Where a VAT group exists pursuant to section 43 of the Value Added Tax Act 1994 (VATA), among other things the representative member of the VAT group is treated as carrying on the business of each of the members of the VAT group.
The first case concerns MG Rover Group Ltd (MGR). The members and representative members of the group changed over time. Certain members of the VAT group sold fleet cars and charged VAT on sales that took place between 1 April 1973 and 4 December 1996. Claims for overpaid VAT pursuant to section 80 VATA were made by companies which either were, or had been, members of the Rover VAT group.
In the other case, Standard Chartered claimed repayment of overpaid VAT pursuant to section 80 VATA. These claims related to:
- Overpaid VAT on supplies made by ACL Limited of fleet cars for a period before that company joined the Standard Chartered VAT group
- Overpaid VAT on supplies made by Chartered Trust on supplies made by it of motor vehicles under hire purchase agreements that were terminated early and services in connection with the provision of hire-purchase agreements and finance for periods before the company joined the Standard Chartered VAT group
The FTT in the MGR case (Judge Barbara Mosedale) concluded that if a company that had made supplies on which VAT was overpaid, joined a VAT group, the right to claim the overpaid VAT was acquired by the representative member of the VAT group until the company left the VAT group.
In addition, if a company that made supplies on which VAT was overpaid while it was a member of a VAT group left the VAT group, it acquired the right to claim the overpaid VAT and the representative member no longer had such a right.
Conversely, in the Standard Chartered case, a differently constituted FTT (Judge Roger Berner and Judge Nigel Collard) found that if a company that made supplies on which VAT was overpaid joined a VAT group; the right to claim the overpaid VAT remained with that company. If a company that made supplies on which VAT was overpaid left a VAT group; the right to claim the overpaid VAT remained with the representative member of the VAT group.
In reaching these decisions, both tribunals discussed existing case law on the construction of section 43 VATA in detail and the differing conclusions are not helpful. It remains to be seen whether one or both cases will be appealed. The decision in Taylor Clark Leisure Plc8 which was referred to in both cases, is currently being appealed to the UT and the outcome may have an impact on either or both of the instant cases, if either are appealed.
To read the MGR decision click here.
To read the Standard Chartered decision click here.