Value added tax - bookmaker employing agent to take telephone bets - agent's services not within betting and gambling exemption

United Utilities Ltd v Customs and Excise Commissioners: CA (Lords Justice Auld, Arden and Jacob): 8 March 2004

A provider of betting facilities employed another company as its agent in respect of a telephone betting service.

The agent provided the premises, office and computer equipment and personnel.

Calls from customers placing bets with the principal on sporting and other events were received by the agent's employees who accepted bets only if the odds were quoted on the principal's game software or with the express permission of the principal.

The agent did not handle monies, set the odds or appraise bets.

The VAT and duties tribunal decided that the services provided by the agent were outwith the scope of the exemption for betting and gambling provided by article 13B(f) of Council Directive 77/388/EEC.

Ferris J [2002] EWHC 2811 (Ch); [2003] STC 223 dismissed the agent's appeal.

The agent appealed.

David Goy QC and Conrad McDonnell (instructed by Deloitte & Touche, accountants) for the agent; Kenneth Parker QC (instructed by Solicitor, Customs and Excise) for customs.

Held, dismissing the appeal (Lady Justice Arden dissenting in part), that the agent 'accepted bets' only in a mechanistic sense, having no discretion in the matter, and provided purely administrative services for the principal's betting business; that there was no principle that a person providing such services to a provider of exempt transactions thereby gained exemption; that section 47(3) of the Value Added Tax Act 1994 did not deal with supply by an agent to his principal which was entirely separate from the supply made by the principal through the agent, and would only enable an agent's services to be treated as exempt where the agent acted in his own name and provided all relevant betting facilities to customers, transacting the bets and receiving the stakes for the account of his principal; and that, accordingly, the services provided by the agent were outwith the scope of the article 13B(f) exemption.