Lloyds Banking Group Plc & Ors v Revenue And Customs & Anor

Article 11 permits a member state to implement VAT grouping by treating the representative member as the single taxable person for the group’s businesses. That model is valid if it supports administrative simplification and the prevention of abuse. The San Giorgio right does not give every person who has suffered an economic burden a direct claim against the state. Under sections 43–44 and 80 of the Value Added Tax Act 1994, the representative member is the claimant for overpaid output tax, including after a real-world supplier leaves the group. After dissolution, the last representative member retains the claim even if it is no longer taxable. Exceptional circumstances may require another mechanism, but none were established in these appeals.

These conjoined appeals arose from claims for repayment of VAT wrongly charged on supplies made by companies while they belonged to VAT groups. The real-world suppliers had subsequently left their groups, and some groups had been dissolved. The Upper Tribunal decisions held that the representative member, rather than the former real-world supplier, was entitled to claim under section 80 of the Value Added Tax Act 1994. The central issues were whether the United Kingdom’s VAT-grouping model complied with article 11, whether the San Giorgio right required repayment to the real-world supplier or the person bearing the economic burden, and whether dissolution or other circumstances justified an exceptional remedy.

1. Appeals dismissed. Lady Justice Rose delivered the judgment, with Lord Justice Henderson and Lord Justice Patten agreeing.
2. VAT grouping. Article 11 gives member states a broad discretion as to implementation. The United Kingdom’s model, under sections 43–44 of the Value Added Tax Act 1994, treats the representative member as carrying on the businesses of the other members, disregards intra-group supplies and uses one VAT registration. It satisfies the requirements identified in Ampliscientifica Srl and another v Ministero dell’Economia e delle Finanze and another [2011] STC 566. The model is consistent with the objectives of simplification and combating abuse. The court declined to make a reference to the CJEU.
3. San Giorgio rights. The authorities, including Amministrazione delle Finanze dello Stato v SpA San Giorgio [1983] ECR 1595, Comateb [1997] STC 1006, Reemtsma Cigarettenfabriken GmbH v Ministero delle Finanze [2008] STC 3448 and Danfoss [2013] STC 1651, did not establish a general right for every person who had borne an economic burden to claim directly from the state. A direct claim outside the ordinary supplier-customer framework is required only where recovery from the supplier is impossible or excessively difficult. The appellants had not established those circumstances.
4. Representative member and dissolution. Taylor Clark Leisure plc v Revenue and Customs Commissioners [2018] UKSC 35 was binding on the domestic construction of sections 43 and 80. The representative member was the sole claimant for overpaid output tax. That remained so after a real-world supplier left the group. Following dissolution, the last representative member could claim under section 80 even if it was no longer taxable. The question who bore the economic burden was irrelevant.
5. Exceptional circumstances. A different mechanism might be required where the group and its last representative member had ceased to exist. Gala’s delay, the absence of competing claims and difficulty identifying representative members did not amount to such circumstances. No remittal or further direction was required.

1. Court of Appeal (Civil Division): appeals dismissed. [2019] EWCA Civ 485.
2. Upper Tribunal (Tax and Chancery Chamber): appeals in the Chartered Trust and MG Rover proceedings allowed against the First-tier Tribunal decisions, holding that the representative member was entitled to claim; Gala’s appeal was dismissed. The decisions are reported at [2016] UKUT 434 (TCC) and, in the judgment’s narrative, [2016] UKUT 564 (TCC).
3. First-tier Tribunal: the Chartered Trust, MG Rover and Gala appeals were determined in decisions reported at [2014] UKFTT 316 (TC), [2014] UKFTT 327 (TC) and [2015] UKFTT 516 (TC).