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Essential characteristic

14 March 2014
Issue: 4444 / Categories: Tax cases , VAT

Reed Employment Ltd v CRC, Court of Appeal

The taxpayer company was a recruitment service that provided permanent and temporary workers.

It issued a weekly invoice to clients that hired temporary employees covering commission and the number of hours worked.

The taxpayer charged VAT on the whole amount invoiced until the decision in Reed Personnel Services Ltd v CCE [1995] STC 588 when it concluded that VAT ought to be charged on the commission element only.

The firm submitted claims in March 2009 to have overpaid VAT refunded for the years from 1973 to 1990 and from 1991 to 1995.

HMRC said the repayment was subject to the unjust enrichment rules in F (No 2) A 2005 s 3 which amended VATA 1994 s 80. The taxpayer appealed saying the 2005 provision infringed the EU principle of equal treatment.

The Upper Tribunal disagreed. It ruled that the relevant time was when the...

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