TC09640 - [2025] UKFTT 01114 (TC)

Purposive construction - relying on paragraphs 41 and 188 of PACCAR and its confirmation of paragraph 188 in R (Quintavalle) v Secretary of State for Health [2003] 2 AC 687 HMRC submit that a literal interpretation of an act may frustrate Parliament’s intent, especially when it focuses too narrowly on the wording of the provision without addressing the problem that provision intended to address. The role of the Tribunal is to act as “informed interpreters” examining not just the words of the statute but also its preamble, historical context, and related legislation.

Historical context and mischief rule – HMRC rely on the mischief rule as established in Heydon’s Case (1584) 3 Co Rep 7A i.e. that we must consider the common-law position before the making of the order, the mischief and defect for which the common law did not provide, the remedy adopted to address that mischief and the true reason for the remedy. They invite us to look at the historical context and background to the taxation of GP deputising services in order to understand the mischief at which the Order was addressed.

The Barras Principle - a presumption that terms used in legislation carry their established legal meaning. Here the terms “deputy” and “deputising service” were used in earlier NHS regulations, specifically the NHSGMPSR 1962 and 1972. These terms refer to out of hours GP cover provided by deputising services. HMRC contend that Item 5 uses these terms in the same sense as used in the earlier NHS regulations and should therefore be interpreted consistently with that wider use.

Use of admissible external aids - HMRC rely on and invite us to determine this appeal using the EN and Memorandum to the Order, together with official statements and contemporaneous legal commentary, HMRC guidance and the internal file of material which we have considered at paragraphs 26 to 44 above. They contend that these materials provide relevant context from which we are able to discern the Parliamentary intent of Item 5.

Conforming construction – applying the Marleasing principle, as a former member of the EU, the principle of conforming construction or interpretation must be applied such that we are required to interpret Item 5 “as far as is possible” in light of the wording and the purpose of article 132 of the PVD in order to achieve the result pursued by the PVD and thereby comply with the UK requirements arising under Article 189 of the Treaty. HMRC contend that the scope for conforming construction is wide and muscular including the implication of words into domestic statutes ensuring that they comply with the EU law and subject only to a restriction that the conforming interpretation should “go with the grain of the legislation”, be compatible with the underlying thrust of the legislation/consistent with the fundamental or cardinal features of the legislation ensuring that the interpretation adopted does not cross the line and amount to the judiciary making legislation.

The objective of Article 132(1)(c) PVD is to reduce the cost of healthcare (see for example paragraph 29 Ambulanter Pflegedienst Kugler GmbH v Finanzamt für Körperschaften I in Berlin (C-141/100) (Kugler)).

Two conditions need to be met to come within Article 132(1)(c): “medical services must be involved and they must be supplied by persons who possess the necessary professional qualifications” (Kugler paragraph 27).

Article 132(1)(c) PVD does not exempt every activity performed in the public interest or all those increasing the cost of healthcare (see d’Ambrumenil and another v HMCE C-307/01 [2005] STC 650 (d’Ambrumenil)paragraph 54).

The concept of the provision of medical care does not extend to include medical interventions carried out for a purpose other than that of diagnosing, treating and, insofar as possible, curing diseases or health disorders (see Kugler paragraph 38 and d’Ambrumenil paragraph 57).

Group 7 Schedule 9 VATA implements the obligations of the UK under Articles 132(1)(b) – (e).

Applying the principle of conforming interpretation we are required to interpret Group 7 Schedule 9 VATA “as far as possible, in the light of the wording and purpose of the directive”.

Article 132(1)(c) PVD provides for “the provision of medical care in the exercise of the medical and paramedical professions as defined by the member state concerned”.

Exemptions are independent concepts of community law which are required to be interpreted strictly, but not restrictively (see Mainpay paragraph 61).

To be construed consistently with the provisions of Article 132(1)(c) PVD Items 1 – 5 must all be interpreted as limited to the provision of medical care.

To the extent that the language adopted by Parliament permits an interpretation which is wider than the provision of medical care, Item 5 must be interpreted in a more restricted way to avoid a non-confirming interpretation, where necessary interpreting the provision with additional imputed wording.

When the historical context and permissible aids to interpretation are considered, it is plain that Item 5 was implemented to apply only to the provision of medical care through a deputy for a GP providing out of hours cover where the individual and identified GP was otherwise required to provide the medical care personally.

Applying the Barras principle we are entitled to look to the regulation and requirements for GP deputising arrangements as provided for under the NHSGMPSR 1972 to understand the limited scope of Item 5 as described in the EN to the Order.

If Item 5 is construed so as to be capable of including a supply of staff, it is not compatible with the terms of the directive and such an interpretation should be avoided unless to do so goes against the grain of the legislation.

There is nothing against the grain of the legislation which would preclude an interpretation of Item 5 so as to read “the provision of a deputising service consisting of the provision of medical care for a general practitioner registered in the register of medical practitioners”.

Such interpretation simply represents the application of the muscular approach or strained interpretation expressly permitted to ensure, so far as possible, UK legislation is interpreted to achieve the UK’s EU obligations.