The Commissioners for HMRC v Yorkshire Agricultural Society

The FTT began its consideration of this issue by referring to the FTT decision of Judge Kempster in Loughborough Students Union v HMRC [2018] UKFTT 357 (TC) (“Loughborough FTT”). The FTT stated that it agreed with Judge Kempster that “Item 1(b) refers to “a” primary purpose, and not “the” primary purpose, and that a primary purpose means a purpose which is important”: FTT[84].

The FTT considered that this accorded with a purposive reading of the exemption. It then stated that it also chimed with the approach taken by earlier tribunals in relation to the pre-2000 provision, in Blaydon Rugby Football Club v Commissioners of Customs and Excise [1996] V & DR 1 (“Blaydon”) and Newsvendors Benevolent Institution v Commissioners of Customs and Excise (1996) VAT Decision 14343 (“Newsvendors”).

The FTT referred to HMRC’s internal guidance on the exemption to support its conclusion that the promotional and advertising material for the Show sufficed to show that the “main and overriding purpose” of holding the event was fund-raising.

The FTT determined that Item 1(b) was satisfied for the following reasons, at FTT[92]-[96]:

It is first necessary to unpack the FTT’s decision. We consider that this passage records a decision that the event satisfied Item 1(b) on one or both of two alternative bases.

The first basis is that fund-raising was not a discrete purpose; rather, the two main purposes of the Show were fund-raising and education, which were of equal importance and were inter-dependent, forming a single purpose which satisfied Item 1(b), even on HMRC’s construction.

The second basis is that if fund-raising was taken as a discrete purpose, it was one important purpose of the Show, even though it was not the only or primary purpose, and that was sufficient to satisfy the exemption, properly construed.

This reading is consistent with the FTT’s summary of its conclusion on Item 1(b), at FTT[140]:

Therefore, in order for HMRC to succeed on Ground 1, they must establish that the FTT erred in law in relation to both of these alternative conclusions.

For HMRC, Ms Mannion said that the nub of the issue is whether Item 1(b) requires an event which has a single primary purpose of fundraising, or whether it can be satisfied, as the FTT decided, by an event for which one of the important purposes is fundraising. In HMRC’s submission, the FTT was wrong in law, because Item 1(b) plainly requires a single identifiable primary purpose.

Ms Mannion made the following points:

Both before the FTT and in this appeal the parties were agreed that the construction of Item 1(b) is to be determined by reference to the words used, because it is not ultra vires the PVD, and does not require a conforming interpretation.

Item 1 is an exemption. The correct approach to the construction of VAT exemptions was recently considered by the Supreme Court in Target Group Ltd v HMRC [2023] UKSC 35 (“Target”). While case law establishes that VAT exemptions are to be construed “strictly”, it is necessary to understand what that means. In particular, it does not mean that an exemption must be construed in a narrow or restricted way. In Target, Lord Hamblen, delivering the judgment of the court, said this, at [17]-[18]:

A “strict” construction also requires account to be taken of the underlying purpose of the exemption in question. In Canterbury Hockey Club C-253/07, the CJEU stated, at paragraph 17 of its decision:

The statutory requirement is that the Show is “an event…whose primary purpose is the raising of money”.

The FTT dealt first (as shall we) with the second basis on which it concluded that this requirement was satisfied, namely that on a proper construction this wording requires only that fund-raising was one important purpose of the event.

Looking first at the language used, we agree with HMRC that it does not support the FTT’s construction. That construction effectively relies on three conclusions. The first is that “primary” mean “main”, the second is that “main” means important, and the third is that there can be more than one primary purpose to an event.

Mr Firth’s skeleton argument asserted that it was common ground that “primary” and “main” are synonymous (Footnote: ²). Ms Mannion filed a supplementary note which stated that this was not correct. HMRC’s position is that main can have a wider meaning than primary and, most importantly, that primary may be synonymous with “the main”, but it is not the same as “a main”. HMRC further dispute that “main” means merely “important”.

