Court of Appeal

Published April 22, 2008

Midlands Co-Operative Society Ltd v Revenue and Customs Commissioners

Before Lady Justice Arden, Lord Justice Wall and Lord Justice Wilson

Judgment April 9, 2008

A taxable person was entitled to assign to another any benefit of repayment he enjoyed from the overpayment of value-added tax.

The Court of Appeal so held in a reserved judgment dismissing an appeal by the Commissioners of Revenue and Customs from Mr Justice Blackburne (The Times June 29, 2007) who had allowed the appeal of Midlands CoOperative Society Ltd from a VAT and Duties Tribunal which held that the right to reclaim overpaid tax had not been transferred to Midlands from Leicestershire CoOperative Society Ltd on the transfer of all its engagements to Midlands, under section 51(1) of the Industrial and Provident Societies Act 1965.

Mr Kevin Prosser, QC and Mr Jonathan Bremner, instructed directly by KPMG LLP, for Midlands; Mr Craig Sephton, QC and Mr James Puzey for the commissioners.

LADY JUSTICE ARDEN said that where a statute gave a person who had paid value-added tax a right of repayment, the statute should be taken, in the absence of contrary indication, to have intended to include a person in whom he had vested that right.

The contrary indication would have to be clearly stated because the right to a repayment was a right of property which should not be restricted without clear wording. It would follow that if a person had assigned a chose in action to another so as to invest in him the right to sue for it, and to give a good receipt, the commissioners could not properly pay the assignor.

Where VAT has been charged to customers, received by the registered person and paid over to the Revenue so as to give rise to a claim under section 80 of the Value Added Tax Act 1994, the registered person could set up arrangements to repay his customers who had been wrongly charged VAT and to preempt the unjust enrichment defence under section 80(3).

It was to be presumed that unless otherwise stated, a right which was created by statute was assignable in the same way as rights created by the general law. There was nothing to exclude the ordinary law that a claim under section 80 might be assigned.

Lord Justice Wall and Lord Justice Wilson agreed.

Solicitors: Solicitor, Revenue and Customs.

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