Barratt Homes Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 29 February 2000 |
| Date | 29 February 2000 |
| Court | Value Added Tax Tribunal |
VAT Tribunal
The following cases were referred to in the decision:
Redrow Group plc VAT[1995] V & DR 115; [1996] BVC 2234
The Chartered Institute of Bankers VATNo. 15,648; [1998] BVC 2344
Statutory interest - Alleged error on part of commissioners - House building companies not grouped for VAT purposes - Input tax - Acquisition of purchaser's existing dwelling in part-exchange for new house - Failure by group companies to claim residual input tax on purchase expenses within partial exemption method - Admitted misdirection by commissioners in relation to individual cases - Appellant unable to show misdirection in relation to other companies - Whether commissioners' error resulted in appellant's failure to claim input tax - Value Added Tax Act 1994Value Added Tax Act 1994, s. 78.
The issue was whether a number of non-VAT grouped subsidiaries of Barratt Developments Ltd could claim statutory interest in circumstances in which only one company could show that an error on the part of the commissioners had resulted in a failure to claim input tax.
In this consolidated appeal, 15 VAT-registered subsidiaries of Barratt Developments plc, of which Barratt Homes Ltd was the representative company, appealed against a refusal by the commissioners to pay statutory interest. None of the companies was part of a VAT group. The dispute was concerned with an incentive scheme set up to encourage the purchase of new homes constructed by the appellant. Under the scheme, the appellant purchased a customer's existing home in part-exchange for one of its new properties. Prior to 1996, Customs had not issued general advice on the VAT treatment of expenses incurred in the course of purchasing the properties. However, in 1996 they advised that input tax credit on expenses relating to the purchase of part-exchange houses could be claimed as residual input tax, as being attributable partly to the zero-rated sale of a new house and partly to the exempt supply of a part-exchange home, whereupon the companies submitted claims by way of voluntary disclosure for unclaimed input tax going back to 1981. In relation to two companies not parties to the appeal, Customs had specifically ruled that there was no entitlement to claim input tax, on the basis that it was attributable to the exempt supply of a part-exchange house and in respect of those misdirections statutory interest was claimed and paid. Further, on the morning of the appeal a letter containing a similar misdirection was produced and it was accepted that the tribunal had to allow the appeal in respect of that company. Customs refused similar claims for statutory interest by the 14 other companies which were parties to the consolidated appeal, on the basis that no specific error on the part of the commissioners leading to a failure to claim input tax could be shown.
The appellant argued that its case did not depend on it is proving that the commissioners had changed their minds about the recovery of input tax in 1996, but rather than that they had been in error in the earlier periods. It was at least relevant to the question of whether they had changed their minds if they had thought that the companies were not entitled to recover input tax, since that made it more likely that they would have directed them not to claim it. It was further argued that, given the corporate structure of the group, it was reasonable to assume that group members exchanged information, so that the specific instances of misdirection would have become common knowledge.
The commissioners contended that there was no evidence of their having an incorrect policy in place before 1996 and that even if they had, it could not be shown that, except in the specific cases where misdirection had been admitted, it could not be shown that they had directed the companies not to claim the repayment of tax.
Held, dismissing the companies' appeals:
1. The fact that the companies were not part of a VAT group was a most important factor meaning...
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