Edinburgh Telford College+the Commissioners For Her Majesty's Revenue And Customs V. A Decision Of The Edinburgh Vat And Duties Tribunal Dated 18th January 2005
| Jurisdiction | Scotland |
| Judge | Lady Cosgrove,Lord Clarke,Lord President |
| Neutral Citation | [2006] CSIH 13 |
| Date | 22 February 2006 |
| Docket Number | XA18/05; |
| Court | Court of Session |
| Published date | 22 February 2006 |
| FIRST DIVISION, INNER HOUSE, COURT OF SESSION | |
| Lord President Lady Cosgrove Lord Clarke | [2006] CSIH 13 XA18/05; XA22/05 OPINION OF THE COURT delivered by LORD CLARKE in APPEALS by EDINBURGH TELFORD COLLEGE Appellants; and THE COMMISSIONERS FOR HER MAJESTY'S REVENUE AND CUSTOMS Appellants and Respondents; against A DECISION OF THE EDINBURGH VAT AND DUTIES TRIBUNAL dated 18 January 2005 _______ |
22 February 2006
Introduction
[1] These are two appeals, one at the instance of Edinburgh Telford College and the other at the instance of the Commissioners for Her Majesty's Revenue and Customs against a decision of the Edinburgh VAT Tribunal dated 18 January 2005. The College has conceded that the Commissioners' appeal should be allowed and the parties have reached an agreement as to the manner in which the issues between them should be disposed of, apart from the matter which is the subject of the College's appeal.
[2] The case involves the proper treatment of input tax charged in relation to the construction of a new campus for the College, the works in respect thereof having commenced in or about October 2002. The appeals involve a consideration of both the relevant domestic and European legislation regulating VAT. Ultimately, however, the main point in issue is to be resolved by a consideration of the relevant European legislation and the case law relating thereto.
The relevant UK legislation
[3] Section 4 of the VAT Act 1994 provides as follows:
"(1) VAT shall be charged on any supply of goods or services made in the United Kingdom, where it is a taxable supply made by a taxable person in the course or furtherance of any business carried on by him.
(2) A taxable supply is a supply of goods or services in the United Kingdom other than an exempt supply".
Section 24 of the 1994 Act provides as follows:
"(1) Subject to the following provisions of this section 'input tax', in relation to a taxable person, means the following tax, that is to say -
(a) VAT on the supply to him of any goods or services;
(b) VAT on the acquisition by him from another member State of any
goods; and
(c) VAT paid or payable by him on the importation of any goods from a
place outside the member States,
being (in each case) goods or services used or to be used for the purpose of any business carried on or to be carried on by him.
(2) Subject to the following provisions of this section, 'output tax', in relation to a taxable person, means VAT on supplies which he makes or on the acquisition by him from another member State of goods (including VAT which is also to be counted as input tax by virtue of subsection (1)(b) above).
(3) For the purposes of subsections (1) and (2) above, where goods or services are supplied to a company, goods are acquired by a company from another member State or goods are imported by a company from a place outside the member States and the goods or services which are so supplied, acquired or imported are used or to be used in connection with the provision of accommodation by the company, they shall not be treated as used or to be used for the purposes of any business carried on by the company to the extent that the accommodation is used or to be used for domestic purposes by -
(a) a director of the company, or
(b) a person connection with a director of the company.
(4) The Treasury may by order provide with respect to any description of goods or services that, where goods or services of that description are supplied to a person who is not a taxable person, they shall, in such circumstances as may be specified in the order, be treated for the purposes of subsections (1) and (2) above as supplied to such other person as may be determined in accordance with the order.
(5) Where goods or services supplied to a taxable person, goods acquired by a taxable person from another member State or goods imported by a taxable person from a place outside the member States are used or to be used partly for the purposes of a business carried on or to be carried on by him and partly for other purposes, VAT on supplies, acquisitions and importations shall be apportioned so that only so much as is referable to his business purposes is counted as his input tax".
Section 25 of the 1994 Act provides as follows:
"(1) A taxable person shall -
(a) in respect of supplies made by him, and
(b) in respect of the acquisition by him from other member States of any
goods,
account for and pay VAT by reference to such periods (in this Act referred to as 'prescribed accounting periods') at such time and in such manner as may be determined by or under regulations and regulations may make different provision for different circumstances.
