Appeal Against A Decision Of The Upper Tribunal By The Advocate General Representing The Commissioners For Her Majesty's Revenue And Customs Against Ke Entertainments Limited
| Jurisdiction | Scotland |
| Judge | Lord Tyre,Lord Drummond Young,Lord President |
| Neutral Citation | [2018] CSIH 78 |
| Docket Number | XA98/17 |
| Date | 13 December 2018 |
| Court | Court of Session |
| Published date | 13 December 2018 |
FIRST DIVISION, INNER HOUSE, COURT OF SESSION
[2018] CSIH 78
XA98/17
Lord President
Lord Drummond Young
Lord Tyre
OPINION OF LORD CARLOWAY, the LORD PRESIDENT
in the Appeal against
a decision of the Upper Tribunal
by
THE ADVOCATE GENERAL REPRESENTING THE COMMISSIONERS FOR HER
MAJESTY’S REVENUE AND CUSTOMS
Appellants
against
KE ENTERTAINMENTS LIMITED
Respondents
Appellants: DM Thomson QC, Roxburgh; Office of the Advocate General
Respondents: Ghosh QC; DLA Piper Scotland LLP
13 December 2018
Introduction
[1] This appeal concerns whether a taxpayer is entitled to a refund of Value Added Tax,
which was paid over many years, following a change in HMRC’s approach to the
assessment of VAT on the game of bingo. This, to a large extent, turns on whether the
change resulted in a “decrease in consideration” under Regulation 38 of the Value Added
2
Tax Regulations 1995. Regulation 38 implements Article 90 of the Principal VAT Directive,
which refers instead to a reduction in “price”. Article 90 superseded Article 11C of the Sixth
Council Directive.
Legislation
[2] Article 11A of the Sixth Council Directive (77/388/EEC of 17 May 1977 on the ...
Common system of value added tax: uniform basis of assessment) provided, in relation to
VAT, that:
“1. The taxable amount shall be:
(a) in respect of supplies of goods and services ... everything which
constitutes the consideration which has been ... obtained by the supplier from
the ... customer ... for such supplies ...”.
Article 11C provided:
“1. ... [w]here the price is reduced after the supply takes place, the taxable
amount shall be reduced accordingly ...”.
[3] The Sixth Directive was recast in the Principal VAT Directive (2006/112/EC of
28 November 2006 on the Common system of value added tax). Article 73 of the latter,
which replaced Article 11A of the former, provides that:
“In respect of the supply of goods or services ... the taxable amount shall include
everything which constitutes consideration obtained… by the supplier, in return for
the supply, from the customer…”.
Article 90, which is in identical terms to Article 11C, states that:
“… [w]here the price is reduced after the supply takes place, the taxable amount
shall be reduced accordingly…”.
3
[4] Article 90 is translated into the United Kingdom regime by Regulation 38 of the
Value Added Tax Regulations 1995 as follows:
“Adjustments in the course of business
(1) This regulation applies where -
… (b) there is a decrease in consideration for a supply,
which includes an amount of VAT and the increase or decrease occurs after the end
of the prescribed accounting period in which the original supply took place.”
Regulation 24 states that an increase in contribution is:
“an increase in the consideration… which is evidenced by a credit or debit note or
any other document having the same effect”.
“[D]ecrease in contribution” is to be interpreted in the same way. Regulation 38 continues
by stating that, where it applies:
“(3) ... the maker of the supply shall ...
(b) in the case of a decrease in consideration, make a negative entry;
for the relevant amount of VAT ... in ... his VAT account”.
[5] Section 19 of the Value Added Tax Act 1994, which is derived from Article 73,
provides that:
“(2) If the supply is for a consideration in money its value shall be taken to be
such amount as, with the addition of the VAT chargeable, is equal to the
consideration.
…
(4) Where a supply of any goods or services is not the only matter to which a
consideration in money relates, the supply shall be deemed to be for such part of the
consideration as is properly attributable to it.”
[6] Section 80, which deals with, inter alia, overpayments of VAT, provides that HMRC
are liable to credit a person who “has brought into account as output tax an amount that was
not output tax due”. However, the person must make a claim and HMRC are not liable
unless the claim is made within four years of the end of the relevant accounting period.
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