We broadly agree with HMRC’s position. While “the primary purpose” may in general have the same or a similar meaning as “the main purpose”, both main and primary are words which describe something more than importance. A secondary or incidental purpose, which is neither the main nor the primary purpose, may nevertheless be an important purpose.

In concluding that a primary or main purpose simply means a purpose which is important (at FTT[84]), the FTT stated that it was agreeing with the conclusion to this effect by Judge Kempster at [86] of Loughborough FTT. In fact, there is no such conclusion at [86] of Loughborough FTT or elsewhere in that decision. Mr Firth argued that authority for the proposition is found in Travel Document Services v HMRC [2018] EWCA Civ 549 (“Travel Document Services”). We do not agree. The only reference to that issue in that decision is to record a bare assertion by counsel to that effect (Footnote: ³).

We also consider that the FTT erred in concluding that Item 1(b) contemplates multiple primary purposes, and is satisfied if one of those purposes is fund-raising. In reaching that conclusion, the FTT’s reasoning was as follows:

In relation to Loughborough FTT, the FTT referred to the statement at [85] of that decision that “a primary purpose of fundraising is a fair interpretation of the legislative wording in Article 132(1)(o)”. However, in our opinion that puts too much weight on the use of the word “a”, and more importantly, fails to take into account the remainder of the decision. In fact, Judge Kempster preferred the approach in Blaydon, which broadly endorses HMRC’s interpretation, and said at [58] that “a “fundraising event” is an event the main purpose of which is to raise funds”. At [62], Judge Kempster also said this:

Judge Kempster described the statement on which the FTT relied as following from his conclusions at [56]-[64], which include the passages we have set out, and it would be inconsistent with those conclusions for the statement to bear the meaning ascribed to it by the FTT. The FTT’s reliance on Loughborough FTT was, therefore, misplaced.

The FTT stated that its approach was consistent with Blaydon and Newsvendors, which “drew a qualitative dividing line between ‘the main purpose’ and a ‘merely incidental purpose’”: FTT[86]. However, neither of those decisions addressed the point which the FTT determined, namely whether Item 1(b) encompassed multiple primary purposes. In fact, the tribunal in Blaydon stated (at page 3) that “…a “fundraising event is an event the main purpose of which is to raise funds”. While Newsvendors and Cheltenham did not take the same approach, all of Blaydon, Newsvendors and Cheltenham concerned the pre-2000 provision, which differs from Item 1(b). In Loughborough Students Union v HMRC [2013] UKUT 517 (TCC) (“Loughborough UT”), the Upper Tribunal specifically referred to the difference in wording, signalling that the pre-2000 authorities cannot simply be read across to Item 1(b). It said this, at [55]-[56]:

We consider that Blaydon and Newsvendors did not support the FTT’s analysis.

The FTT further stated that it considered HMRC’s interpretation of Item 1(b) to be unnecessarily restrictive and inconsistent with case law guidance as to the interpretation of VAT exemptions. We do not consider that the case law guidance which we have set out above in relation to the construction of VAT exemptions supports the interpretation adopted by the FTT of the clear statutory language. Taking into account the context and underlying purpose of the exemption, an event “whose primary purpose is the raising of money” cannot permissibly be construed as describing an event of which one important purpose is the raising of money.

In conclusion, we consider that the FTT erred in law in construing Item 1(b) as describing an event of which one important purpose was fund-raising.

We turn to the FTT’s alternative basis for deciding that the Show satisfied Item 1(b). This was that fund-raising should not be viewed as a discrete purpose but as one of two equally important and inter-dependent purposes, which were the main purpose of the Show.

The FTT’s main findings of fact on this issue are set out at FTT[44]-[46]:

Ms Mannion’ skeleton argument submitted that this approach was impermissible because it was “founded on and undermined by” the FTT’s error of law in relation to the first alternative, namely its conclusion that Item 1(b) permitted multiple main purposes.

