The claimant had properly accounted for VAT on its transactions for many years, but a decision of the European court had latterly ruled that the services were exempt. The claimant sought restitution from HMRC, who responded by arguing that substantial parts of the claim were out of time.
Held: 1. That, using the notional figures referred to above, the Commissioners had been enriched in the full amount of pounds 100, even if only pounds 75 was paid to them by a Manager after deducting pounds 25 in respect of input tax paid to its own suppliers. In the judge’s view, although the pounds 25 was not paid to the Commissioners, it was nevertheless used by the Commissioners to give the Managers a credit for that input tax.
2. That the Commissioners were enriched at the expense of the Lead Claimants because, in economic terms, the person at whose expense the VAT was paid was the customer. The enrichment was also unjust.
3. That a cause of action in unjust enrichment was, however, excluded under domestic law by section 80(7) of the 1994 Act, which protects the Commissioners from liability other than as provided in that section.
4. That the Lead Claimants had a directly effective right to repayment against the Commissioners under EU law, which required a remedy to be made available in respect of the full notional pounds 100, not merely the pounds 75.
5. That EU law did not, on the other hand, require national law to give the Lead Claimants any remedy in respect of amounts falling within the scope of the time-bar imposed by section 80(4). Any EU-based claims would be subject (in effect) to the same limitation period.
It has now become conventional to consider the question whether English law recognises a right to restitution by reference to the four questions identified by Lord Steyn in Banque Financiere namely:
a) Has the defendant been benefited, in the sense of being enriched? b) Was the enrichment at the claimant’s expense?
c) Was the enrichment unst?
d) Are there any defences?
Held: 1. That, using the notional figures referred to above, the Commissioners had been enriched in the full amount of pounds 100, even if only pounds 75 was paid to them by a Manager after deducting pounds 25 in respect of input tax paid to its own suppliers. In the judge’s view, although the pounds 25 was not paid to the Commissioners, it was nevertheless used by the Commissioners to give the Managers a credit for that input tax.
2. That the Commissioners were enriched at the expense of the Lead Claimants because, in economic terms, the person at whose expense the VAT was paid was the customer. The enrichment was also unjust.
3. That a cause of action in unjust enrichment was, however, excluded under domestic law by section 80(7) of the 1994 Act, which protects the Commissioners from liability other than as provided in that section.
4. That the Lead Claimants had a directly effective right to repayment against the Commissioners under EU law, which required a remedy to be made available in respect of the full notional pounds 100, not merely the pounds 75.
5. That EU law did not, on the other hand, require national law to give the Lead Claimants any remedy in respect of amounts falling within the scope of the time-bar imposed by section 80(4). Any EU-based claims would be subject (in effect) to the same limitation period.
Judges:
Henderson J
Citations:
[2012] EWHC 458 (Ch), [2012] STC 1150, [2012] STI 1373, [2012] Eu LR 470, [2012] BVC 109
Links:
Statutes:
Value Added Tax Act 1994 80(7)
Jurisdiction:
England and Wales
Citing:
Applied – Banque Financiere De La Cite v Parc (Battersea) Ltd and Others HL 16-Apr-1998
The making of an order for restitution after finding an unjust enrichment by subrogation, is not dependant upon having found any common or unilateral intention of the parties. The House distinguished between contractual subrogation of the kind most . .
Cited by:
Principle Judgment – Investment Trust Companies v Revenue and Customs ChD 26-Mar-2013
The claimant investment Trust companies sought repayment of taxes paid in error by way of restitution.
Held: The range of the the law of restitution to recover any tax unlawfully exacted was to be be restricted to those situations where the . .
Cited – Benedetti v Sawiris and Others SC 17-Jul-2013
The claimant appealed against reduction of the sum awarded on his claim for a quantum meruit after helping to facilitate a very substantial business deal for the defendants.
Held: The correct approach to the amount to be paid by way of a . .
Main Judgment – Investment Trust Companies v Revenue and Customs CA 12-Feb-2015
The claimants having sought repayment of overpaid VAT, they now complained of sums deducted by the Revenue.
Held: The Court allowed the Lead Claimants’ appeal, to the extent of the notional pounds 75 paid in respect of dead periods, and . .
At First Instance – Revenue and Customs v The Investment Trust Companies SC 11-Apr-2017
Certain investment trust companies (ITCs) sought refunds of VAT paid on the supply of investment management services. EU law however clarified that they were not due. Refunds were restricted by the Commissioners both as to the amounts and limitation . .
Cited – Bank of Cyprus UK Ltd v Menelaou SC 4-Nov-2015
The bank customers, now appellants, redeemed a mortgage over their property, and the property was transferred to family members, who in turn borrowed from the same lender. A bank employee simply changed the name on the mortgage. This was ineffective . .
Lists of cited by and citing cases may be incomplete.
VAT, Equity, European
Updated: 04 October 2022; Ref: scu.451850