Coin - a - Drink Limited v Her Majesty's Revenue & Customs, TC 04657
| Jurisdiction | UK Non-devolved |
| Judge | Kevin POOLE |
| Judgment Date | 06 October 2015 |
| Neutral Citation | [2015] UKFTT 0495 (TC) |
| Respondent | Her Majesty's Revenue & Customs |
| Appellant | Coin - a - Drink Limited |
| Reference | TC 04657 |
| Court | First-tier Tribunal (Tax Chamber) |
[2015] UKFTT 0495 (TC)
TC04657
Appeal number: TC/2013/03851
Corporation tax – taxability of VAT repayment and associated simple interest – whether Shop
Direct Group v HMRC decision correct in the light of EU law – whether VAT repayment and
interest payment could be characterised, by virtue of EU law, as falling due under the
English law of restitution – whether application of principles of restitution should prevent
HMRC from recovering corporation tax referable to VAT repayment and interest – appeal
dismissed
FIRST-TIER TRIBUNAL
TAX CHAMBER
COIN-A-DRINK LIMITED Appellant
-and-
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMS Respondents
TRIBUNAL: JUDGE KEVIN POOLE
RUTH WATTS DAVIES
Sitting in public in the Royal Courts of Justice, Strand, London on 17-18 November
2014
David Southern QC instructed by BDO LLP for the Appellant
Rupert Baldry QC, Elizabeth Wilson and Nicholas Saunders instructed by the General
Counsel and Solicitor to HM Revenue and Customs, for the Respondents
© CROWN COPYRIGHT 2015
2
DECISION
Introduction
1. This appeal concerns the ability of HMRC to impose a corporation tax liability 5 on sums paid to the appellant by way of refund of overpaid VAT in the sum of
£411,230 (“the VAT Repayment”) and associated interest in the sum of £949,452.14
(“the Interest Payment”).
2. The Interest Payment was calculated and paid as simple interest by HMRC
purportedly pursuant to section 78 Value Added Tax Act 1994 (“VATA”). The 10 appellant is claiming further interest on a compound basis of up to £7.1 million. That
claim is currently stayed pending the final outcome of what is commonly called the
Littlewoods litigation and therefore this appeal does not formally determine the
liability of any such further interest to corporation tax.
3. It might be thought that these issues had been definitively resolved by the case 15 of Shop Direct Group and others v HMRC [2014] EWCA Civ 255 (in relation to
which the decision of the Court of Appeal is now final, save in respect of one issue
that does not arise in this appeal). However, this appeal has been pursued entirely on
the basis of EU law arguments that were not put forward to (nor, therefore, considered
by) any of the First-tier Tribunal, the Upper Tribunal or the Court of Appeal in Shop 20 Direct. Thus, it appears, these words of Henderson J in Littlewoods Retail Limited
and others v Revenue & Customs Commissioners [2014] STC 1761 (“Littlewoods 2”)
at [65] were uttered prematurely when referring to the Shop Direct litigation:
“The litigation has thus determined in HMRC’s favour all of the points
of principle relating to the taxability of the sums of principal and 25 interest already paid.”
The facts
4. The relevant facts were agreed, and the bulk of the hearing was devoted to
legal argument on the basis of those facts. We heard no live evidence, and the bundle
of documents before us mainly comprised the correspondence between the parties and 30 the appellant’s accounts and tax computations for the relevant years. A statement of
agreed facts was submitted to us, which read as follows:
“1. At all material times (including the period 1973-1984) Coin-a-
Drink Limited (“CAD”) carried on a trade of operating full service
automatic food beverage and snack vending machines. 35
2. By letter dated 26 March 2009 CAD made a voluntary disclosure
claim under section 80 Value Added Tax Act 1994 (“VATA 1994”) for
repayment of amounts overpaid by way of output tax on supplies of hot
drinks up to 1 May 1984. The claim related to Compass Contract
Services UK Ltd [2006] EWCA Civ 730. 40
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