TaxAdministrationCustoms drags out zoo spat with E&Y

Customs drags out zoo spat with E&Y

Ernst & Young and 'tunnel-visioned' Customs & Excise are at loggerheads over a decision by the European Court of Justice, which may cost the government agency up to £40m.

In a long-running spat over whether zoos should pay VAT on admission fees, the ECJ recently ruled in favour of the firm – which is advising the UK zoos consortium – so long as management decisions are made by non-paid trustees.

But according to the firm, Customs, which it described as ‘tunnel-visioned’, has not contacted E&Y since the decision last month. The decision could force Customs to hand back VAT charged on the admission money since 1990 – when UK rulings were supposed to fall in line with European directives.

However, the firm welcomed the ECJ’s decision. Martin Scammell, VAT partner at Ernst & Young, said: ‘We are delighted at the Court’s decision and it points towards an eventual victory for our client. The Zoological Society of London (which owns London Zoo and Whipsnade Wild Animal Park) has been at the forefront of a six-year battle with HM Customs, and it has been a key member of a consortium of zoos represented by Ernst & Young.

‘The zoos potentially stand to be repaid an estimated £30m to £40m in VAT that has been overpaid since 1 January, 1990.’

The basis of the case was a challenge to HM Customs’ interpretation of the European legislation that exempts cultural services from VAT provided the bodies supplying the service fulfil certain conditions.

The legislation states that a body is eligible for the exemption if it cannot distribute any profit; applies any profit it does make to the continuance and furtherance of its activities and should ‘be managed and administered on a voluntary basis’.

Nobody at Customs was available for comment.

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