In a decision released today in a test case concerning the provision of sports and leisure facilities by all local authorities in Northern Ireland, the First-tier Tax Tribunal has ruled in Mid Ulster District Council (formerly Magherafelt District Council) v Comrs. for Her Majesty’s Revenue and Customs TC/2011/687& TC/2012/9253 that the provision of those facilities is not subject to VAT. The case was the designated lead case for Northern Ireland. Chelmsford City Council v HMRC TC/2011/7844 was the lead case for England & Wales and Midlothian Council v HMRC TC/2011/7816 for Scotland.
The decision for Northern Ireland will potentially have far-reaching implications for all UK local authorities providing services pursuant to any statutory duties and powers which can be classified as a special legal regime. The Tribunal found on the evidence that local authorities in Northern Ireland were not in competition with private providers of sports and leisure services. The appeal was therefore allowed. The question whether the same is true for the rest of the UK will be determined on the evidence at a further hearing if the parties so request.
Melanie Hall QC and Harry Gillow acted for Mid Ulster (formerly Magherafelt) District Council, the successful Appellant. Raymond Hill acted for HMRC. The decision can be read here. The decisions for England, Wales and Scotland can be read here and here.