We do not agree. We consider that the FTT was here reaching a conclusion that if it was necessary to determine the single primary purpose of the Show, as a matter of fact it was wrong to separate the purposes of fund-raising and education. Moreover, the FTT concluded, it was not possible to “sensibly rank” those purposes to determine which was most important. This alternative analysis was a different approach to the construction of Item 1(b), which was not dependent on or infected by the error of law which we have found in relation to the FTT’s first approach.

In her oral submissions, Ms Mannion argued that this alternative analysis was not permissible, because as a matter of law it is necessary in applying Item 1(b) first to find all the separate purposes of an event and then to find which of those purposes was the single primary purpose. That process, she said, did not permit a finding that purposes were intertwined or inseparable. In response to a question, Ms Mannion stated that if as matter of fact it was found that two purposes were equally important, then there would be no primary purpose.

We do not consider that Ms Mannion’s restrictive approach to ascertaining the primary purpose of an event is justified. The requirement that the primary purpose is “the raising of money” should be interpreted in context and taking into account the purpose of the exemption in Item 1. As Mr Firth correctly pointed out, in raising money at an event a charity is very likely to be doing so in the context of an intention to advance its charitable purposes, and, as Mr Firth put in in his skeleton argument, “it makes no sense to exempt events intended to raise funds to pursue the charity’s objectives but to exclude exemption if the same event actually pursues those charitable objectives”.

Looking at Item 1(b) in context, by virtue of Item 1(a) the exemption is applicable only if the event is one “that is organised for charitable purposes by a charity…”. In our opinion, the FTT was entitled to conclude that the requirement in Item 1(b) was not failed in a situation where, as a matter of fact, the primary purpose of the event consisted of fund-raising which was inextricably intertwined with the furthering of the charity’s charitable purposes. Put another way, Ms Mannion’s interpretation produces the curious result that an event can only fall within both (a) and (b) if it is organised for charitable purposes but not primarily for charitable purposes.

The alternative basis on which the FTT found that the Show satisfied Item 1(b) was dependent on its findings of fact in this particular case, which we have set out above, which were clearly open to it on the evidence.

We should mention that Ms Mannion sought to challenge the FTT’s decision, at FTT[87], to reject HMRC’s argument that because an annual show is regular and not “exceptional”, it cannot be a fund-raising event within the exemption. The FTT was, in our opinion, entitled to regard the annual nature of the event as a relevant factor into account in its assessment, but without affording it significant weight.

We consider that the alternative basis on which the FTT reached its conclusion that the Show satisfied Item 1(b) was one which was available to it as matter of statutory construction and on the particular facts found in this case.

HMRC’s appeal in relation to Ground 1 is dismissed.

The FTT began by stating as follows, at FTT[107]:

Having set out Article 132(1)(o) of the PVD, the FTT then observed, at FTT[109]:

The FTT noted that in Loughborough FTT, Judge Kempster concluded that Item 1(c) was incompatible with the Directive , but that the incompatibility could be “cured” by interpreting it in a conforming manner in accordance with the Marleasing principle. The FTT agreed with this conclusion. The FTT stated that the parties agreed that (1) the FTT should continue to interpret and apply VATA as it would have been interpreted and applied prior to the UK leaving the EU, and (2) domestic law is to be interpreted so as to conform with EU law: FTT[118]-[119].

In Loughborough FTT the FTT concluded that that Item 1 could be read in a conforming manner so as to be compliant with the PVD by omitting Item 1(c) in its entirety. The FTT agreed with the analysis and decision of Judge Kempster and adopted it. However, the FTT noted that it would have reached the same result by deleting the word “primarily” in Item 1(c), rather than the entire sub-clause: FTT[128].

The FTT stated at FTT[131]:

The FTT expressed concern at the lack of clarity in HMRC’s case as to what compliant promotion would actually have looked like. It considered that HMRC’s approach was “self-evidently unworkable, either by taxpayers or HMRC, and gives no certainty to either”: FTT[133].

