MG Rover Group Ltd v Revenue & Customs & Ors [2014] UKFTT 327 (TC) (31 March 2014)

MG Rover Group Ltd v Revenue & Customs & Ors [2014] UKFTT 327 (TC) (31 March 2014)

Under UK law, the right to claim repayment of overpaid VAT in respect of supplies made while a company was a member of a VAT group rests with the company that made the supplies (the 'real world supplier'), but only after it ceases to be a member of the VAT group and the close economic link is broken. The statutory deeming effect of s 43 VATA applies only while the group relationship subsists; once the RWS leaves the group, the right to claim repayment vests in the RWS, not the current representative member. Assignments of claims are only effective if the right to claim existed at the time of assignment.

Citation
[2014] UKFTT 327 (TC)
Parties
Appellant: MG Rover Group Limited; First Respondent: The Commissioners for Her Majesty’s Revenue & Customs; Second Respondent: BMW (UK) Holdings Limited; Third Respondent: Rover Company Limited
Jurisdiction
United Kingdom
Judgment Date
31 March 2014
Procedural Posture
VAT Group Registration/overpaid Output Tax Claim / Preliminary Issue Determination Before First Tier Tribunal (tax)
Outcome
Appellant succeeds on the preliminary issue.
Legal Topics
VAT Group Registration, Overpaid Output Tax, Section 80 VATA 1984, Section 43 VATA 1984, Assignment of Claims, Statutory Interpretation, EU VAT Directive Compliance
Tax Law VAT Law Corporate Law VAT Group Registration Overpaid Output Tax Section 80 VATA 1984 Section 43 VATA 1984 Assignment of Claims +2 more

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Parties

MG Rover Group Limited

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

First Respondent

BMW (UK) Holdings Limited

Second Respondent

Rover Company Limited

Third Respondent

Procedural Posture

VAT Group Registration/overpaid Output Tax Claim / Preliminary Issue Determination Before First Tier Tribunal (tax)

Legal Issues

  1. 1 Whether, under UK law, the right to claim repayment of overpaid VAT rests with the company that made the sales (the 'real world supplier') or with the representative member for the time being of the VAT group;
  2. 2 Whether the answer changes if the real world supplier funded the VAT or made the supplies;
  3. 3 Whether an assignment between group members transferred the right to claim repayment;

Ratio Decidendi

Under UK law, the right to claim repayment of overpaid VAT in respect of supplies made while a company was a member of a VAT group rests with the company that made the supplies (the 'real world supplier'), but only after it ceases to be a member of the VAT group and the close economic link is broken. The statutory deeming effect of s 43 VATA applies only while the group relationship subsists; once the RWS leaves the group, the right to claim repayment vests in the RWS, not the current representative member. Assignments of claims are only effective if the right to claim existed at the time of assignment.

Court Disposition

Appellant succeeds on the preliminary issue.

Orders

  • It is determined that, under UK law, the right to claim repayment of overpaid VAT rests with the company that made the supplies (the 'real world supplier') after it leaves the VAT group, not with the representative member for the time being.
  • The preliminary issue is decided in favour of MG Rover Group Limited.