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The Court of Appeal (Vos (MR), Singh LJ and Falk LJ) has today dismissed two appeals brought by Charedi Jewish children and Evangelical Christian children challenging the Finance Act 2025 which removed the exemption on VAT for private school fees.
The Charedi Jewish Claimants, represented by Khatija Hafesji, argued that the failure to implement a “low cost” fee exemption (exempting schools charging less than £7690 a year from the charge) unlawfully discriminated against them contrary to Article 14 ECHR read with A2P1.
The Charedi Jewish Claimants had a number of sub-grounds of appeal, including (i) that the Divisional Court had failed to ask itself whether the measure was in fact objectively justified, and (ii) that the Divisional Court was wrong to accept the government’s “pluralism policy” justification. The “pluralism policy” was a reference to the government’s assertion that the state education system provides a “pluralist” education suitable for children of all faiths and none. If children from certain religious minorities felt that such education was nevertheless not acceptable to them, the failure to make an exemption was justified in the context of the “pluralism policy”.
Applying the recent Supreme Court decision in Shvidler v SSFCDA [2025] UKSC 30, the Court of Appeal carried out its own proportionality assessment. The Court agreed with the Charedi Jewish appellants that the Divisional Court had failed to apply the 4-stage test in Bank Mellat, and ask itself whether there was an objective justification for the failure to treat Charedi Jewish children differently. Instead, the Divisional Court had considered only whether decision fell within the state’s “margin of appreciation”. The Court of Appeal stated: “it is important not to avoid the question of objective justification which must be addressed in this case… although the authorities make numerous references to metaphors such as “margin”, “area” and to varying degrees of intensity of review, ultimately it seems to us those are not legal tests to be applied by a court. They are helpful tools which may assist the court on its path as it answers the questions posed by the legal test, but they are not the legal test. The legal test, as we have already said, is to be found in the four-stage test for proportionality in Bank Mellatt” (para 85).
The Court of Appeal also agreed with the Charedi Jewish appellants that the “principled” justification favoured by the Divisional Court (the “pluralism policy”) was given too much weight by the Divisional Court in the proportionality analysis. The Court of Appeal departed from the Divisional Court, when making its own fresh assessment of the proportionality of the measure, by placing considerable weight on the “practical” justifications advanced by the government, which had found little favour with the Divisional Court. Those practical considerations included the administrative difficulties of operating an exemption, the risk of abuse, and the loss of revenue.
Khatija Hafesji acted for BYL and BAU (the (Claim 1) Appellants), instructed by Rook Irwin Sweeney.