VATGPB3330 - Non-business activities: distortions of competition: significant distortion
Although an activity may be identified as being in competition with the private sector, it can be more difficult to determine whether non-business treatment will lead to a significant distortion of competition.
The off-street car parking case of Isle of Wight Council (see also VATGPB8616) has indicated that the burden of proof lies with HMRC and not the public body to show that significant distortion of competition exists in relation to an activity performed by a public body. The Tribunal referred several questions to the Court of Justice of the European Union (CJEU) (C 288/07) to clarify how this question should be considered.
The CJEU ruled that competition between public bodies and private operators must be considered in terms of the activity that is taking place and that this must be evaluated in national terms rather than in relation to any local market.
This means, for example, that in the Isle of Wight case it is whether there may be significant distortion of competition in relation to the provision of off-street car parking in general that must be decided rather than by reference to the environs of a local area.
The CJEU also ruled that, in relation to Article 13 of the Principal VAT Directive [now covered by Section 41A(3) of the VAT Act 1994], the phrase 바카라 사이트˜would lead to significant distortions of competition바카라 사이트™ the words 바카라 사이트˜would lead to바카라 사이트™ are
바카라 사이트˜to be interpreted as encompassing not only actual competition, but also potential competition, provided that the possibility of a private operator entering the relevant market is real, and not purely hypothetical바카라 사이트™.
In the same ruling, the word 바카라 사이트˜significant바카라 사이트™ was to be
바카라 사이트˜understood as meaning that the actual or potential distortions of competition must be more than negligible.바카라 사이트™