(2) Subject to the provisions of this section, he is entitled at the end of each prescribed accounting period to credit for so much of his input tax as is allowable under section 26, and then to deduct that amount from any output tax that is due from him.
(3) If either no output tax is due at the end of the period, or the amount of the credit exceeds that of the output tax then, subject to subsections (4) and (5) below, the amount of the credit or, as the case may be, the amount of the excess shall be paid to the taxable person by the Commissioners; and an amount which is due under this subsection is referred to in this Act as a 'VAT credit'.
(4) The whole or any part of the credit may, subject to and in accordance with regulations, be held over to be credited in and for a subsequent period; and the regulations may allow for it to be so held over either on the taxable person's own application or in accordance with general or special directions given by the Commissioners from time to time.
(5) Where at the end of any period a VAT credit is due to a taxable person who has failed to submit returns for any earlier period as required by this Act, the Commissioners may withhold payment of the credit until he has complied with that requirement.
(6) A deduction under subsection (2) above and payment of a VAT credit shall not be made or paid except on a claim made in such manner and at such time as may be determined by or under regulations; and, in the case of a person who has made no taxable supplies in the period concerned or any previous period, payment of a VAT credit shall be made subject to such conditions (if any) as the Commissioners think fit to impose, including conditions as to repayment in specified circumstances.
(7) The Treasury may by order provide, in relation to such supplies, acquisitions and importations as the order may specify, that VAT charged on them is to be excluded from any credit under this section; and -
(a) any such provision may be framed by reference to the description of
goods or services supplied or goods acquired or imported, the person by whom they are supplied, acquired or imported or to whom they are supplied, the purposes for which they are supplied, acquired or imported, or any circumstances whatsoever; and
(b) such an order may contain provision for consequential relief from
output tax".
It is the next section of the Act, section 26, which provides for the input tax allowable under section 25. Section 26 is in the following terms:
"(1) The amount of input tax for which a taxable person is entitled to credit at the end of any period shall be so much of the input tax for the period (that is input tax on supplies, acquisitions and importations in the period) as is allowable by or under regulations as being attributable to supplies within subsection (2) below.
(2) The supplies within this subsection are the following supplies made or to be made by the taxable person in the course or furtherance of his business -
(a) taxable supplies;
(b) supplies outside the United Kingdom which would be taxable supplies
if made in the United Kingdom;
(c) such other supplies outside the United Kingdom and such exempt
supplies as the Treasury may by order specify for the purposes of this subsection.
(3) The Commissioners shall make regulations for securing a fair and reasonable attribution of input tax to supplies within subsection (2) above, and any such regulations may provide for -
(a) determining a proportion by reference to which input tax for any
prescribed accounting period is to be provisionally attributed to those supplies;
(b) adjusting, in accordance with a proportion determined in like manner
for any longer period comprising two or more prescribed accounting periods or parts thereof, the provisional attribution for any of those periods;
(c) the making of payments in respect of input tax, by the Commissioners
to a taxable person (or a person who has been a taxable person) or by a taxable person (or a person who has been a taxable person) to the Commissioners, in cases where events prove inaccurate an estimate on the basis of which an attribution was made; and
(d) preventing input tax on a supply which, under or by virtue of any
provision of this Act, a person makes to himself from being allowable as attributable to that supply.
(4) Regulations under subsection (3) above may make different provision for different circumstances and, in particular (but without prejudice to the generality of that subsection) for different descriptions of goods or services; and may contain such incidental and supplementary provisions as appear to the Commissioners necessary or expedient".
The regulations referred to in section 26(3) are to be found in Part XIV of the Value Added Tax Regulations 1995 (SI 1995/2518). Regulation 101 sets out the general method for attributing input tax to taxable supplies. Regulation 102(1) provides:
"Subject to paragraph (2) below and [regulations 103, 103A and 103B], the Commissioners may approve or direct the use by a taxable person of a method other than that specified in regulation 101 ... ".
Regulation 100 provides:
"Nothing in this...
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