New Judgment: Commissioners for HMRC v Investment Trust Companies (in liquidation)  UKSC 29
11 Tuesday Apr 2017
On appeal from:  EWCA Civ 82
This appeal considered whether the claimants have a direct mistake-based action in unjust enrichment against the defendant on the basis that the defendant was enriched at the claimant’s expense by the mistaken payment of VAT, and whether the claimants’ cause of action against HMRC in unjust enrichment for the recovery of VAT was excluded by the Value Added Tax Act 1994, s 80(7). The appeal also considered, subject to the foregoing, the extent to which the defendant had been enriched by the mistaken payment of VAT. The Supreme Court unanimously allowed the appeal and disallowed the cross-appeal. The Court held that, beyond direct transfers of value, or equivalent situations, it is generally difficult to maintain that the defendant has been enriched at the claimant’s expense, and in the instant case there had been no direct transfer of value or equivalent situation. This is because the claimants’ payment to the Managers became part of the Managers’ general assets, and was not impressed with a special purpose trust, while the Managers’ VAT liability to the defendants arose independently of whether the claimants actually paid VAT. The two transactions were found to be separate and cannot be collapsed into a single transfer of value. The Supreme Court also held that, even if the claimants had in principle been able to make out a claim in unjust enrichment, such a claim would have been excluded by the Value Added Tax Act 1994, s 80(7), which sets out arrangements for the supplier to reimburse the consumer, subject to a limitation period, removing the need for the consumer to have a direct remedy against the defendants.
To watch the hearing, please visit: Supreme Court Website (17 May 2016 morning session) (17 May 2016 afternoon session) (18 May 2016 afternoon session) (19 May 2016 morning session) (19 May 2016 afternoon session)