Appropriately capped
Cardiff County Council paid value added tax on goods and services acquired for the purposes of its public functions. This was then reclaimed under section 33, Value Added Tax Act 1994. However, it also carried on business activities, and was required to submit VAT returns. Customs directed the council to claim its section 33 refund in the same way.
Appropriately capped
Cardiff County Council paid value added tax on goods and services acquired for the purposes of its public functions. This was then reclaimed under section 33, Value Added Tax Act 1994. However, it also carried on business activities, and was required to submit VAT returns. Customs directed the council to claim its section 33 refund in the same way.
The VAT returns submitted by the council between 1 January 1991 and 29 February 2000 were incorrect, in that sums were included which should not have been so accounted for. As a result, the sums repaid to the council were smaller than they should have been. In December 1999, Customs said that section 33 claims lodged after 31 March 2000 would be subject to a three year time limit. On 30 March 2000, the council sought repayment of the amounts which it had mistakenly accounted for between 1 January 1991 and 29 February 2000. Customs said that section 80, VAT Act 1994 applied and restricted the repayments to three years.
The council sought judicial review of Customs' decision.
Mr Justice Stanley Burnton said that the authority's claim was time-barred by virtue of section 80. The authority paid its perceived liability to Customs just as effectively, as if it had received cash for its section 33 claim, and paid its perceived liability as a taxable person separately. Furthermore, although the payment was not of VAT due to Customs, it was a payment 'by way of VAT'. That conclusion was consistent with what would have happened if Customs had not required the section 33 claim to be amalgamated with the section 25(3) claim, and each claim had been accounted for and actually paid separately. In that event, Customs would have paid the section 33 claim in full. The authority would have paid what it considered to be its net liability as a taxable person. The resulting overpayment would have been subject to section 80.
The application therefore failed and Customs' view was upheld.
(R (on the application of Cardiff County Council) v Commissioners of Customs and Excise, Administrative Court, 15 October 2002.)