Supreme Court: Judgment in gaming machine tax appeal to be handed down next week

The respondent, Taylor Clark Leisure Plc, was the representative member of the Taylor Clark VAT Group (“the VAT Group”) from 1973 to 2009, when the VAT Group was dissolved. The respondent’s income was in part generated by bingo games and gaming machines. From 1989 to 1990, the respondent’s corporate group was reorganised. The respondent’s bingo business was transferred to its newly-incorporated subsidiary, Carlton. Carlton was a member of the VAT Group from 1990 to 1998. In 1998 the respondent sold Carlton to outside shareholders. Carlton accordingly left the VAT Group and instead accounted using its own VAT registration number.

In 2005 the Court of Justice of the European Union held that VAT was not, and never had been, payable on income from gaming machines. In 2007 Carlton submitted to HMRC four claims in relation to overpayments made by the VAT Group between 1973 and 1996. Section 121 of the Finance Act 2008 removed an existing statutory time bar for such claims, but the statutory deadline for submitting claims under section 121 was 31 March 2009.

The claims were all submitted on Carlton’s letterhead, and all cited the VAT registration number of the VAT Group and Taylor Clark’s name, save for one claim which stated Carlton’s name and the VAT registration number of the VAT Group.

In April 2009 HMRC wrote to the respondent, but not to Carlton, indicating that one of the claimed sums would be paid to the respondent. In May 2009 that sum was paid to the respondent as representative of the VAT Group.

In July 2009, however, HMRC assessed that this sum was repayable to HMRC. The respondent sought review of that decision, and also sought repayment of the VAT sums which had been the subject of the other claims submitted by Carlton. HMRC refused, citing amongst other things the deadline of 31 March 2009 which had passed.

The respondent unsuccessfully appealed to the First-Tier Tribunal and then to the Upper Tribunal. Its subsequent appeal to the Inner House of the Court of Session was allowed. The Inner House held that the claims made by Carlton before the deadline were properly regarded as claims made by Taylor Clark as representative of the VAT Group. HMRC appeals to the Supreme Court.

The issue is: whether certain claims for the return of overpaid VAT are to be treated as having been made by or on behalf of the single taxable person constituted by the Taylor Clark VAT Group, so that any repayment is due to Taylor Clark as the representative member of the single taxable person.

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