the basis that I am wrong on the conclusions so far.

Ms Hall's submissions on her remaining grounds of appeal

36. Ms Hall submits that the fiscal neutrality principle is breached because universities are the appropriate comparators for (non-university) providers of university education, such as FBT (I am of course assuming relevant differential treatment because of the all or nothing and mainly acting rules). This is not strictly correct because under UK VAT law, universities are not "bodies governed by public law": see University of Cambridge v HMRC [2009] STC 1288, which decides that universities do not form part of the public administration of the UK. FBT has to show that it has similar objects to bodies governed by public law having "such as their aim", that is, having as their aim "the provision of children's or young people's education, school or university education, vocational training or retraining" (Article 132.1(i) of the PVD).
37. Ms Hall submits that students would not draw any distinction between the services exempted and those which it provides. In support of this submission, Ms Hall relies on Rank, where the CJEU held that it was important in establishing similarity that the users of gaming machines would draw no distinction between them.
38. FBT's further grounds are points designed to reinforce up its core argument on fiscal neutrality. Ground 2 is about FBT's status as a profit-making enterprise. The CJEU in MDDP made it clear that a profit-making enterprise could still obtain the benefit of the exemption. That matter is of course common ground. Ms Hall contends that the Tribunals did not acknowledge that FBT can claim the exemption even though it is profit-making. I do not consider that this is the correct reading of the decisions of the Tribunals. If they had regarded its profit-making status as fatal to its claim to the exemption, they would surely have said so.
39. FBT's third ground of appeal is designed to show that FBT participates in the public purpose which the CJEU held in MDDP at [21] was the purpose of Article 132 to receive the benefit of the education exemption, namely to facilitate access by students to any form of education by reducing the cost, as provided under Article 132. To be contrasted are activities within Chapter 3 of the PVD (which include gambling), which are not activities in the public interest. Ms Hall continues that FBT's activities satisfy the purpose found by the CJEU, and therefore no further criteria should have been imposed. It follows, on her submission, that the restrictions in Note 1(b), as well as the SFM factors, are not authorised by EU law and that they are discriminatory.
40. Ms Hall's last two grounds are directed to showing that VATA and the decisions of the Tribunals fail to comply with the EU law principle of legal certainty.
41. Under its Ground 4, FBT submits that, by enacting and applying Note 1(b) (paragraph 3 above), the legislature and indeed the decision of the First-tier Tribunal are non-EU law compliant for failing to identify comparators. This can be taken with Ground 5, under which FBT contends that Parliament failed to identify (1) the types of education to be exempted, and (2) criteria to be applying for determining eligibility for exemption. Ms Hall submits that in MDDP the CJEU has made it clear that identification of these matters was necessary: MDDP, paragraph 54 (paragraph 10 above). Ms Hall submits that it is apparent from the reasoning employed by the First-tier Tribunal, and its mechanical application of the SFM factors, that it was not asking the right question. The right question was: has FBT objects similar to the aims of a body governed by public law providing university education? The SFM factors, on her submission, say nothing about whether a college has the aims of a body governed by public law providing university education. The rules must place all relevant bodies on an equal footing: see in relation to the exemption in Article 13A(1)(g) of the Sixth Directive Zimmerman at [43].
42. FBT's fifth ground is Parliament's inclusion of an exemption for "education", without specification of the particular types of education to be exempted or criteria as to how suppliers were to be identified, breaches the principle of legal certainty. VATA does not with respect to the education exemption contain criteria which are neutral, abstract and defined in advance, as required by paragraph 67 of the opinion of the Advocate General Kokott in MDDP:

67. In my opinion, the exercise of Member States' discretion in the recognition of private organisations for the tax exemptions under Article 132(1) of the VAT Directive cannot be left to either the national authorities or the national courts. Their consideration is necessarily related to the specific case and can be no substitute for an abstract rule on recognition. As Advocate General Ruiz-Jarabo Colomer has rightly stated, such classification criteria have to be neutral, abstract and defined in advance.

