An ongoing dispute over a Hampshire college’s VAT rebate that has “a potentially wide impact” has gone all the way to the European courts, after a third visit to the courtroom failed to resolve the college’s battle with the taxman.

The European Court of Justice will now decide whether supplies for Brockenhurst College’s training restaurant, MJs, are exempt from VAT, after the Court of Appeal at the Royal Courts of Justice agreed to refer the case following a hearing on November 4.

In his summary of the hearing, the Chancellor of the High Court, Sir Terence Etherton, said: “The interpretation and application of the exemption in Article 132(1)(i) on the facts of the present case is not acte clair. The facts are not unusual and so the decision in the present case has a potentially wide impact.”

Many colleges in England run similar training facilities — including restaurants, hair salons, spas and theatres — that are staffed by students and open to the public. As previously reported by FE Week, successful payback campaigns in the vein of Brockenhurst’s could net the sector tens of millions of pounds.

The issue at stake is whether supplies to the restaurant are “closely related” to the education of learners at the college, and should therefore be exempt from VAT.

A hearing in February 2014 ruled that they were, and awarded Brockenhurst College £55,000 — representing four years’ worth of tax payments.

The college won a second hearing, in August 2014, after HMRC appealed the decision.

At the third hearing in November, the Court of Appeal agreed with the request from both HMRC and the college to refer the case to the European Court of Justice on the basis that the law was unclear.

A spokesperson for the European Court of Justice confirmed that the case between the college and HMRC arrived on December 24.

No date has yet been set for when a decision would be made, the spokesperson told FE Week, adding that the process “typically” takes around 18 months.

Brockenhurst College principal Di Roberts declined to comment on the case.

Picture by: Horst Galuschka / DPA/Press Association Images

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