Natasha has been successful in important lead cases before the Court of Appeal regarding whether provisions of the Value Added Tax Act 1994, which provide an exemption from VAT for certain welfare services, infringe the EU principle of fiscal neutrality.

The Appellants provided day care services to adults with learning disabilities for profit. They argued that the VAT legislation, which provided an exemption from VAT for welfare supplies made by ‘state-regulated private welfare institutions’, breached fiscal neutrality because supplies of day care were only regulated (and therefore exempt) in Scotland and Northern Ireland but not in England and Wales.

The Court of Appeal dismissed the appeal. It held that the fact that providers of day care services in Scotland and Northern Ireland were state-regulated and their supplies of services were exempt, whereas similar providers in England and Wales were not state-regulated and were therefore liable to VAT, was not caused by any lack of neutrality in the VAT legislation. Instead, the difference was caused by the fact that regulation of the care sector was the responsibility of each devolved nation. Further, state-regulated welfare supplies were perceived differently by customers to non-regulated supplies and, as a result, the supplies were not relevantly similar for the purposes of demonstrating a breach of fiscal neutrality.

Natasha Barnes was led by Jonathan Davey QC in this matter and a link to the judgment can be found here.