Court of Appeal

Published July 5, 2007

Commissioners for Revenue and Customs v BUPA Purchasing Ltd and Others

Where the Commissioners for Revenue and Custome had made a value-added tax assessment and the time limit for making any further assessment had passed before they became aware that further input tax was deductible, the taxpayer was not entitled to reduce the amount of VAT stated due in the assessment to take account of output tax which had not yet been taken into account and which arose from the same transaction.

The Court of Appeal (Lord Justice Auld, Lord Justice May and Lady Justice Arden) so held on June 12, 2007 allowing an appeal by the commissioners from Mr Justice Park ([2006] STC 388) on issues arising from a scheme designed to enable the taxpayers, BUPA Purchasing Ltd, Essex Street Investments Ltd and Bemerton Ltd, to recover input tax from purchases of services from outside suppliers.

LADY JUSTICE ARDEN said it was inconsistent with the intention of Parliament expressed in the Value Added Tax Act 1994 to hold that the commissioners could only reduce an assessment with respect to either output tax or input tax less any offset, or that they could only make adjustments to input and output tax if they were exercising their power to reduce an assessment.

Customs and Excise Commissioners v Sooner Foods Ltd ([1983] STC 376) was to be preferred to Ridgeon’s Bulk Ltd v Customs and Excise Commissioners ([1994] STC 427).

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