TC09640 - [2025] UKFTT 01114 (TC)

The principle of conforming interpretation requires that we recognise the UK’s EU obligation to implement the EU VAT Directives and thereby that we must, “as far as possible, in light of the wording and purpose of the directive” interpret Item 5 in accordance with the provisions of Article 132(1)(c) (Marleasing SA v La Comercial Internacional de Alimentación SA (Case C-106/89) paragraph 8). In doing so we must “examine the whole of the relevant legislation” and we are “not confined to construing the existing words of the legislation” (see Test Claimants in the FII Group Litigation v HMRC [2016] EWCA Civ 1180, [2017] paragraph 104) i.e. we are entitled to adopt a strained interpretation, reading down or in words to achieve a conforming construction (HMRC vIDT Card Services Ireland Limited [2006] EWCA Civ 29).

These wide interpretive powers have been summarised by the Upper Tribunal in Banks v HMRC [2020] UKUT 101 (TCC) (Banks)at paragraph 65(i) – (vii):

“(i)

The obligation on UK courts to construe domestic legislation consistently with EU law obligations is both broad and far-reaching;

(ii)

It is not constrained by the normal domestic rules of statutory interpretation;

(iii)

It does not require ambiguity in the legislation being interpreted;

(iv)

It is not an exercise in semantics or linguistics;

(v)

It permits departure from the strict and literal application of the words used by Parliament;

(vi)

It permits the implication of words necessary to comply with EU law;

(vii)

The precise form of the words to be implied does not matter; …”

The breadth of the interpretive tool and the scope of its limitations are now stable law, and we can turn to any number of authorities that confirm the approach we are required to take in addition to those referenced above:

However, it is not the case that the power is unrestricted or limitless. The judiciary does not have a breadth of interpretative power which permits us to step into the shoes of the legislature particularly where the legislative language was adopted to enact a policy choice of the executive.

The restrictions are summarised in Banks, as follows:

“(viii)

the interpretation adopted should ‘go with the grain of the legislation’ and be compatible with the underlying thrust of the legislation in issue;

(ix)

an interpretation cannot be adopted which is inconsistent with a fundamental or cardinal feature of the UK legislation (as that would be amendment rather than interpretation);

(x)

the interpretation adopted cannot require the court to make a decision which it is not equipped to make nor lead to important practical repercussions which the court cannot evaluate.”

Alternatively put, the restrictions preclude an interpretation which is contra legem but, as we read and interpret the various cases to which we were referred by both parties, the term “contra legem” substantively, and perhaps collectively, joins the restrictions identified in paragraph 110 above.

The Upper Tribunal recently adopted the position, in HMRC v Yorkshire Agricultural Society [2025] UKUT 4 (TCC) (Yorkshire AS)(at paragraphs 105 – 110), that the limits on conforming interpretation are themselves to be restrictively applied so as not to frustrate the possibility of conforming construction. However, this was in the context of legislation imposing what the Tribunal found to be an impermissible additional restriction, limiting the full scope of the exemption as provided for under the PVD, rather than with a view to limiting the scope of domestic provisions drafted more widely than a directive obligation.

In our view, the critical case we must apply is Ampleaward. That case draws the line between permissible conforming interpretation and impermissible legislative amendment as founded on the availability of different interpretations of the words used. As stated by the Court of Appeal “if the wording of the national rule allows of several interpretations, the national court must apply, from amongst the various interpretations, the one which will bring the provision of national law into harmony with Community law”. If the language leaves no room for interpretation, is clear and/or unequivocal, even if ultra vires the terms of the directive it purports to implement, conforming interpretation will not be permissible; particularly where the conforming interpretation advocated aims to limit the scope of the domestic statute to bring it in line with the authorising EU provisions.

We consider that the “provision of a deputy” i.e. someone who acts on behalf of another or in a designated role of another, cannot represent the provision of medical care. The recipient organisation is making the supply of medical care with the deputy acting as the resource by which the medical care is provided. That is not a service meeting the terms of any other provision of Group 7, particularly not Item 1. It is not the provision of medical care, either directly or indirectly. That is so irrespective of the terms of Article 132(1)(c) PVD and the purpose of exempting the provision of medical care.

For the reasons we have set out in our analysis under the other interpretive approaches, we consider that Parliament’s intent was to exempt supplies not otherwise exempted under Group 7 and where the provision of medical care was facilitated through the provision of deputies, temporary workers or locums provided by an employing third party which does not make supplies of medical care.

We therefore consider that the thrust, grain or intent of article 3(c) of the Order, as interpreted with the EN and otherwise in the context of Group 7 and its history, was explicitly to provide an exemption for GP out of hours deputising services because it was considered that the services did not meet the terms of Item 1 (as interpreted pursuant to what is now note 2) but using language which was deliberately wider than a deputising service (as interpreted through the lens of the NHSGMPSR).

It is our view that to limit the language used by Parliament by imputing any of the proposed formulations posited by HMRC is against the grain and contra legem. It would undermine a policy decision to exempt the provision of deputies for all branches of medical practitioners by legal/natural persons whose supplies of services did not otherwise meet the terms of Item 1 (construed with what is now note 2). As the Appellant contended, we are not being invited to construe words with a range of potential interpretations in a particular way. We are, instead, being asked to interpret words bearing only one meaning as something entirely different.

Further, and by reference to the analysis in Ampleaward, we consider that the construction we are invited to adopt represents an impermissible attempt by HMRC to narrow legislation which was drafted in terms wider than the permissible EU exemption. Even on HMRC’s interpretation (i.e. applying only to deputising services) in light of Mainpay and by reference to the provisions of NHSGMPSR, Item 5 applies to a supply of staff. As such we are invited to limit the extent to which Item 5 is non-conforming rather than to apply an interpretation which conforms.

Had we been prepared to adopt the interpretations urged upon us, as noted in Rapid,such interpretation would render Item 5 nugatory. The provision of medical care by any individual on the register of medical practitioners is and was already exempted under Item 1. Item 5 cannot reasonably be a subset of Item 1. The provisions were designed to provide discrete and accretive heads of exemption.

In this regard therefore we respectfully disagree with the conclusion of the Tribunal in Rapid that a conforming construction is possible. In doing so we note that the Tribunal in that case does not appear to have had the benefit of the analysis with which we were presented. As a matter of judicial comity we are not obliged to follow a decision of competent jurisdiction where we consider it to be wrong; accordingly we do not follow the decision in Rapid.

We conclude that there is no conforming interpretation open to us.