BMW(UK) Limited, MG Rover Group Limited, Lloyds Banking Group PLC, Standard Chartered PLC and others v HMRC
| Jurisdiction | UK Non-devolved |
| Judgment Date | 19 October 2016 |
| Neutral Citation | [2016] UKUT 0434 (TCC) |
| Appellant | Andrew Hitchmough QC and Jonathan Bremner instructed by Eversheds for MG Rover Group Limited David Scorey QC instructed by Deloitte for the Lloyds Appellants Ian Glick QC, Derek Spitz, Victoria Wakefield, and Adam Rushworth instructed by Norton Rose Fulbright for BMW (UK) Holdings Limited Tim Eicke QC and Edmund King instructed by PwC for the Standard Chartered |
| Respondent | ---- |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Appeal Number | UT/2014/0027; UT/2014/0063, UT/2014/0029, and UT/2015/0038 |
[2016] UKUT 0434 (TCC)
Appeal numbers: UT/2014/0027; UT/2014/0063, UT/2014/0029, and UT/2015/0038
VAT – grouping – claim for overpaid tax where company leaves VAT group –
correct entity to make claim – last representative member – first appeal
(BMW/MGR) allowed; second and third appeals (Lloyds/Standard Chartered)
dismissed
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
(1) HER MAJESTY’S REVENUE AND CUSTOMS
(2) BMW(UK) HOLDINGS LIMITED Appellants
and
MG ROVER GROUP LIMITED
----
Respondents
(1) LLOYDS BANKING GROUP PLC
(2) BLACKHORSE LIMITED Appellants
and
HER MAJESTY’S REVENUE AND CUSTOMS
---- Respondents
(1) STANDARD CHARTERED PLC
(2) STANDARD CHARTERED BANK
-and-
HER MAJESTY’S REVENUE AND CUSTOMS
Appellants
Respondents
TRIBUNAL:
MR JUSTICE WARREN
JUDGE CHARLES HELLIER
Sitting in public in the Rolls Building, London on 5-8, 11, 12 and 14 July 2016
Andrew Hitchmough QC and Jonathan Bremner instructed by Eversheds for
MG Rover Group Limited
David Scorey QC instructed by Deloitte for the Lloyds Appellants
Ian Glick QC, Derek Spitz, Victoria Wakefield, and Adam Rushworth instructed
by Norton Rose Fulbright for BMW (UK) Holdings Limited
Tim Eicke QC and Edmund King instructed by PwC for the Standard Chartered
Appellants
Andrew Macnab and Peter Mantle, instructed by the General Counsel and
Solicitor to HM Revenue and Customs, for Her Majesty’s Revenue and Customs
© CROWN COPYRIGHT 2016
2
DECISION
1. The decisions of the First-tier Tribunal (the “FTT”) in Standard Chartered plc v
HMRC; Lloyd’s Banking Group plc v HMRC [2014] UKFTT 316 (TC) 5 (“Lloyds/SC”), and MG Rover Group Limited v HMRC, BMW (UK) Holdings
Limited, and Rover Company Limited [2014] UKFTT (TC) 327 (TC)
(“BMW/MGR”), relate to how the grouping provisions in section 43 Value Added Tax
Act 1994 (“VATA”) operate when a company moves into or out of a VAT group, and
which company has the right to make a claim under section 80 VATA for the 10 repayment of VAT on a supply on which VAT should not have been paid or accounted
for. Relevant to both decisions is the extent and effect of the authority conferred by
what was Article 4(4) of the Sixth Directive to treat a number of closely linked
companies as a single taxable person.
2. The Lloyds/SC and the BMW/MGR decisions gave answers to the questions 15 which arose in the appeals whose reasoning conflicted. In the Lloyds/SC appeal the
tribunal regarded the section 43 grouping provisions as being in compliance with the
authority of Article 4(4) and interpreted the grouping rules with reference to EU
principles. It found that the EU law was clear and that there was no need for a
reference to the Court of Justice. We will refer to the Court as “the CJEU” or “the 20 Court”. In BMW/MGR the tribunal considered that Article 4(4) did not authorise the
form of the grouping rules enacted by the UK, interpreted the UK rules on domestic
principles only, and indicated that if it had to apply EU law there was sufficient
uncertainty to justify a reference to the CJEU.
