In Reverend Jane Taylor Trading as Mill House Retreats v HMRC [2021] TC8315/V, the First Tier Tribunal (FTT) found that the provision of spiritual retreats was not VAT exempt. Welfare services were being provided but Church of England supervision did not make them state-regulated.

Item 9 of Group 7 (Health and Welfare), Schedule 9, VAT Act 1994 provides that:

  • The supply by a charity, a state-regulated private welfare institution or agency, or a public body of Welfare services and of goods supplied in connection with those welfare services are exempt from VAT.
  • Note (8) defines state-regulated as approved, licensed, registered, or exempted from registration by any Minister or other authority pursuant to a provision of a public general Act.

Note (6) to Group 7 provides that 'welfare services' includes the provision of spiritual welfare as part of a course of instruction or retreat.

Reverend Taylor, a self-supporting minister operates Mill House Retreats (MHR) which provides spiritual welfare through the provision of Christian retreats, supervised by the Church of England.

  • She is an active priest in the Church of England subject to the same quality of training and supervision as a paid member of the Church of England clergy. The reverend assisting her in running MHR is an ordained deacon in the Church of England. Both are licensed and supervised by the Church of England.
  • Her evidence was that she operates MHR on a non-profit making basis. It is not a registered charity or a public body.
  • Rev Taylor claimed that MHR is state-regulated (by the Church of England) for the purposes of the VAT exemption in Group 7 or that it is entitled to VAT exemption on the grounds of fiscal neutrality as she is providing spiritual welfare of the kind also provided by charities and state-regulated entities.
  • On review, HMRC issued a decision that MHR activities were standard rated. Reverend Taylor Appealed. 

The FTT dismissed the appeal, MHR’s supplies of spiritual welfare services were not exempt:

  • There was no dispute that the provision of spiritual welfare by MHR was of the kind described in Note (6) to Group 7.
  • They agreed that MHR is regulated by the state but found that it is not 'state-regulated'.
    • The Church of England legislation (such as Measures and other provisions of canon law) are not public general acts and the reference to 'Minister' in note (8) is to a government minister and not a minister of the Church of England.
  • A Court of Appeal decision, LIFE Services Limited v HMRC and The Learning Centre (Romford) Limited v HMRC [2020] EWCA Civ 452, has already established that item 9 of Group 7 does not contravene fiscal neutrality, so Reverend Taylor’s appeal on this ground must also fail.

Useful guides on this topic

Health and welfare: VAT
Reduced rating, zero-rating and VAT exemption can apply to various services relating to medical care, health and welfare. This guide looks at supplies of medicines, supplies of goods and building works to disabled persons and charities, medical care, and welfare services.

How to appeal an HMRC decision
Disagree with a HMRC decision? How to appeal, what type of decision can you appeal and what are your different options when you disagree with HMRC? What are the key steps in making an appeal?

External link

Reverend Jane Taylor Trading as Mill House Retreats v HMRC [2021] TC8315/V 


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