Supreme Court rejects end consumers’ unjust enrichment and EU law claims to recover mistakenly-paid VAT direct from HM Revenue & Customs

12 Apr 2017

The Supreme Court has unanimously allowed HM Revenue & Customs’ appeal and dismissed the ITCs’ cross-appeal in both parties’ appeals from the Court of Appeal’s decision, [2015] EWCA Civ 82.

In HMRC’s appeal, the Supreme Court held that (1) the ITCs, as end customers, had no direct claim against HMRC in the English law of unjust enrichment in circumstances where the customers had paid their suppliers (and the suppliers had accounted to HMRC for) “VAT” that was not due, because the supplies should have been exempt (2) that any such claim was in any event excluded by statute (s.80(7) of the Value Added Tax Act 1994) and (3) EU law required no different result (in particular, in respect of tax periods when the taxpayer’s own claim for repayment against HMRC was statute-barred under the VAT Act).  In the ITCs’ appeal, the Supreme Court upheld the Court of Appeal’s decision that HMRC were only enriched by the net amount of over-declared output tax less over-claimed input tax, not by the gross amount of the over-declared output tax.

The judgment is available at: The Supreme Court and here.

Andrew Macnab (led by Stephen Moriarty QC, Fountain Court Chambers) represented HM Revenue & Customs.