43. Accordingly, Ms Hall submits that Parliament had to identify the bodies by reference to their aims and that they failed to specify the aims of all the bodies.

HMRC's submissions

44. I start with Mr Hill's submissions directed to Ms Hall's submissions on fiscal neutrality (Ground 1). He submits that the exemption could only be given to bodies governed by public law or bodies having similar objects and satisfying the PVD supplier condition. It was not enough that the body provided education (see MDDP). Furthermore, on his submission, the UK could properly exempt universities, even though not bodies governed by public law. They were similar to such bodies. But in order to find that a body was similar to a body governed by public law, the tribunal or court has to have regard to the public nature of the services supplied. In this case, FBT could not succeed because it did not have a close enough relationship with the University of Wales.
45. Mr Hill contends that, as Morgan J in this case held, there is a two-stage test: first as to the supply and then as to the supplier: see generally C-495/12 HMRC v Bridport and West Dorset Golf Club at [36]: "In this connection, it should be observed that the scope of the exemptions in Article 132(1)(b), (g), (h), (i), (l), (m) and (n) of Directive 2006/112 is defined not only by reference to the substance of the transactions covered, but also by reference to certain criteria that the suppliers must satisfy."(underlining added). The First-tier Tribunal held that FBT supplied university education so the first stage was met. However, on Mr Hill's submission, FBT cannot show that it fulfils the supplier condition, that is, that it has objects similar to those pursued by bodies governed by public law. These must be the provision of services of a public interest nature.
46. Furthermore, following MDDP, the member state had to define the conditions necessary for this purpose. The CJEU cited in support of this point its decision in Zimmerman where the question was whether a body was "recognised as charitable by the member state concerned" for the purpose of Article 13A(1) of the Sixth VAT Directive. In answering that question, the CJEU held that national authorities, when considering whether a body should be so recognised, should have regard to (among other matters) the specific provisions of domestic law or administrative framework under which the body operated, the public interest nature of the activities of the taxable person concerned and the extent to which the costs of its supplies were met by public funding: Zimmerman at [31].
47. Mr Hill submits that the term "university education" is not restricted to the provision of educational services which directly lead to the obtaining of a university degree, but also includes being taught within a university or similar environment. Mr Hill relies on a passage from my judgment in HMRC v University of Leicester Students' Union [2002] STC 151 at [53], where I drew attention to the different forms of university and held that "[A] teaching university provides an environment in which undergraduates develop their thinking powers in the period of their undergraduate careers."
48. Mr Hill submits that FBT has to show that the supply at issue meets the criteria for the exemption. It is not enough therefore for FBT to point to other bodies which are entitled to the exemption. FBT had to show similar objects to a body governed by public law. To do that, it had to show that its objects meet the same condition as to public interest. It is up to the member state to decide what is necessary to constitute a public interest activity.
49. On fiscal neutrality, the UK in assessing the public interest was entitled to distinguish between fully integrated and other organisations in the public interest. HMRC accepted in SFM the original purpose of the reference to colleges and halls in Note 1(b) was to do with the colleges of Durham, Oxford and Cambridge. They are part of the university but not the university itself. However, legislation could be wider than this.
50. Further, Mr Hill submits that, for the purposes of fiscal neutrality, contrary to FBT's submission based on Rank, the tribunal cannot look just at the consumer's point of view (i.e. the students) because they are not interested in the ethos of the provider. A student will get the wider experience of university education if he attends a university. FBT says that the courses are analogous but courses have to be provided by bodies with similar aims to those of bodies governed by public law.
51. These submissions cover the second ground of appeal so that I next turn to Mr Hill's submissions on the third ground. Mr Hill submits that not all supplies of education are within the exemption and so the purpose found by the CJEU in MDDP takes FBT no further. Moreover, under Article 132(1)(i), in order to be satisfied as to the aims of a body which was not itself a body governed by public law, national authorities had to be satisfied as to the public interest nature of their work: see MDDP at [35]. Therefore the UK had confined the exemption to "colleges or halls" of a university. A member state was entitled and bound to set conditions and so a member state was entitled to require that as a matter of substance the body in question is linked with, or forms part of, a university.
52. Mr Hill submits that, as universities are not bodies governed by public law, they cannot be the comparators for the purposes of Article 132.1(i). I agree that is the natural reading of that Article. Mr Hill submits that what the UK has done is identify other bodies which qualify under Article 132.1(i): see Note 1(b), as amplified in the case of colleges by the SFM case. These criteria were applied to all bodies. FBT failed to show a sufficient degree of integration.

