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

As it was before the FTT, HMRC’s primary position in this appeal is that Item 1(c) is not ultra vires the PVD, so that the question of a conforming interpretation does not arise.

Ms Mannion submitted that the FTT erred in law in reaching the contrary conclusion, both in adopting the approach in Loughborough FTT and in its own alternative approach of disapplying the word “primarily”. HMRC were unable to challenge the conclusion regarding Item 1(c) in Loughborough FTT itself, because they were the successful party overall in the appeal, but, said Ms Mannion, HMRC consider that it was wrong.

HMRC’s position is that Item 1(c) is permissible under the Directive because it is an “evidential tool” to ensure that the relevant event complies with Item 1(n), as being an event whose primary purpose is the raising of funds.

Ms Mannion argued that such a condition is permissible under Article 132(2) of the PVD, which permits Member States to introduce “any restrictions necessary” for the purposes of the exemption. Alternatively and in addition, it is permissible under Article 131 for the purpose of ensuring the correct and straightforward application of Article 132(1)(o), and avoiding abuse of the exemption.

If we do not accept HMRC’s primary position, Ms Mannion argued that in any event the FTT’s alternative conforming interpretations of Item 1(c) each overstepped the permissible limits of Marleasing. They amounted to giving direct effect to Article132(1)(o), and there had been no argument in this case that it had direct effect.