Commissioners of Customs and Excise v McMaster Stores (Scotland) Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 14 June 1994 |
| Date | 14 June 1994 |
| Court | Value Added Tax Tribunal |
VAT Tribunal
The following cases were referred to in the decision:
British Eagle International Air Lines Ltd v Compagnie Nationale Air France WLR[1975] 1 WLR 758
Farmers' Mart Ltd v Milne ENR1914 SC 84
Lamdec Ltd VAT(LON/90/1018) No. 6078; [1991] BVC 721
Recovery of overpaid tax - Company in receivership - Credit notes issued by receiver to concessionaire tenants - Company had previously purported to charge VAT on rent - Option to tax invalidly exercised - Tenants claimed in insolvency as unsecured creditors - Estimated dividend only 6.5p in the pound - Whether "decrease in consideration" for supplies - Whether credit notes complied with procedural requirements - Value Added Tax (Accounting and Records) Regulations 1989 (SI 1989/2248), reg. 7(1).Recovery of overpaid tax - Tax paid in error - Whether repayment unjustly enriched claimant - Finance Act 1989, s. 24(3).
The issues were (1) whether there had been a "decrease in consideration" enabling the appellant to apply for a refund of overpaid tax under reg. 7(1) of the Value Added Tax (Accounting and Records) Regulations 1989 (SI 1989/2248) where the tenants would only be entitled to receive a dividend of 6.5p in the pound as unsecured creditors and (2) whether in making such payments the appellant would thereby be unjustly enriched.
The appellant had carried on business as seven department stores in Scotland until in December 1992 it went into receivership under a floating charge dated 28 April 1989 in favour of the Clydesdale Bank plc granting a security over the whole property of the company, including all debts and obligations to become due.
Parts of the stores were rented to concessionaires who paid rent calculated on the basis of an agreed percentage of the takings. Until April 1990, the rents were exempt supplies but in that month the appellant notified the tenants that it was electing to waive exemption. Thereafter, tax was charged and paid on the rent and the appellant duly accounted for it to the commissioners.
Early in 1993 the receiver discovered that the appellant had failed to notify the commissioners of the fact that it had opted to tax so that the option was invalid. On 25 June 1993 the receivers wrote to the tenants informing them and issuing credit notes, referring to "credit re: VAT charged in error for the period April 1990 to December 1992". They were told that as unsecured creditors the appellant was not able to refund...
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