HMRC v Southern Cross Employment Agency Ltd
| Jurisdiction | UK Non-devolved |
| Judge | MR JUSTICE NEWEY |
| Judgment Date | 01 April 2015 |
| Neutral Citation | [2015] UKUT 0122 (TCC) |
| Respondent | SOUTHERN CROSS EMPLOYMENT AGENCY LIMITED |
| Appellant | REVENUE AND CUSTOMS |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Appeal Number | FTC/26/2014 |
[2015] UKUT 0122 (TCC)
Appeal number: FTC/26/2014
VAT – whether section 80 of the Value Added Tax Act 1994 prevents HMRC
from entering into a binding compromise agreement for the repayment of
money paid by way of VAT – whether any such agreement was ultra vires
and so void – whether such an agreement was concluded on the facts
UPPER TRIBUNAL (TAX AND CHANCERY CHAMBER)
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMS Appellants
- and -
SOUTHERN CROSS EMPLOYMENT AGENCY LIMITED
Respondent
TRIBUNAL: MR JUSTICE NEWEY
Sitting in public in London on 3 and 4 February 2015
Miss Jessica Simor QC, instructed by the General Counsel and Solicitor to HM
Revenue and Customs, for the Appellants
Mr Peter Mantle, instructed by Crowe Clark Whitehill LLP, for the Respondent
© CROWN COPYRIGHT 2015
2
DECISION
Introduction
1. In 2010, HM Revenue and Customs (“HMRC”) made a payment of nearly 5 £1.4 million to the respondent, Southern Cross Employment Agency Limited
(“Southern Cross”). In the previous year, Southern Cross had submitted a
claim to recover VAT for which it had in the past accounted to HM Customs
and Excise (to whom I shall also refer as “HMRC”). According to Southern
Cross, the payment to it was made pursuant to a contractual agreement 10 compromising the repayment claim. HMRC, however, maintain that they were
barred from entering into any such agreement by section 80 of the Value
Added Tax Act 1994 (“the VATA”), that such an agreement would in any case
have been ultra vires and void and, finally, that no contractual agreement was
concluded on the facts. According to HMRC, Southern Cross was not entitled 15 to the money it was paid and assessments were properly raised to recover it.
2. In a decision dated 17 January 2014 (“the Decision”), the First-tier Tribunal
(“the FTT”) (Judge Berner and Mr Jenkins) ruled in favour of Southern Cross.
HMRC, however, appeal against the Decision. 20
Factual history
3. Southern Cross is an employment agency specialising in the supply of dental
nurses to dentists. 25
4. In 2001, Horwath Clark Whitehill wrote to HMRC on Southern Cross’s behalf
to say that they considered its supplies of dental nurses to be exempt from
VAT. When HMRC replied a few weeks later, they agreed that the supplies
were exempt for VAT purposes. In the light of that, Southern Cross sought 30 repayment of VAT for which it had accounted to HMRC between 1998 and
2001. HMRC met the claims.
5. In 2009, after HMRC had accepted that the three-year limitation period for
which there had previously been provision was unlawful, Horwath Clark 35 Whitehill submitted on Southern Cross’s behalf a further claim for the
repayment of VAT, this time for the period from 1973 to 1997. The total
amount sought was £861,162.65.
6. Mr Barry Knight, an officer of HMRC, responded to Southern Cross’s claim 40 in a letter of 2 December 2009, raising the defence of unjust enrichment for
which section 80(3) of the VATA provides. He suggested that there was
evidence indicating that, “prior to VAT free competition, the VAT would have
been passed on and that [Southern Cross] would be unjustly enriched”.
Horwath Clark Whitehill, however, replied that they were “strongly of the 45 opinion that [Southern Cross] would not be unjustly enriched by the payment
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