Weight Watchers seeks tax ruling

The High Court has been asked to decide whether the activities of Weight Watchers (Ireland) are exempt from value added tax (VAT).

The company claims its activities are educational and therefore exempt from VAT.

Mr Bernard Condon, for Weight Watchers (Ireland), told Mr Justice White yesterday the issue in the proceedings was whether his clients were carrying on or providing educational activities of a kind similar to that provided by State-recognised educational establishments.

The matter came before Mr Justice White through a case stated from a decision given in 1994 by retired Circuit Court Judge Liam Devally. In disallowing an appeal by Weight Watchers (Ireland) against VAT assessments by the Revenue authorities, Judge Devally held that Weight Watchers' activities "did not consist of the supply of educational services of a kind similar to school or university education".

Yesterday, in challenging Judge Devally's finding, Mr Condon said there was no definition of "school or university education", "vocational training or retraining", "educational establishments recognised by the State" or "education, training or retraining of a similar kind" in the VAT legislation or in the tax code generally.

Mr Condon said there was no physical exercise or health club-type facilities involved in Weight Watchers (Ireland) programmes. His clients had nothing to do with the care of the human body and were entitled to be treated in the same manner as exempted evening classes such as arts and crafts, ballet, cooking, and drama.

Counsel said Weight Watchers (Ireland) was affiliated with Aontas (the National Association of Adult Education) and ran a nationwide network of classes availed of by the public. Its income came from registration fees for classes and a nightly attendance fee together with the sale of products (on which VAT was payable).

In 1994, the total turnover of Weight Watchers Ireland was £1 million. As individuals attended classes, they were given nutritional education programmes.

The Revenue have argued that the educational content of Weight Watchers (Ireland)'s activities was merely incidental to its primary purpose which, they said, was to provide psychological and other support to members to enable them to reduce and maintain weight at ideal levels.

The Revenue also argued that the element of education provided by Weight Watchers (Ireland) was not of a similar kind to that provided by State-recognised educational establishments.