Representative members and VAT repayment claims

On 3 January 2017, the Upper Tribunal held, in Gala 1 Ltd v HMRC [2016] UKUT 0564 (TCC), that a claim for overpaid VAT must be made by the representative member of a VAT group.

 

This latest decision follows a number of recent cases looking at the question of VAT overpayment claims under section 80 of VATA 1994. 

 

The taxpayer sought to rely, before the Upper Tribunal, on one remaining ground of appeal (the taxpayer accepting that the Standard Chartered, Taylor Clark and Rover decisions had dealt with the majority of its original grounds of appeal). However the taxpayer failed to convince the Upper Tribunal that ‘exceptional circumstances’ existed in its case, that could allow for someone other than the representative member to make a section 80 claim. In the tribunal’s view, the taxpayer provided no evidence to demonstrate that the representative member could not reasonably have made the claim.

 

Although it is a shame that the taxpayer failed to provide evidence as to the difficulty involved in the representative member of the VAT group making the claim (so that the tribunal did not consider what level of difficulty was required before it would depart from the general position), the tribunal did state that, in order for the taxpayer to succeed on its one remaining ground of appeal, it would need to have been ‘virtually impossible’ for the representative member to have made the claim.

 

The combined effect of these decisions would seem to be that in almost all cases, a section 80 claim will need to be made by the representative member of the relevant VAT group (i.e. the representative member at the relevant time), even where the group member directly concerned with the supply in question has since left the VAT group. 

 

David Gubbay & Ben Roberts, RPC (RPC’s Corporate Tax Update)