On 11 April 2017, the Supreme Court held10, in the long-running Investment Trust Companies case, that the final consumers of services (in this case the investment trust companies (ITCs)) were not entitled to claim directly against HMRC for VAT (incorrectly) charged in accordance with UK VAT legislation which, at the time, was not compliant with EU law. Rather, the final consumers’ recourse was against the suppliers (in this case, the investment managers) which had charged the VAT.

The ITCs’ claims related to VAT “overcharged” by the investment managers:

• for periods after 4 December 1996, in respect of which a 3-year time limit had prevented the investment managers from making a claim against HMRC under section 80 of the VATA 1994; and

• for periods prior to 4 December 1996, being the difference between the VAT (over)paid to the investment managers and the amounts reimbursed to the managers by HMRC following section 80 claims by the managers. This amount claimed by the ITCs equated to the input tax claimed by the managers.

The court’s view was that section 80 of the VATA 1994 in effect barred claims against HMRC by final consumers. The options open to the ITCs were limited to claims against the investment managers, as it was not, on the facts and in the court’s view, “impossible or excessively difficult” for the ITCs to make a claim in restitution against the managers. Unfortunately the court did not consider what might qualify as being impossible or so difficult, beyond commenting that insolvency of the supplier would qualify.

The decision can be viewed here