Anglian Water Services Ltd v The Commissioners for HM Revenue and Customs
| Jurisdiction | UK Non-devolved |
| Judge | Mrs Justice Falk,Judge Cannan |
| Neutral Citation | [2018] UKUT 0431 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Subject Matter | Tax,27 December 2018 |
| Date | 27 December 2018 |
| Published date | 31 December 2018 |
[2018] UKUT 0431 (TCC)
Appeal number: UT/2017/0103
VALUE ADDED TAX – repayment of output tax – section 80(3) VATA 1994 – unjust
enrichment – water and sewerage infrastructure charges set by regulators – whether
regulators took into account the incidence of VAT in setting the charges – evidence
before the FTT – whether that evidence was probative of the decision the regulators
would have taken if they had known that infrastructure charges were outside the
scope of VAT – approach to admission of new evidence by Upper Tribunal – Karoulla
considered
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
ANGLIAN WATER SERVICES LIMITED
Appellant
- and -
THE COMMISSIONERS FOR HER
MAJESTY’S
REVENUE AND CUSTOMS
Respondent
TRIBUNAL:
MRS JUSTICE FALK
JUDGE JONATHAN CANNAN
Sitting in public at The Rolls Building, Fetter Lane, London EC4A 1NL on 8 – 10
October 2018
Mr James Rivett of counsel, instructed by Steve Leader, Solicitor, Anglian Water
Services Limited, for the Appellant
Mr Peter Mantle of counsel, instructed by HM Revenue and Customs Solicitor’s
Office, for the Respondents
© CROWN COPYRIGHT 2018
DECISION
Introduction
This is an appeal against a decision of the First-tier Tribunal (Tax Chamber)
5
(Judge Barbara Mosedale) [2017] UKFTT 386 (TC) released on 4 May 2017. The FTT
dismissed an appeal by the appellant (“AWSL”) against a decision of the respondents
(“HMRC”) to refuse a claim for repayment of overpaid output tax of some £12 million.
The claim covered output tax overpaid in the period 1 April 1990 to 4 December 1996.
AWSL was appointed as a water and sewerage undertaker for the Anglian region
10
in 1989, as part of the privatisation of the water industry. The claim for repayment was
made pursuant to section 80 Value Added Tax Act 1994 (“VATA 1994”). It concerns
VAT charged to customers in relation to certain infrastructure charges. HMRC accept
that the supplies were outside the scope of VAT and as a consequence VAT was
overpaid, however they refused the claim relying on the defence of unjust enrichment
15
in section 80(3) VATA 1994. That section provides as follows:
“It shall be a defence, in relation to a claim under this section by virtue of subsection (1)
or (1A) above that the crediting of an amount would unjustly enrich the claimant.”
It is well established that the burden is on HMRC to establish the defence of
unjust enrichment – see Baines & Ernst Ltd v HM Revenue & Customs [2006] EWCA
20
Civ 1040. As appears below, the Court of Appeal in Baines & Ernst set out certain
principles to be applied in considering whether the defence of unjust enrichment is
made out. Following a careful and comprehensive analysis the FTT found that HMRC
had satisfied the burden and that repayment of the output tax would unjustly enrich
AWSL.
25
AWSL appeals against the decision of the FTT on four grounds:
(1) The FTT failed properly to identify the principles in Baines & Ernst.
(2) The FTT failed properly to apply the principles in Baines & Ernst.
(3) The FTT reached conclusions and/or made findings of fact which no person
acting judicially and properly instructed as to the relevant law could have reached
30
(see Edwards v Bairstow [1956] AC 14).
(4) The decision of the FTT would have been different if a letter dated 6
September 1989 from HM Customs & Excise (“HMCE”) to the Water Authorities
Association (“WAA”) had been before the FTT.
Ultimately the issue on this appeal is whether the FTT erred in law in concluding
35
that HMRC had made out the defence of unjust enrichment.
The principles to be applied in relation to the defence of unjust enrichment are
the subject of Ground 1 and we refer to them below in that context. By way of
introduction we can simply say that the burden is on HMRC to establish that repayment
To continue reading
Request your trial