TC09680 - [2025] UKFTT 01332 (TC)

It is Parliament’s role to legislate. The role of this Tribunal in confined to interpreting Parliament’s enactments. Very considerable caution is required before concluding it is appropriate, as an act of interpretation, to add words to correct an obvious drafting error.

However, I have reached the view that this is one of those very rare occasions where it is permissible, and indeed required of me, to read words into legislation to correct an obvious drafting error.

The insertion is not too big, it simply completes a list of institutions reflecting devolution arrangements as they now prevail in the UK.

Further, the subject matter is not penal, it is concerned with the appropriate charging of VAT in a consistent and comprehensive manner across the nations of the UK.

While I find for HMRC on this basis, for the reasons set out above, there are two parts of their argument I reject.

HMRC suggest since the 2002 Order was made by negative resolution, being laid before Parliament on 20 March 2002 and coming into force the following day, such a correcting interpretation is particularly apt. In support of this they rely on the speech of Lord Mance in R (Noone) v Governor of Drake Hall Prison [2010] UKSC 30; [2010] 1 WLR 1743 at [75].

Whilst I accept delegated legislation which has had limited parliamentary scrutiny is more readily amenable to correction for drafting error, I do not consider such considerations carry any weight in this case. This is because the error was not in the 2002 Order. When the 2002 Order was made the GWA 2006 had not been enacted. Accordingly, the National Assembly for Wales had no powers to pass primary legislation – it could only pass subordinate legislation in place of the Secretary of State. There was therefore no drafting error in omitting the National Assembly for Wales at that time – any subordinate legislation it passed would be pursuant to a UK Act of Parliament and so covered by the definition of “state regulated”.

As noted HMRC seek to rely on the explanatory note to the 2002 Order. So far as is relevant to Item 9 it states:

“The effect of this Order is to specify the types of organisations that are entitled to exemption for the purposes of item 9 of Group 7 (welfare services) as well as the types of services the supply of which can be exempted under that item. In addition, the Order amends item 4 to enable provision to be made in a new Note (7) for a consistent interpretation of what is now termed a ‘state-regulated’ institution in both item 4 and item 9.

…

Article 4 substitutes a new item 9 (welfare services) which removes the requirement that supplies be made otherwise than for profit. Further, it provides that exempt supplies of welfare services can be made by state-regulated private welfare institutions, as well as by charities and public bodies.

Article 5 substitutes a new Note (6) (definition of welfare services) which inserts a reference to care within the exemption for services directly connected with children and young persons. Further, it provides that, in the case of services supplied by a state-regulated private welfare institution, the only services that are included within the exemption are services in respect of which the institution is regulated.

Article 6 inserts a new Note (7) to provide a common definition of “state-regulated” for the purposes of the institutions referred to in items 4 and 9.”

I find it to be of no assistance, and so neutral on the issue.

This is sufficient to determine the appeal in favour of HMRC. As I heard arguments on updating construction and conforming interpretation I also consider them briefly.