The FTT summarised its conclusion at FTT[141]. This was that the Show satisfied Item 1(c) either because Item 1(c) in its entirety was an incorrect transposition of the Directive into UK law, and should be deleted, or because the word “primarily” was an incorrect transposition and should be deleted.

As it was before the FTT, HMRC’s primary position in this appeal is that Item 1(c) is not ultra vires the PVD, so that the question of a conforming interpretation does not arise.

Ms Mannion submitted that the FTT erred in law in reaching the contrary conclusion, both in adopting the approach in Loughborough FTT and in its own alternative approach of disapplying the word “primarily”. HMRC were unable to challenge the conclusion regarding Item 1(c) in Loughborough FTT itself , because they were the successful party overall in the appeal, but, said Ms Mannion, HMRC consider that it was wrong.

HMRC’s position is that Item 1(c) is permissible under the Directive because it is an “evidential tool” to ensure that the relevant event complies with Item 1(n), as being an event whose primary purpose is the raising of funds.

Ms Mannion argued that such a condition is permissible under Article 132(2) of the PVD, which permits Member States to introduce “any restrictions necessary” for the purposes of the exemption. Alternatively and in addition, it is permissible under Article 131 for the purpose of ensuring the correct and straightforward application of Article 132(1)(o), and avoiding abuse of the exemption.

If we do not accept HMRC’s primary position, Ms Mannion argued that in any event the FTT’s alternative conforming interpretations of Item 1(c) each overstepped the permissible limits of Marleasing. They amounted to giving direct effect to Article132(1)(o), and there had been no argument in this case that it had direct effect.

The joint note produced by the parties stated that the parties agreed on the following principles:

We accept and adopt this summary of the principles relevant to this case.

The following issues arise in relation to Ground 2:

Article 132(1)(o) provides that Member States shall exempt certain supplies by charities “in connection with fund-raising events organised exclusively for their own benefit, provided that exemption is not likely to cause distortion of competition”.

It is common ground that Item 1 of Group 12 is compliant with Article 132(1)(o) in restricting exemption to an event that is organised for charitable purposes by a charity and whose primary purpose is the raising of money (sub-paragraphs (a) and (b) of Item 1). However, as the FTT correctly pointed out, there is no indication in the language of Article 132(1)(o) that it is necessary in addition for the event to be “promoted as being primarily for the raising of money” (the “promotion condition”).

In establishing whether or not Item 1(c) infringes the PVD, we must first construe Item 1(c) using normal domestic principles of construction: CG Fry and Son Ltd v SSLHC [2024] EWCA Civ 730 at [74]. Those principles include that the language must be construed in context and with regard to the purpose of the legislation.

In our opinion, the determination of whether or not the promotion condition conforms with the PVD depends largely on the purpose and function of the promotion condition.

In Loughborough FTT, having concluded that Item 1(b) was not ultra vires Article 132, Judge Kempster said this, at [86]:

Ms Mannion said that HMRC did not accept that Judge Kempster had properly described the purpose of the promotion condition. It followed that the FTT had erred in law in following Loughborough FTT on this issue.

HMRC’s position in relation to purpose and function is as follows:

In relation to the “evidential tool” argument, we accept that the way in which a charity promotes or advertises an event would in practice be one element of the relevant evidence in assessing whether or not Item 1(b), and for that matter Item 1(a), were satisfied on the facts. However, the promotion condition goes much further than that. It singles out one area of relevant evidence and elevates it to a distinct condition for the exemption. The question is whether such an additional restriction on the availability of the exemption is within the terms of the exemption which Member States must implement under Article 132(1)(o). Article 132(1)(o) addresses the status of the supplier, the need for an event, the purpose of the event, the need for it to be organised exclusively for the benefit of the charity, and the need to avoid distortion of competition. The exemption does not identify or address the purpose for which a qualifying event is promoted.

Ms Mannion’s suggestion that the promotion condition allows HMRC and others to easily appreciate the purpose of the event seems to us to echo the purpose suggested, somewhat speculatively, by Judge Kempster, but which HMRC have rejected as part of their case.

