Anglia Ruskin University (ARU) Loses VAT Exemption Appeal for Student Union Bar

Anglia Ruskin University (ARU) recently lost a request for a Judicial Review challenging HMRC’s decision that food sold at a Student Union bar does not qualify for the VAT education exemption.

Universities and Higher Education (HE) providers can supply catering to their students VAT-free if they are considered an “eligible body.” This exemption also extends to catering provided by a Student Union (SU) on behalf of the university, as outlined in HMRC Notice 709/1, paragraph 5.5. However, this concession applies only to designated catering areas such as canteens and refectories - it explicitly excludes bars.

The dispute arose because ARU’s Student Union provided catering at a venue it described as a bar, where alcohol was served. The venue had all the typical characteristics of a bar, including draft beer, bottle fridges, and no dedicated dining area. The judge ruled that HMRC’s definition of a “bar” should be interpreted in its usual sense, regardless of the ratio of food to drink sales.

As a result, food sold at the bar is subject to VAT at the standard rate.

If you wish to discuss this in further detail, please get in touch with one of our Indirect Tax team members.