The decision in the Upper Tribunal ('UT') appeal in the Wakefield College case has been released with the tribunal allowing HMRC's appeal. However, the tribunal felt unable to 'leave this appeal without expressing some disquiet' in the way in which the relevant legislation operates.

Wakefield College had won their case in the First-tier Tribunal (FTT), with the FTT deciding that the college's business activities, comprising students paying towards the cost of their courses (although not paying the full fee) were de minimis as the fees were heavily subsidised. On this basis they decided the construction of a new building could be zero-rated. However, the UT disagreed and held that the fees received in return for the courses made this a business activity and therefore zero-rating could not apply.

However, despite allowing HMRC's appeal, the UT made some very interesting comments on the unfairness of the legislation relating to the zero-rating of relevant charitable purpose buildings in the final paragraph of the decision:

"We cannot leave this appeal without expressing some disquiet that it should have reached us at all. It is common ground that the College is a charity, and that the bulk of its income is derived from public funds. Because that public funding does not cover all of its costs it is compelled to seek income from other sources; but its doing so does not alter the fact that it remains a charity providing education for young people. If, by careful management or good fortune, it can earn its further income in one way rather than another, or can keep the extent of the income earned in particular ways below an arbitrary threshold, it can escape a tax burden on the construction of a building intended for its charitable purpose, but if it is unable to do so, even to a trivial extent, it is compelled to suffer not some but all of that tax burden. We think it unlikely that Parliament intended such a capricious system. We consider it unlikely, too, that Parliament would consider it a sensible use of public money for the parties to litigate this dispute twice before the FTT and now twice before this tribunal. We do not blame the parties; the College is obliged to maximise the resources available to it for the pursuit of its charitable activities, just as HMRC are obliged to collect tax which is due. Rather, we think the legislation should be reconsidered. It cannot be impossible to relieve charities of an unintended tax burden while at the same time protecting commercial organisations from unfair competition and preventing abuse."