Where an event is found as a matter of fact to be both organised for charitable purposes by a charity and to have as its primary purpose the raising of money (as required by sub-paragraphs (a) and (b)), HMRC have not demonstrated any justifiable basis on which that event should then fall outside the exemption in Article 132(1)(o) purely because it was not promoted as being primarily for raising money.

Ms Mannion argued that the promotion condition was justified under Article 132(2). This allows Member States to introduce “any restrictions necessary” for the purposes of Article 132(1)(o). We reject that argument, for the following reasons.

While the words “any restrictions necessary” are wide, they are not to be construed in isolation. Article 132(2) itself refers to “any restrictions necessary, in particular as regards the number of events or the amount of receipts which give entitlement to exemption”. The reference to the number of events and amount of receipts is not exhaustive, but it is indicative of the types of condition which might be considered to be “necessary”. An example of such a condition can be found in the definition of “fund-raising event” in the pre-2000 provision, which referred to an event “which is separate from and not forming any part of a series or regular run of like or similar events”. Another example is set out in Notes 4 and 5 to Items 1 to 3 of Group 12, which state as follows:

The wording of Article 132(2) as a whole, and these examples, suggest that in determining whether a restriction to the exemption is “necessary”, the central question is whether it is necessary to avoid distortion of competition. That proposition appears to have been the view of the Upper Tribunal in Loughborough UT, at [66], and is recorded as being agreed by counsel for HMRC in that case (at [57]). If that is correct, then since HMRC has produced no evidence, beyond mere assertion, that the promotion condition is necessary in order to avoid distortion of competition, we consider that HMRC’s argument based on Article 132(2) is not made out. Indeed, as a matter of principle, we find it hard to see what relevance the promotion condition, as distinct from Items 1(a) and (b), could have to the prevention of distortion of competition.

Ms Mannion submitted that “necessary” in Article 132(2) has a wider meaning than necessary to avoid distortion of competition. However, even if that is correct, HMRC have not established on what basis the separate promotion condition would be necessary in relation to the exemption, as contrasted to being what HMRC describe as a helpful evidential tool in relation to Item 1(b). We agree with the FTT’s observations and findings to this effect, at FTT[129]-[130].

HMRC’s final argument was that the promotion condition is permitted under Article 131, which applies to all VAT exemptions, as being a condition imposed “for the purposes of ensuring the correct and straightforward application of [the exemption] and of preventing any possible evasion, avoidance or abuse”.

We reject that argument, for three reasons.

First, the correct and straightforward application of the exemption must be determined by reference to the exemption as set out in Article 132(1)(o). That is an exemption for fund-raising events organised by charities for charitable purposes. As we have explained above, we do not agree that the correct application of an exemption on those terms requires or justifies a condition relating to promotion. Further, far from ensuring the straightforward application of the exemption, in agreement with the FTT we consider that, as a practical matter, a condition requiring determination of the primary purpose for which the event is promoted introduces additional uncertainty in its application.

Second, CJEU law establishes that Article 131 does not permit conditions which narrow the subject-matter of the exemption. In Commission v Spain C-124/96, the CJEU said this in relation to the predecessor to Article 131, Article 13A(1) of the Sixth Directive 77/388/EEC, at [10]-[13]:

We consider that the promotion condition does affect the subject-matter of the exemption since, as we have said, that exemption is an exemption for fund-raising events organised by charities for charitable purposes.

Third, HMRC’s case in relation to Article 131 is mere assertion, and that is not enough. In Quadrant Amroq Beverages SRL C-332/21, the CJEU stated as follows, at [63]:

That decision, and other CJEU decisions, concern exemptions said to be justified under provisions other than Article 132(2), but we see no reason why an exemption said to be justified under Article 132(2) should not require evidence.

In conclusion, we consider that the FTT was correct in deciding that the promotion condition is ultra vires Article 132(1)(o).

