The landlord appealed against a decision that VAT was not to be included when calculating a rent based upon the turnover in the premises, when it had been expressed to include purchase taxes.
Held: The appeal succeeded: ‘it would be wrong to treat the differences between the incidence and operation of purchase tax and of VAT as relevant under . . the lease. One system replaced the other, with almost identical impact on final consumer expenditure and on the total received by Debenhams. On Debenhams’ current case, the introduction of VAT would potentially have given them an uncovenanted bonus; instead of the rent being calculated by reference to a turnover amount including (in effect) purchase tax, it should, as from the moment when VAT replaced purchase tax, have been calculated by reference to a lesser net amount, even though the total paid by consumers to and received by Debenhams was effectively the same under both systems. ‘
Judges:
Judge, Mance, Jacob LJJ
Citations:
[2005] EWCA Civ 868, Times 29-Sep-2005, [2006] 1 P and C R 123
Links:
Jurisdiction:
England and Wales
Citing:
Cited – Lynn v Nathanson 1931
(Nova Scotia Court of Appeal) A government theatre tax had to be paid by patrons who bought two tickets, one for the theatre and one for the tax. The tax was held to be outside the phrase in the lease which recovered rent on ‘gross receipts obtained . .
Cited – Kirin-Amgen Inc and others v Hoechst Marion Roussel Limited and others etc HL 21-Oct-2004
The claims arose in connection with the validity and alleged infringement of a European Patent on erythropoietin (‘EPO’).
Held: ‘Construction is objective in the sense that it is concerned with what a reasonable person to whom the utterance . .
Cited – Hostgilt Limited v Megahart Limited 4-Dec-1998
VAT operates with a system of inputs and outputs to bring down the burden of purchase tax. VAT is a tax on a retailer’s turnover, which purchase tax was not. In a concluded contract the question of whether a sum includes VAT is a matter of . .
Appeal from – Debenhams Retail plc and Another v Sun Alliance and Londoin Insurance Company Ltd ChD 9-Nov-2004
The lease contained a clause where the rent was to be set according to the ‘gross amount of the total sales’ of the tenant. The tenant argued that this figure did not include the VAT charged on sales, the landlord argued that it was the total sums . .
Cited by:
Cited – Lloyds TSB Foundation for Scotland v Lloyds Banking Group Plc SC 23-Jan-2013
A predecessor bank had created a trust into which it paid a small proportion of its profits. The parties now disputed the calculation of profits when the Bank declared a loss which allowed for an unrealised gain on the acquisition of HBOS. . .
Lists of cited by and citing cases may be incomplete.
Landlord and Tenant, VAT
Updated: 01 July 2022; Ref: scu.228921