My conclusions on the submissions of the parties

53. All Ms Hall's submissions proceed on the basis that Parliament has not set conditions for the education exemption in compliance with EU law. It is now clear from MDDP that a member state can and should set the conditions for bodies which are not governed by public law which are to be entitled to the education exemption ("non-public bodies"). How it sets those conditions is a matter for national law.
54. No one has suggested that Parliament had to use any particular form of words to set these conditions. In my judgment, it was therefore open to Parliament to exercise the UK's option by deciding which non-public bodies were to qualify and then including a list of them in the relevant legislation. That is what Parliament has done in Note 1(b).
55. Parliament is obviously constrained by Article 132.1(i) as to what bodies it can include. In those circumstances, it has taken the view that the body must be one which provides education in like manner to a body governed by public law, that is, there must be a public interest element in its work. It has decided to draw the line, in the case of universities to those colleges, halls and schools which are integrated into universities and which are therefore imbued with its objects.
56. For FBT to show that its exclusion from this group is a breach of the fiscal neutrality principle would require it to say that it belongs to the same class as those institutions which meet the integration test in Note 1(b). Neither of the Tribunals made any findings that would support that conclusion and this Court is hearing an appeal only on a point of law.
57. FBT contends that Parliament has not met the requirements of the EU law principle of legal certainty by setting out criteria which are to apply to determine when non-public bodies seek to enjoy the education exemption. The criteria have to be "neutral, abstract and defined in advance". In my judgment, this is achieved by the combination of Note 1(b) and the SFM factors. These factors are neutral, they are abstract and defined in advance. By applying them, it is possible to know what supplies and which suppliers qualify for exemption.
58. Moreover Note 1(b) and the SFM factors apply equally to profit-making and not-for-profit entities. This disposes of FBT's Ground 2. Furthermore, it is clear that the Tribunals did not rule against FBT because it was a profit-making enterprise.
59. Parliament has taken a cautious view of who should be a non-public body entitled to the exemption especially when compared with Poland's (non-compliant) law before the MDDP case, but FBT has not in my judgment shown that its choice did not comply with any of the requirements of Article 132.1(i) or of the principles of fiscal neutrality and legal certainty. Note 1(b) achieves legal certainty even though Item 1, "education", if it had stood on its own, would not have done so. It is wrong, as FBT would invite us to do, to look at Item 1 on its own and then leap to the conclusion that the exemption fails the legal certainty principle. Item 1 has to be read with Note 1(b). Furthermore, it is clear that the position is not such as to disable FBT from knowing whether it is entitled to the exemption.
60. Ms Hall relies on a phrase in the answer given by the CJEU to the second question in MDDP (Judgment, [56] second indent) that proceeds on the basis that a person is only entitled to the exemption if he is objectively to be regarded as meeting the PVD supplier condition. In my judgment, this is merely saying that a member state has to exercise its discretion so as to lay down criteria which can be objectively ascertained, as opposed to (say) exemptions which are available if a minister so decides on the basis of some unspecified criteria. As I have explained, Note 1(b) and the SFM factors together provide the necessary criteria for objective assessment.
61. Ground 3 focused on the educational nature of FBT's degree-course activities. It turns on paragraph 41 of the decision of the First-tier Tribunal (set out in paragraph 29 above). Ms Hall contends that the observations of the First-tier Tribunal should be elevated into some new self-standing test which breaches the fiscal neutrality principle. I can take this shortly because, in my judgment, FBT has not construed this paragraph correctly. All that paragraph does is deal with one of the SFM factors. Those factors are applied to determine the degree of integration between a college of a university and the university in question for the purposes of Note 1(b). Unsurprisingly the First-tier Tribunal expected the fundamental purpose of a college of a university to be university education. This was simply one of the factors to be taken into account when evaluating whether FBT qualified for the education exemption.
62. The remaining grounds, Grounds 4 and 5, are covered by what I have already said about legal certainty because they proceed on the basis that Parliament has not set out the criteria, the comparators and the types of educational supply to be exempted from VAT, when it has done so in Note 1(b).
63. On this basis, a number of other points raised by Ms Hall, including the submission as to the importance of students' perceptions, do not have to be resolved.
64. Before coming to my final conclusion, I need to consider whether there should be a reference for a preliminary ruling to the CJEU.

