UT/2023/000115 - [2025] UKUT 00004 (TCC)

The statutory requirement is that the Show is “an event…whose primary purpose is the raising of money”.

The FTT dealt first (as shall we) with the second basis on which it concluded that this requirement was satisfied, namely that on a proper construction this wording requires only that fund-raising was one important purpose of the event.

Looking first at the language used, we agree with HMRC that it does not support the FTT’s construction. That construction effectively relies on three conclusions. The first is that “primary” mean “main”, the second is that “main” means important, and the third is that there can be more than one primary purpose to an event.

Mr Firth’s skeleton argument asserted that it was common ground that “primary” and “main” are synonymous (Footnote: ²). Ms Mannion filed a supplementary note which stated that this was not correct. HMRC’s position is that main can have a wider meaning than primary and, most importantly, that primary may be synonymous with “the main”, but it is not the same as “a main”. HMRC further dispute that “main” means merely “important”.

We broadly agree with HMRC’s position. While “the primary purpose” may in general have the same or a similar meaning as “the main purpose”, both main and primary are words which describe something more than importance. A secondary or incidental purpose, which is neither the main nor the primary purpose, may nevertheless be an important purpose.

In concluding that a primary or main purpose simply means a purpose which is important (at FTT[84]), the FTT stated that it was agreeing with the conclusion to this effect by Judge Kempster at [86] of Loughborough FTT. In fact, there is no such conclusion at [86] of Loughborough FTT or elsewhere in that decision. Mr Firth argued that authority for the proposition is found in Travel Document Services v HMRC [2018] EWCA Civ 549 (“TravelDocument Services”). We do not agree. The only reference to that issue in that decision is to record a bare assertion by counsel to that effect (Footnote: ³).

We also consider that the FTT erred in concluding that Item 1(b) contemplates multiple primary purposes, and is satisfied if one of those purposes is fund-raising. In reaching that conclusion, the FTT’s reasoning was as follows:

In relation to Loughborough FTT, the FTT referred to the statement at [85] of that decision that “a primary purpose of fundraising is a fair interpretation of the legislative wording in Article 132(1)(o)”. However, in our opinion that puts too much weight on the use of the word “a”, and more importantly, fails to take into account the remainder of the decision. In fact, Judge Kempster preferred the approach in Blaydon, which broadly endorses HMRC’s interpretation, and said at [58] that “a “fundraising event” is an event the main purpose of which is to raise funds”. At [62], Judge Kempster also said this:

Judge Kempster described the statement on which the FTT relied as following from his conclusions at [56]-[64], which include the passages we have set out, and it would be inconsistent with those conclusions for the statement to bear the meaning ascribed to it by the FTT. The FTT’s reliance on Loughborough FTT was, therefore, misplaced.

The FTT stated that its approach was consistent with Blaydon and Newsvendors, which “drew a qualitative dividing line between ‘the main purpose’ and a ‘merely incidental purpose’”: FTT[86]. However, neither of those decisions addressed the point which the FTT determined, namely whether Item 1(b) encompassed multiple primary purposes. In fact, the tribunal in Blaydon stated (at page 3) that “…a “fundraising event is an event the main purpose of which is to raise funds”. While Newsvendors and Cheltenham did not take the same approach, all of Blaydon, Newsvendors and Cheltenham concerned the pre-2000 provision, which differs from Item 1(b). In Loughborough Students Union v HMRC [2013] UKUT 517 (TCC) (“Loughborough UT”), the Upper Tribunal specifically referred to the difference in wording, signalling that the pre-2000 authorities cannot simply be read across to Item 1(b). It said this, at [55]-[56]:

We consider that Blaydon and Newsvendors did not support the FTT’s analysis.

The FTT further stated that it considered HMRC’s interpretation of Item 1(b) to be unnecessarily restrictive and inconsistent with case law guidance as to the interpretation of VAT exemptions. We do not consider that the case law guidance which we have set out above in relation to the construction of VAT exemptions supports the interpretation adopted by the FTT of the clear statutory language. Taking into account the context and underlying purpose of the exemption, an event “whose primary purpose is the raising of money” cannot permissibly be construed as describing an event of which one important purpose is the raising of money.

In conclusion, we consider that the FTT erred in law in construing Item 1(b) as describing an event of which one important purpose was fund-raising.

We turn to the FTT’s alternative basis for deciding that the Show satisfied Item 1(b). This was that fund-raising should not be viewed as a discrete purpose but as one of two equally important and inter-dependent purposes, which were the main purpose of the Show.

The FTT’s main findings of fact on this issue are set out at FTT[44]-[46]:

Ms Mannion’ skeleton argument submitted that this approach was impermissible because it was “founded on and undermined by” the FTT’s error of law in relation to the first alternative, namely its conclusion that Item 1(b) permitted multiple main purposes.

We do not agree. We consider that the FTT was here reaching a conclusion that if it was necessary to determine the single primary purpose of the Show, as a matter of fact it was wrong to separate the purposes of fund-raising and education. Moreover, the FTT concluded, it was not possible to “sensibly rank” those purposes to determine which was most important. This alternative analysis was a different approach to the construction of Item 1(b), which was not dependent on or infected by the error of law which we have found in relation to the FTT’s first approach.

In her oral submissions, Ms Mannion argued that this alternative analysis was not permissible, because as a matter of law it is necessary in applying Item 1(b) first to find all the separate purposes of an event and then to find which of those purposes was the single primary purpose. That process, she said, did not permit a finding that purposes were intertwined or inseparable. In response to a question, Ms Mannion stated that if as matter of fact it was found that two purposes were equally important, then there would be no primary purpose.

We do not consider that Ms Mannion’s restrictive approach to ascertaining the primary purpose of an event is justified. The requirement that the primary purpose is “the raising of money” should be interpreted in context and taking into account the purpose of the exemption in Item 1. As Mr Firth correctly pointed out, in raising money at an event a charity is very likely to be doing so in the context of an intention to advance its charitable purposes, and, as Mr Firth put in in his skeleton argument, “it makes no sense to exempt events intended to raise funds to pursue the charity’s objectives but to exclude exemption if the same event actually pursues those charitable objectives”.

Looking at Item 1(b) in context, by virtue of Item 1(a) the exemption is applicable only if the event is one “that is organised for charitable purposes by a charity…”. In our opinion, the FTT was entitled to conclude that the requirement in Item 1(b) was not failed in a situation where, as a matter of fact, the primary purpose of the event consisted of fund-raising which was inextricably intertwined with the furthering of the charity’s charitable purposes. Put another way, Ms Mannion’s interpretation produces the curious result that an event can only fall within both (a) and (b) if it is organised for charitable purposes but not primarily for charitable purposes.

The alternative basis on which the FTT found that the Show satisfied Item 1(b) was dependent on its findings of fact in this particular case, which we have set out above, which were clearly open to it on the evidence.

We should mention that Ms Mannion sought to challenge the FTT’s decision, at FTT[87], to reject HMRC’s argument that because an annual show is regular and not “exceptional”, it cannot be a fund-raising event within the exemption. The FTT was, in our opinion, entitled to regard the annual nature of the event as a relevant factor into account in its assessment, but without affording it significant weight.

We consider that the alternative basis on which the FTT reached its conclusion that the Show satisfied Item 1(b) was one which was available to it as matter of statutory construction and on the particular facts found in this case.

HMRC’s appeal in relation to Ground 1 is dismissed.