SolvedVBNB72300 | Legal history: cases about operating in a commercial market
From HM Revenue & Customs · VAT Business/Non-Business Manual
Please note that the following material is not a full summary of the case - it merely highlights the principle referred to in the appropriate section of this manual.
Hutchison 3G UK Ltd (Case-369/04) [2010]
The regulatory body granted licences through auction to telecommunication operators authorising them to set up and exploit telecommunication equipment for a specified period. The operators considered that the amount paid should have been subject to VAT and sought to recover the equivalent amount as input tax. HMRC rejected the claims on the grounds that the issuing of licences was not subject to VAT. The question was whether the Secretary of State was engaged in an economic activity. The court ruled that the regulatory authority exclusively carried out the activity of controlling and regulating the use of the spectrum which is a function delegated to it. It was creating a market rather than participating in one and not exploiting property for the purposes of obtaining income on a continuing basis. Accordingly the issuing of licences to use telecommunications equipment was not economic activity and the fact that there was a payment involved could not change the legal status of the activity.
SPÖ Landesorganisation Kärnten v Finanzamt Klagenfurt (Case C-267/08) [2010] STC 287
A political party as part of its public relations role supplied advertising materials, the activity was subsidised from public funds because income was not generated on a continuing basis. The court found that the appellant’s activity was the development of informed political opinion with a view participation in the exercise of political power and therefore non-economic because it did not participate in any market.