UT/2023/000021 - [2024] UKUT 00334 (TCC)

As the Court of Appeal clarified in Wakefield, the key question for whether the “economic activity” requirement is satisfied is whether the supply is “…made for the purpose of obtaining income”.

Many of the Trust’s submissions on this issue overlapped to a large extent with those under Article 2 regarding the activity being one carried out by public bodies in line with public duties and with public funding. However a central tenet of the Trust’s case on Issue 2 was that the provision of healthcare services by the Trust was not operated, or for that matter realistically capable of being operated, in the way that a private operator seeking profit would do it. Rather, the Trust’s activity reflected the performance of its statutory functions. The very fact that various constraints were imposed on service operators undertaking the specified health services meant that it was an unattractive activity for private operators to take on. That reflected the public health nature of the activity and the fact that it was one typically carried out by public bodies.

HMRC’s response, in brief, is that the existence of a statutory duty or function underlying the particular activity is legally irrelevant to the analysis whether that activity is “economic”. Moreover, it was wrong, as a matter of law, to make a comparison with a profit-seeking private operator.