3. In each of Lloyds/SC and BMW/MGR the FTT gave permission for the losing 25 parties to appeal to this tribunal. It was directed that the appeals be heard together. We
use ‘Lloyds’, ‘SC’, ‘BMW’, ‘MGR’ and ‘HMRC’ in this decision to refer to the
relevant appellants in these appeals. We use “Lloyds” to embrace the company now
known as Blackhorse Limited which was at times relevant to these appeals called
Chartered Trust plc and is now a subsidiary of Lloyds. 30
4. We shall return to the provisions of section 43 VATA later but for the following
summary it is sufficient to note that when a VAT group is formed it requires that one
member of the group be designated as the “representative member” and that what
would otherwise have been supplies to and by third parties by and to the individual
members for the purposes of VATA are treated as supplies by and to the representative 35 member. In what follows we follow the parties’ terminology and call the company
which made the provision of goods or services which is treated as a supply for VAT
purposes by the representative member, the Real World Supplier or RWS.
5. In the BMW/MGR appeal the FTT decided the question of who was entitled to
make a claim for overpaid VAT as a preliminary issue. The hearing proceeded on the 40 following basis: VAT had been overdeclared at various times in relation to the
provision of motor vehicles by Rover Company Ltd, Rover Wholesale Ltd and MGR
when they had been members of a VAT group; those companies left the VAT group;
at that time and subsequently BMW was the representative member of that VAT
group; Rover Company Limited executed an assignment to MGR of any claim they 45 might have to the repayment of the overdeclared VAT. (MGR also claimed that Rover
3
Wholesale Ltd had assigned its repayment right to it but the FTT did not consider the
terms of that assignment.) Later BMW claimed repayment of the overdeclared VAT
under section 80 VATA as representative member of the VAT group, and MGR
claimed repayment for itself and as assignee of Rover Company Ltd and Rover
Wholesale Ltd (although the claim in relation to Rover Wholesale was not considered 5 by the FTT).
6. The FTT held that when a company which, apart from the effects of the VAT
grouping provisions would be treated as having made the supply to which the claim
relates left the VAT group, it became thereafter the person entitled to make the claim.
It therefore decided the preliminary issue in favour of MGR. BMW and HMRC appeal 10 against that decision.
7. In the Lloyds/SC appeals, Chartered Trust had supplied goods and services (we
use “supply” to denote the provision of goods or services despite its use as a term of
art in VATA) in relation to which VAT had been overdeclared. It had done so
consecutively in two periods: 15
(1) Period 1: in this period it was the representative member of a VAT
group which was dissolved at the end of the period;
(2) Period 2: in this period it was a member of the Standard Chartered VAT
group.
At the end of Period 2 Chartered Trust left the Standard Chartered VAT group and 20 joined the Lloyds VAT group.
8. Chartered Trust claimed repayment of VAT under section 80 in respect of both
periods; Standard Chartered also claimed in respect of both periods. Its claim in
relation to Period 1 arose because in that period it was the holding company of
Chartered Trust and was on the basis that it had borne the burden of the overpaid 25 VAT.
9. The FTT held that: in Period 1 only Chartered Trust was entitled to claim
(Standard Chartered appeals against that decision); and in Period 2 only Standard
Chartered was entitled to claim (Lloyds/Chartered Trust appeals against that decision).
10. The Lloyds/SC appeal to the FTT also concerned ACL Ltd, which was separately 30 registered from 1973 to 1996, when it joined the Standard Chartered VAT group. Later
it was sold to Lloyds. Both ACL and Standard Chartered made claims for the
repayment of VAT in respect of the period in which ACL had been separately
registered. The FTT held that only ACL was entitled to claim in respect of that period.
Before us Standard Chartered did not pursue its appeal against that decision. 35
11. Before us the parties’ positions were as follows.
12. HMRC and BMW argue that where a supply is made to or by a member of a
VAT group the right to make a claim for overdeclared VAT in relation to that supply
rests in the representative member of the group for the time being. On that basis BMW
is entitled to claim in respect of the supplies made by MGR, Rover Company Ltd and 40 Rover Wholesale Ltd; Chartered Trust is entitled to claim in respect of Period 1 (as
representative member at the time the VAT group was dissolved) and Standard
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