In view of our conclusion that the promotion condition is ultra vires, it is necessary to determine whether Item 1(c) can be interpreted in conformity with Article 132(1)(o). The case of Marleasing establishes that national courts have a duty to interpret domestic legislation, as far as possible, in the light of the wording and the purpose of the relevant directive in order to achieve the result pursued by the latter; in other words, in conformity with the directive.

Following the hearing we directed the parties to provide further written submissions on a number of issues, including the potential application of Marleasing to Item 1(c). In a subsequent written reply, which had not been requested by the Tribunal, Mr Firth sought to raise the argument that the permission to appeal granted to HMRC was restricted to the issue of whether Item 1(c) was compatible with the Directive, and did not extend to whether (if it was not compatible) the FTT’s application of Marleasing was permissible. We reject that argument. The relevant ground of appeal, for which permission was granted, was that “the FTT erred in law in its interpretation of [Item 1(c)] and wrongly excised it (or alternatively the word ‘primarily’) from the text of Item 1”. While HMRC’s primary case was that Item 1(c) was compatible with the Directive, this ground clearly encompasses a secondary challenge to both of the alternative conforming interpretations on which the FTT relied, and that was clear from HMRC’s skeleton argument.

The approach to be taken in applying a conforming interpretation was set out by Sir Andrew Morritt C in Vodafone 2 v Revenue and Customs Commissioners [2009] EWCA Civ 446 (“Vodafone 2”), at [37]-[38]. The relevant principles can be summarised as follows:

Ms Mannion referred to the need first to identify precisely in what respects the domestic provision infringes EU law, before it can be decided whether a conforming interpretation is possible, relying for this proposition on statements made recently by this Tribunal in The Trustees of the Panico Panayi Accumulation and Maintenance Settlements Numbers 1 to 4 v HMRC [2024] UKUT 00319 (TCC), at [128] and [130]. Ms Mannion criticised the FTT for failing to have carried out this preliminary step.

For our part, while we agree that an acceptable conforming interpretation must identify the precise infringement and do no more than is necessary to remedy that infringement, we consider that a rigid approach whereby, as a separate step, the precise infringement must first be identified will not necessarily be the best way of approaching the issue in all cases. For the reasons set out above, we have concluded that Item 1(c) is not compatible with the PVD, and that the FTT was justified in reaching the conclusion. The next question in light of that determination is whether a conforming interpretation is possible. That will critically turn on whether or not a particular conforming interpretation goes against the grain of the legislation and crosses the line between interpretation and legislation. The proper resolution of that question will necessarily take into account the precise infringement which has been determined to arise.

A conforming interpretation must not “go against the grain” of the legislation. In Vodafone 2, reference is made in this context to “the underlying thrust” of the legislation, and the impermissibility of an interpretation which is inconsistent with a fundamental or cardinal feature of the legislation.

This constraint is sometimes referred to as prohibiting an interpretation which is “contra legem”. In Dansk Industri (DI) v Estate of Karsten Eigil Rasmussen (Case C-441/14), Advocate General Bot defined this as follows, at paragraph 68 of his Opinion :

If applied too literally, the expression contra legem might be thought to prohibit many conforming interpretations which have been reached by the CJEU and UK courts. The terms in which the constraint is expressed in Vodafone 2 are, in our opinion, a more helpful way of framing the prohibition. We respectfully endorse the comments of the Court of Appeal to this effect in British Gas Trading Ltd v Lock and Anor [2016] EWCA Civ 983. Having summarised the passage above from the Opinion of Advocate General Bot, Sir Colin Rimer said this, at [102]-[104]:

The further submissions from the parties as to the grain or underlying thrust of the relevant legislation produced similar results. Mr Firth stated that “the grain (as opposed to textual detail) of the legislation is exempting fundraising events organised by charities”. Ms Mannion stated that “the ‘purpose’, ‘grain’ or ‘thrust’ of Item 1…is, narrowly, to encourage charitable fundraising through events. It does not extend beyond that specific purpose to wider activities which further charitable purposes, or support the application of a loose or weak definition of a fundraising event to further that supposed goal”.

