HMRC v Isle of Wight Council & ors [2007] EWHC 219 (Ch)

Judgment (about 18 pages) of Rimer J in the Chancery Division of the High Court giving reasons for referring questions to the European Court of Justice for a preliminary ruling in the HMRC v Isle of Wight Council and others test case relating to VAT on off-street council car parking.

The questions to be referred relate to the interpretation of the second paragraph of Article 4(5) of the Sixth VAT directive:

However, when [public authorities] engage in [paid-for] activities or transactions, they shall be considered taxable persons in respect of these activities or transactions where treatment as non-taxable persons would lead to significant distortions of competition.

The wording of the questions is yet to be agreed, but the judge decided that they need to cover:

Update, August 2007: See ECJ case documents, including the questions, which read:

Is the expression "distortions of competition" to be ascertained on a public body by public body basis such that, in the context of the present case, it should be determined by reference to the area or areas where the particular body in question provides off-street parking or by reference to the totality of the national territory of the Member States?

What is meant by the expression "would lead to"? In particular, what degree of probability or level of certainty is required for that condition to be satisfied?

What is meant by the word "significant"? In particular, does "significant" mean an effect on competition that is more than trivial or de minimis, a "material" effect or an "exceptional" effect?

For further information or advice please contact Franck Latrémolière.

Filed under ECJ/CFI, Economic activity, HMRC, UK courts, VAT.

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