Benridge Care Homes Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 12 October 2010 |
| Neutral Citation | [2010] UKFTT 493 (TC) |
| Date | 12 October 2010 |
| Court | First-tier Tribunal (Tax Chamber) |
[2011] TC 00751
[2010] UKFTT 493 (TC)
John N. Dent (Chairman)
Nigel Gibbon, counsel, for the Appellants
Richard Chapman, counsel, instructed by the Solicitor and General Counsel for HM Revenue and Customs, for the Respondents
Unjust enrichment - Claim for repayment of input tax without bringing the whole of output tax into account - Whether permitted - Appeals were brought by Benridge Care Homes Ltd and Mr and Mrs McLaughlin trading as Benridge Rest Home, but since the circumstances were identical they were treated as a single appeal - The appellants operated a residential care home and applied to register for VAT on a voluntary basis in order to claim input tax credit in accordance with principles established in Kingscrest Associates Ltd v C & E Commrs (Case C-498/03) [2007] BVC 528 - They submitted a return showing a repayment due of £66,922 - On verification of the return, the commissioners discovered that input tax totals had been extracted from the annual accounts and related only to the council-funded residents - The commissioners had informed the appellants that the return figures were to be reduced to "nil" on the grounds that it was fair and reasonable to expect that values of output tax, as well as input tax, could have been extracted - The appellants accepted that there should be additional output tax put into the repayment claim and wished to negotiate an amount of output tax acceptable to the local authorities - They said that negotiations had broken down because the commissioners could not give reassurance to the local authorities that the VAT charged would be recoverable - The appellants suggested that the tribunal had no jurisdiction to look at the output tax position and questioned the vires on which the returns had been reduced to nil - The appellants submitted that there was no concept of unjust enrichment in these circumstances - The commissioners maintained that the appellants were trying to reclaim input tax without bringing into account the whole of the output tax - They drew the tribunal's attention to the fact that the appellants had accepted that there should be additional output tax - The question was whether the appellants would be unjustly enriched if they received the benefit of input tax without allowing the full amount of output tax to be brought into the calculation - The decision that the return was wrong was a matter within the jurisdiction of the tribunal, and fell within the Value Added Tax Act 1994, Value Added Tax Act 1994 section 83s. 83 - Held, that it was not permissible for the taxpayer to under-assess output tax in order to make a claim to recover input tax - If the business accounts were capable of producing a figure of input tax, they were equally capable of producing a figure of output tax - The tribunal had jurisdiction under Value Added Tax Act 1994 section 83 subsec-or-para 1s. 83(1)(c) to consider an appeal in respect of the amount of any input tax which may be credited to a person and under s. 83(1)(p) in respect of the amount of an assessment - The commissioners had come to the correct conclusion in determining that the proper method of calculation was to use the figures of income shown in the accounts - The reduction of the assessment to nil was for the benefit of the appellants in that, with the inclusion of output tax, they would have had an amount of tax to pay - The question of whether the local authorities were able to recover the VAT charged was not a matter to be brought into account by the commissioners - Appeal dismissed.
1. The appeal before us concerns legislation and regulations relating to unjust enrichment as they arise in respect of a Vat repayment claim. The Appellants are Benridge Care Homes Limited and Mr and Mrs McLaughlin, who trade as Benridge Rest Home. Both appeals arise in identical circumstances, and so will be treated as one.
2. Benridge Rest Home ran a residential care home for the elderly from premises situated at 53 Queens Road Southport from November 1980 until September 1986. The company was incorporated in September 1986 and operated the rest home from then.
3. The Appellants sought registration for VAT on a voluntary basis in order to make a claim under the ruling in Kingscrest Associates Ltd v C & E CommrsECAS (Case C-498/03) [2007] BVC 528. The Respondents received the Appellants' long period first return on 19 December 2008 for repayments totalling £66922.77.
4. On 21 January 2009 officers of the Respondents visited the Appellants' accountants and established that the accountants had extracted the figures for the input tax from the annual accounts. This figure for the Limited Company had then had a 26/27 equation applied to it to account for the input tax of council residents but not in relation to the private residents. It was discussed whether or not it was viable to include all input tax from the annual accounts and use the turnover figure to reconstruct the output tax. The accountant stated there was no risk as output tax paid by the Appellants would be reclaimed by the councils. The officers notified the Appellants' accountant that it was the Appellants' records which were being inspected and not the councils' records, and that in order to verify the claim, the VAT return as a whole had to be considered, which included inputs and...
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Benridge Care Homes Ltd and Others v Revenue and Customs Commissioners
...83 - VAT Regulations 1995 (SI 1995/2518), reg. 29. This was an appeal by the taxpayers against a decision of the First-tier Tribunal ([2010] UKFTT 493 (TC); [2011] TC 00751) that HMRC had been entitled to reduce the taxpayers' VAT repayment claims to nil and that it was not open to the taxp......