Womens' college did not 'occupy' its library, Law Lords say as they dismiss taxman's appeal
Newnham College has won the right to avoid VAT on its £7.5m library following
a House of Lords ruling.
The Lords rejected an appeal from HM Revenue & Customs on the case
As an educational supplier, Newnham would have paid VAT on its suppliers’
bills but not been able to reclaim VAT itself. So the ‘famously poor women’s
college’, as it is referred to in the judgment, opted to set up a company to
build the library that could reclaim the VAT.
The taxman objected to the structure saying that it should be set aside for
tax purposes, but the law lords disagreed, saying that it had not been proven
that the college ‘occupied’ the library.
‘There is nothing in the arrangements, whether in law or in practice, which
contradicts or displaces the right of exclusive occupation granted to the
company by the lease, ‘ Lord Hoffman said.
‘The practical physical control of the library premises is in the hands of
the librarian and her staff, who act on behalf of the company. It is they who
have the right to admit or exclude persons from the library and they do not
share this right with the college.
‘The college is contractually entitled to have its members in good standing
admitted and provided with books and other services, but these rights cannot be
characterised as rights of occupation,’ he said.
Only one of the five law lords dissented from that verdict.