Should this court make a reference to the CJEU for a preliminary ruling on any issue?

65. Ms Hall submits that this Court requires guidance from the CJEU on some nine issues. She submits, for example, that this Court needs guidance on the question whether the concept of a body which has similar objects to a body governed by public law is an autonomous concept or one which the member state can define. She points out that in the Open University case Henderson J made the point that there is a lack of CJEU authority on the term "body governed by public law" for the purpose of Article 132.1(i). She submits that this supports her submission that this Court could not with confidence decide this appeal without making a reference to the CJEU. By way of further example, Ms Hall submits that the CJEU has not decided how the member state should satisfy the PVD supplier condition where, as in the UK, there are no public law entities to provide a reference point. She submits that the CJEU jurisprudence contains indications that the concept of a body governed by public law is an autonomous concept of EU law. Ms Hall submits that the CJEU has not given a ruling on this exemption.
66. Ms Hall further submits that the CJEU did not in MDDP have to address one of the key issues in this case which is the distinction between university and other education, for which exemption is given. We need to go further in this case. Again I do not see that that issue arises.
67. Suffice it to say that I have found sufficient jurisprudence in the decisions of the CJEU brought to our attention to decide the issues on this appeal. Accordingly I would reject the application for a reference.

Arguments not going to the issues

68. Intending no discourtesy to counsel, I have not dealt with submissions which did not seem to go to any of the issues which we have to decide. In one telling phrase Ms Hall described her submissions as appearing to throw legal principles about like confetti. For example, I have not dealt with her submission that the basis on which this Court decided in her favour might affect the level of compensation to which FBT may be entitled, as compensation is not in issue on this appeal. She also submitted that there were drafting differences between Note 1 and also other exemptions in the Group 6 of Schedule 9 to VATA and also in the PVD. I do not derive any assistance from these other provisions. MDDP is a decision on the education exemption and it is not necessary to look at other provisions to decide points which have been decided in MDDP.
69. There was a further submission that there is some significance for this appeal in the change of wording in the Sixth VAT Directive and the PVD as Article 13 of the Sixth VAT Directive referred to member states "defining" the organisations or bodies and Article 132.1(i) refers to "recognise". Ms Hall contends that this was a deliberate change and that in MDDP, the CJEU used the Sixth VAT Directive and the PVD, but some parts of the CJEU's reasoning were based on recognition and some parts of it were a definitional exercise. I do not doubt that but do not see that that change has a bearing on the question in this appeal. It is a truism that some European Universities were formed centuries ago on the initiative of the ruler, for example Leiden University, the oldest University in the Netherlands, which was founded in 1575 by William, Prince of Orange, and so would not be defined in statute. One can well understand why the European Union legislature formed the view that recognition was a more appropriate concept. Note 1(b) achieves the result that all UK universities, even though not "bodies governed by public law," are bodies which are recognised by the UK for the purposes of Article 132(1)(i).

Conclusion
 


70. For the detailed reasons given above, I would dismiss this appeal.

Lady Justice Gloster

71. I agree.

Lady Justice Sharp

72. I also agree.