Your World of Legal Intelligence
 United Kingdom | +44 (0) 20 7284 8080

The London Institute (Now known as the University of the Arts, London) v Her Majesty's Revenue and Customs, V 19362

Judgment Cited authorities 16 Cited in Precedent Map Related
Vincent
JurisdictionUK Non-devolved
JudgeDr K KHAN
Judgment Date06 December 2005
RespondentHer Majesty's Revenue and Customs
AppellantThe London Institute (Now known as the University of the Arts, London)
ReferenceV 19362
CourtFirst-tier Tribunal (Tax Chamber)
LONDON TRIBUNAL CENTRE







19362

Value Added Tax - Claim for input tax under-declared - Claim made on 30 January 2001 for input tax under-claimed 1989-1996 - Legislation introducing limitation period for making claims had no provision for transitional relief – Effect on claim - Whether reasonable period sufficient for making claim – Value Added Tax Regulations 1995, SI 1995/2518, Reg. 29 (1A) – Appeal dismissed


LONDON TRIBUNAL CENTRE




THE LONDON INSTITUTE Appellant

(NOW KNOWN AS THE UNIVERSITY OF THE ARTS, LONDON)



  • and –



THE COMMISSIONERS FOR HER MAJESTY’S REVENUE & CUSTOMS Respondents






Tribunal: DR KAMEEL KHAN (Chairman)

MR CYRIL SHAW FCA



Sitting in public in London on 12 and 13 September 2005


Mr D Scorey, instructed by KPMG LLP, for the Appellant


Miss V Sloane, instructed by HMRC Solicitors Office, for the Respondents




© CROWN COPYRIGHT 2005


DECISION Appeal and Background Facts 1. The Appellant appeals pursuant to Section 83(c) Value Added Tax Act 1994 (“VATA”) against the decision of the Commissioners for Her Majesty’s Revenue and Customs (“the Commissioners”) refusing a voluntary disclosure claim. The claim is for an under-declaration of input tax made by letter dated 30 January 2001. It relates to input tax underclaimed in the prescribed accounting periods from 1 April 1989 to 30 April 1996. The total amount of VAT claimed, excluding interest, is approximately £1.5 million. 2. The disputed decision is contained in a letter from the Commissioners dated 29 April 2003. The claim was rejected by the Commissioners, on the basis that it was time-barred pursuant to Regulation 29(1A) of the Value Added Tax Regulations 1995 (“the 1995 Regulations”). The 1995 Regulations provide that the Commissioners shall not allow or direct a person to make any claim for deduction of input tax in terms such that the deduction shall fall to be claimed more than three years after the date by which the return for the prescribed accounting period in which the VAT became chargeable is required to be made. This three year cap was introduced with effect from 1 May 1997 by the VAT (Amendment) Regulations 1997. 3. The Appellant had previously made a claim on 31 August 1999 for input tax underclaimed in prescribed accounting periods from 31 July 1996 to 31 July 1999. The claim for these periods fell within the three year time limit and the Commissioners paid the Appellant approximately £1 million in respect of this claim in 2000-2001. 4. The group VAT registration of the Appellant comprises three entities:


(a) the London Institute which comprises 6 colleges and two halls of residence. Input tax incurred by the colleges is only recovered where the directly associated onward supply is taxable. The Institute may be eligible to reclaim a portion of overhead expenses but to date (1994) no method had been proposed. The two halls of residence have an agreed recovery of 13/52 being representative of the number of weeks open for taxable activities;


(b) Development at London Institute Limited (“DALI Limited”) where all income is taxable except grants from the then Polytechnic and Colleges Funding Council (“PCFC”) towards salaries. No directly related input tax is claimed; and (c) the Cochrane Theatre was included in the VAT group from 1 November 1992. The current partial exemption method as agreed with the VAT City Office enabled full input tax recovery on bar takings, i.e. where it can be directly related to taxable activities, and the recovery of 64% of the unattributable tax. The remaining 36% being representative of income received from the London Institute for exempt educational activities. The percentages are reviewed annually. 5. The Institute is based in central London and provides higher and further education principally in the fields of Art and Design. It offers courses to UK, EC and overseas students through its different colleges and locations throughout London. Some of the colleges are well known and include the London College of Fashion, Central St Martins College of Art and Design, London College of Printing, Chelsea College of Art and Design and Camberwell College of Art and Design. 6. The Cochrane Theatre is modest. It is used by the various colleges for stage design courses, shows and events. It undertakes a mixture of exempt and taxable supplies as the Theatre is also hired out for use to outside organisations for which a standard rated fee is charged. Additional taxable theatre income is from admission charges and from its small bar. Input tax incurred on the bar stock is recovered in full and is not part of the claim for our purposes. DALI Limited runs short courses from the various college sites and has an office at each college. It is not an “eligible body” under the VATA, Schedule 9, Group 6 and its supplies of training courses are subject to VAT at the standard rate. It receives some grant income in respect of non-credit bearing courses. The VAT identified as wholly relating to taxable supplies has been recovered in full and is not part of the claim for our purposes. 7. Pursuant to Section 124A(3)(B) and 125 of the Education Reform Act 1988 as amended, the London Institute changed its name to “the University of the Arts, London” This was confirmed by the Privy Council Office on 10 May 2004. 8. The London Institute was the representative member for the group VAT registration. 9. For the purposes of this appeal, we should record that two bundles of documents were presented to the Tribunal: Bundle A containing an agreed bundle of documents which comprehensively dealt with all correspondence and other relevant paperwork and Bundle B, containing legislation and authorities. There was one witness called, Mr David Martin James, Head of Finance at the Appellant. He provided a Witness Statement.


Appellant’s Arguments 10. The Appellant’s main submission concerns the legality of Regulation 29(1A) of the 1995 Regulations (“Regulation 29”). It is their submission that the legislation is unlawful and contrary to the directly enforceable rights of the Appellant and must be disapplied by the Tribunal, which is bound to give effect to the Appellant’s rights. The legislation took effect in May 1997. Before 1997, UK law allowed a taxpayer six years to make a claim for overpaid tax. This was stated in Section 80 VATA. There was no time limit for claiming input tax and VAT on taxable supplies was allowed once attributable to taxable transactions. The recovery of input tax was allowed by Article 17-20 of the Sixth Directive. These provisions had been implanted into domestic UK law by sections 20-26 VATA. These rights are directly enforceable in the hands of the taxpayer. (See Marks and Spencer plc v Customs and Excise Commissioners [2002] STC 1036 (“M&S 1”); Marks and Spencer plc v Customs and Excise Commissioners and University of Sussex v Customs and Excise Commissioners [2004] STC 1(“M&S 2”).) 11. The Commissioners were of the view that payment traders (i.e. those making ...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT