Court of Session judgment

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GRT100456
Summary
From a VAT perspective, the issue
in this case was simple. Carlton
Clubs Ltd (Carlton) was a member
of the Taylor Clark Leisure PLC
(Taylor Clark) VAT Group. It
submitted various claims for
repayment of overpaid VAT. As the
representative member of the VAT
Group during the period of trading
which gave rise to the claims, Taylor
Clark asserted that it was entitled to
receive the VAT refund.
Carlton had left the Taylor Clark
VAT group many years before the
claims were submitted. Nonetheless,
the Court of Session has ruled that,
for the period when Carlton was a
member of the VAT Group any
VAT overpaid was overpaid by the
VAT group and only Taylor Clark
was entitled to the refund.
18 July 2016
Court of Session
This is a long-running battle. The question to be resolved was whether Carlton was entitled
to a VAT refund relating to VAT overpaid to HMRC during a period when it was a
member of the Taylor Clark VAT Group. The Upper Tribunal had found that the claims
were repayable to Carlton and Taylor Clark appealed to the Inner House of the Scottish
Court of Session.
In its judgment, the Court has overturned the previous Tribunal's decisions and has
allowed Taylor Clark's appeal. The Court cited the Court of Justice (CJEU) judgment in the
case of Skandia America (Skandia) as authority for its view that, for VAT purposes, a VAT
group takes the form of a single taxable person. The Court considers that a UK VAT
group is, therefore, a person in its own right and that, as a consequence, the trading
activities of a member of a VAT group is regarded as being undertaken by the
representative of the VAT group. Similarly, where a VAT refund is due to a VAT group, it
is only the representative member of the VAT group that is entitled to receive it.
The Upper Tribunal had been wrong to rule that Carlton was entitled to the VAT refund.
Whilst it was clear that Carlton had submitted the claims for refund of overpaid VAT the
fact remained that, on a proper construction, the claims had been made by Carlton as agent
of Taylor Clark and the period covered by the claims were at a time when Taylor Clark was
the representative member of the VAT Group. Following the CJEU's judgment in Skandia,
the VAT group was a single taxable person which was represented by Taylor Clark. As
such, the claims made by Carlton could only properly be regarded as having been made by
and repayable to Taylor Clark.
Comment – This seems like a sensible judgment from the Court of Session. The
concept of a 'single taxable person' created by a VAT group means that, for VAT
purposes, the group's activities are seen as being conducted by the representative
member. No other member can, therefore, make or receive payment of a claim
otherwise than as agent of the representative member. It will be interesting to see
whether HMRC will seek leave to appeal the to the Supreme Court.
Taylor Clark Leisure PLC
Case Alert
Contact
Stuart Brodie Scotland stuart.brodie@uk.gt.com (0)14 1223 0683
Karen Robb London & South East karen.robb@uk.gt.com (0)20 772 82556