We consider that Ms Mannion is right to focus on the grain or thrust of Item 1 as a whole, rather than the grain or thrust of sub-paragraph (c), or (for example) the use of “primarily” in that sub-paragraph. We also agree with Mr Firth that, if the grain or thrust is considered at too granular a level, there is a risk that almost any conforming interpretation might be seen as prohibited.

In our opinion, the underlying thrust and purpose of Item 1(c) is to encourage fundraising events organised by charities for charitable purposes by providing that supplies in connection with such events are exempt.

The issue is whether the alternative conforming interpretations of Item 1(c) adopted by the FTT go against, or are inconsistent with, this underlying thrust and purpose, and cross the boundary between interpretation and amendment.

The FTT decided that there were two permissible conforming interpretations. The first, which we refer to below as Interpretation 1, is to delete sub-paragraph (c) in its entirety. The second, which we refer to as Interpretation 2, is to delete the word “primarily” from sub-paragraph (c).

We consider that Interpretation 2 is clearly preferable to Interpretation 1.

Ms Mannion argued that Interpretation 1 went beyond the type of construction permitted by Marleasing, because it entailed the wholesale deletion of one element of the definition of fund-raising event, and amounted to giving direct effect to Article 132(1)(o). Mr Firth argued that the authorities establish that the deletion of wording is not necessarily beyond the permissible limits of a Marleasing construction, and that the precise manner of such construction should not be constrained. He relied on the following passage from Vodafone 2, at [39]:

We do not read this passage as authority that deletion is a permissible method of conforming construction. It is simply making the uncontroversial point that being able to consider the manner of achieving a particular construction is helpful to a court or tribunal in deciding whether that construction is permissible under Marleasing principles.

We do not have to decide whether or not Interpretation 1 is permissible, because we have concluded that Interpretation 2 is permissible. A construction of Item 1(c) which requires that the relevant event is promoted as being for the raising of money, but without requiring that it is promoted as being primarily for that purpose, is, in our opinion, a permissible conforming construction. It does not go against what we have determined, or what the parties have submitted, to be the grain or thrust of Item 1. Nor is it inconsistent with Article 132(1)(o).

Ms Mannion stated in her further written submissions that “this approach was in principle permissible under Marleasing, but was not in accordance with it, because it was not effective in meeting any supposed infringement of EU law”. Ms Mannion argued that “it could only be an effective remedy if the Tribunal found that the aspect of Item 1(c) which was incompatible with the PVD is not the imposition of the promotion requirement per se, but the requirement that the event is promoted as being ‘primarily’ for fundraising”.

We do not agree with Ms Mannion’s arguments. They amount to an assertion that the only justifiable conforming interpretation would be Interpretation 1, but since Interpretation 1 goes against the grain it is not permitted. That is illogical. As explained above, we have concluded that Item 1(c) infringes the PVD. In light of that conclusion, our task is to determine whether there is an acceptable conforming construction of sub-paragraph (c), keeping in mind that such a construction should go no further than is necessary to remedy any infringement and that it must not in any event go against the grain. We have concluded that Interpretation 2 meets those requirements. That is because it is a construction which is effective in meeting the infringement, while doing no more than is necessary, and not going against the grain of Item 1.

Since we have decided that the promotion condition can be interpreted in a way which conforms with the PVD, we do not need to determine whether Article 132(1)(o) should be treated as having direct effect. While we did receive written submissions on this issue, it is not straightforward and we have decided that it is best dealt with in a case where it is dispositive, particularly since the issue of direct effect was not the subject of submissions before the FTT and as a consequence was not discussed in the Decision.

We interpret Item 1(c) in conformity with Article 132(1)(o) as requiring that the event be “promoted as being for the raising of money”. On the basis of the FTT’s finding of fact at FTT[131] (set out at paragraph 67 above), the Show satisfied this requirement. Therefore, HMRC’s appeal in relation to Ground 2 is dismissed.

HMRC’s appeal against the FTT’s decision to allow the 2016 repayment claim by the Society is dismissed.