Graham Elliott comments on the Suffolk Constabulary VAT case
The Suffolk Constabulary (see the FTT case TC03644) found itself unable to bring its man to trial the other day. The man in question was the ‘VAT man’.
Its problem related to VAT incurred on certain expenses which it claimed in a VAT return under the provisions of VATA 1994 s 33. These provisions allow certain bodies (generally uncommercial bodies supported by public money) to claim VAT, despite the costs not being linked to the making of taxable supplies. HMRC denied a claim, but we are not concerned with the reasons for that. The sole issue of contention was whether the Suffolk Constabulary was able to litigate on the matter.
Oddly, it could not, and the tribunal decided it had no authority to hear the case. This was because the (long) list of issues which VATA 1994 s 83 allows a tribunal to hear does not appear to include this situation. It includes a dispute about ‘the amount of any input tax which may be credited to a person’. That seems, ostensibly, to cover the taxpayer’s case, but it does not, because ‘input tax’, as defined in s 24, is VAT on ‘goods or services used … for the purpose of any business’. But s 33 is specifically VAT not used for the purpose of a business, so it is not input tax.
Neither is the VAT incurred by a DIY housebuilder, but this class of claimant is specifically covered in the long list of appealable issues, whereas s 33 is not. Thus, Parliament has afforded no right of appeal to the bodies covered (though they can presumably consider judicial review – an altogether different kind of action).
In the light of this, the same is true of bodies covered by s 33A (certain museums and galleries) and s 33B (academy schools). This is somewhat alarming. VAT refunds are a major item for academy schools, and yet they have no independent means of appeal if HMRC decides to disallow it. Nor do local authorities. Nor does the BBC.
Alarming as this seems, there is a logic, because it is debatable whether claims made by such bodies should be allowed to be made in VAT returns at all. Since the VAT is not associated with taxable supplies, it should be refunded outside the VAT system as a grant. But for convenience, the UK law allows the claim to be processed as though it were input tax, thus leading to the false impression that the body has the same rights to it as a person making taxable supplies.
‘When the VAT man’s finished jumping on his mother, he likes to lie a-basking in the sun. Ah! take one consideration with another, a policemen’s lot is not a happy one.’ (Apologies to WS Gilbert)
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Constabulary duties not quite done
Graham Elliott comments on the Suffolk Constabulary VAT case
The Suffolk Constabulary (see the FTT case TC03644) found itself unable to bring its man to trial the other day. The man in question was the ‘VAT man’.
Its problem related to VAT incurred on certain expenses which it claimed in a VAT return under the provisions of VATA 1994 s 33. These provisions allow certain bodies (generally uncommercial bodies supported by public money) to claim VAT, despite the costs not being linked to the making of taxable supplies. HMRC denied a claim, but we are not concerned with the reasons for that. The sole issue of contention was whether the Suffolk Constabulary was able to litigate on the matter.
Oddly, it could not, and the tribunal decided it had no authority to hear the case. This was because the (long) list of issues which VATA 1994 s 83 allows a tribunal to hear does not appear to include this situation. It includes a dispute about ‘the amount of any input tax which may be credited to a person’. That seems, ostensibly, to cover the taxpayer’s case, but it does not, because ‘input tax’, as defined in s 24, is VAT on ‘goods or services used … for the purpose of any business’. But s 33 is specifically VAT not used for the purpose of a business, so it is not input tax.
Neither is the VAT incurred by a DIY housebuilder, but this class of claimant is specifically covered in the long list of appealable issues, whereas s 33 is not. Thus, Parliament has afforded no right of appeal to the bodies covered (though they can presumably consider judicial review – an altogether different kind of action).
In the light of this, the same is true of bodies covered by s 33A (certain museums and galleries) and s 33B (academy schools). This is somewhat alarming. VAT refunds are a major item for academy schools, and yet they have no independent means of appeal if HMRC decides to disallow it. Nor do local authorities. Nor does the BBC.
Alarming as this seems, there is a logic, because it is debatable whether claims made by such bodies should be allowed to be made in VAT returns at all. Since the VAT is not associated with taxable supplies, it should be refunded outside the VAT system as a grant. But for convenience, the UK law allows the claim to be processed as though it were input tax, thus leading to the false impression that the body has the same rights to it as a person making taxable supplies.
‘When the VAT man’s finished jumping on his mother, he likes to lie a-basking in the sun. Ah! take one consideration with another, a policemen’s lot is not a happy one.’ (Apologies to WS Gilbert)
