The High Court has ruled in favour of the taxpayer in a dispute over remedies where VAT has been unlawfully charged. Under UK law, only partial refunds can be made where EU law on tax is breached.
This case, Investment Trust Companies v HMRC [2012] EWHC 458 (Ch), looked at whether the EU principles of reimbursement could be applied in the UK. The court held that English common law claims were time barred by the VAT Act but that claims founded in EU law did lie against HMRC.
The case follows that of JP Morgan Claverhouse plc v HMRC: C-363/05, where investment management fees for investment trust companies were held to be exempt from VAT. Stephen Coleclough, tax partner at PwC, said: “The claimants were seeking to recover VAT which they had borne and which the UK did not allow to be recovered, in clear breach of EU law.”