Memo from Woodall

CONFIDENTIAL

From Dr D R Woodall, 1988 November 14

The BMC -- VAT, Traditions and Corporation Tax

VAT. I am indebted to John Wright and the LMS's accountant for the advice on which the following account is based, but any misunderstandings contained in it are undoubtedly my own.

The decision as to whether or not to charge VAT on the meals and accommodation of conference delegates is taken in the first instance by the appropriate officers of the host university, but their decision is subject to ratification by the local VAT inspector.

VAT inspectors have considerable powers of discretion, and so one cannot be categorical about what decision a particular inspector will reach; but, in practice, inspectors are likely to follow the guidelines drawn up jointly by Customs and Excise and the CVCP. These guidelines distinguish two types of academic conference that should be exempt from VAT: (i) conferences organized solely by a university, and (ii) conferences organized jointly between a university and another body and satisfying certain additional criteria, one of which is that 'its content and administrative arrangements are supplied and controlled primarily by the university with the approval of the university authorities.'

It had been hoped that, by making each BMC as independent as possible from all others, it would qualify for exemption as a 'conference organized solely by a university'. I am advised that this view cannot be sustained. The facts that (a) the name carries on from one colloquium to the next, (b) many academics attend the colloquium on a regular basis, (c) money is passed on, however informally, from one year to the next, and (d) there is a minute book containing the minutes of all BMC General Meetings and Committee Meetings, all imply the de facto existence of a continuing body which has a rôle in the organization of the colloquium.

This means that, to satisfy the guidelines, the BMC would have to qualify as a 'conference organized jointly between a university and another body'. For this, it would be at least desirable, and possibly essential, for a brief but formal agreement to be drawn up between the local organizers and the 'other body', making clear that the BMC's content and administrative arrangements are supplied and controlled primarily by the host department.

The problem with this is that the 'other body', the BMC, has no personification between the end of one conference and the beginning of the next. The only personification of the BMC at the moment consists of the Nottingham local organizing committee. If we were to sign a joint agreement with the BMC, it would actually be the same people, wearing two different hats, who were making an agreement with themselves, and Customs and Excise would almost certainly reject this as 'merely a device'. They could argue that we were organizing the BMC by virtue of our membership of the BMC and not by virtue of our membership of the University, so that the academic programme was not in effect 'supplied and controlled primarily by the University.' For the agreement to be accepted as conferring exemption from VAT, it would be necessary to put a greater distance between the proprietors of the name BMC and the local organizers who were given full control over the supply of lectures etc. This is the reasoning behind my proposal to set up a permanent committee to act as the 'other body' in future years.

Having said that, I should say that the BMC has in fact always obtained exemption from VAT as a 'conference organized solely by a university', and will continue to do so next year. This is probably largely because nobody has ever drawn the attention of a VAT inspector to the precise nature of the BMC (and we hope nobody will!). Nevertheless, my limited knowledge of VAT inspectors suggests that they tend to be reasonable people who might well be generous to the BMC even though it does not fall within the official guidelines, since it is clearly the sort of conference that ought to qualify for exemption, if only it were not administered in such an awkward way.

So we could simply carry on as we are until some university declines to grant exemption from VAT or, worse, some local VAT inspector over-rules the university's decision to grant exemption and imposes VAT retrospectively. My view is that this would be risky, and would also place an unreasonable burden on the local organizers. Both at Exeter and at Nottingham, the local organizers went through an awkward period when they did not think they were going to get exemption, and none of us want anything said or done that would draw the attention of our respective Universities to the true nature of the BMC. It is my view that if BMC members want exemption from VAT, they should agree to change the organizational structure so that it satisfies the guidelines, and not expect local organizers to practise economy with the truth in their dealings with their universities.
Traditions. It seems to me that a body of long standing is healthiest when its traditions and organizers are of comparable power. It is not healthy to have a powerful organizing committee with no regard for tradition, but, equally, it is not healthy for a body to be governed by traditions which nobody has the stature or authority to challenge. The situation of the BMC comes close to the latter. Over the years, it has built up a formidable body of tradition, but it has no organization of comparable stature. Between BMCs, the only organization consists of the local organizers of the next Colloquium, who may not be regular or even sporadic attenders at the BMC, and who may justifiably be fearful of making changes that may incur the wrath of BMC members.

This places a great burden on the local organizers. Certainly, I feel very exposed in making my current proposals. Who am I to propose changes to this venerable institution, the BMC? Such proposals should not come from an individual, but from the appropriate committee. But there isn't an appropriate committee: that is the whole problem.

This situation can also lead to the perpetuation of undesirable practices. The local organizers are primarily concerned to ensure that their own Colloquium goes off smoothly, and to pass the baby on to the next University with as little hassle as possible. They may well suspect that certain things would be better done differently, but they have no incentive to involve themselves with the long-term future of the BMC, and so are likely to leave well alone. I do not think this is a healthy situation.
Corporation Tax. To illustrate the sort of practice I am referring to: I personally believe that the BMC should be paying corporation tax on the interest it receives on the BMC reserve fund, and that successive treasurers have been breaking the law by not declaring this interest. If I am right, then much of the BMC reserve fund actually belongs to the Inland Revenue and not to the BMC at all.

I should say that various people whose views I respect do not share my pessimism, and believe that the BMC is not liable to corporation tax. But, in a sense, whether I am right or wrong is less significant than the fact that nobody seems to know for certain. Under the present set-up, nobody is involved with the BMC for long enough for it to be worth their while finding out what the true position is. I believe that the BMC needs a permanent committee who will involve themselves with issues like this that affect its long-term future, while leaving local organizers free to concentrate on individual colloquia.