You're barred!

An interesting High Court case this month, where Anglia Ruskin Students’ Union were refused permission to apply for judicial review of HMRC’s decision that a café run by the Student’s Union was a “bar”, and therefore ineligible for VAT exemption under an extra statutory concession. 

HMRC's VAT Notice 709/1 explains that by concession catering supplies made by student unions can be VAT- exempt, but not when made in "bars."  In this case, HMRC concluded that the café was a bar, which meant the concession did not apply.

The Union appealed, arguing that the café should not be classified as a bar since it primarily sold food despite also selling alcoholic drinks.  The High Court did not agree, stating that the café met the ordinary definition of a bar, including selling both drinks and food.  The court also rejected the Union's argument that HMRC's policy was irrational, concluding that such café-bars engage in taxable business like any other bar and their supplies are not closely related to the supply of education by an eligible body.

The High Court's decision highlights the importance of adhering to the ordinary definition of terms and the rationale behind HMRC's VAT exemption policy for student unions. This underlines the value in obtaining support from a VAT advisor or discussing an uncertain position with HMRC.