“After consulting the advisory committee on value added tax (hereafter, the ‘VAT Committee’), each Member State may regard as a single taxable person any persons established in the territory of that Member State who, while legally independent, are closely bound to one another by financial, economic and organisational links. A Member State exercising the option provided for in the first paragraph, may adopt any measures needed to prevent tax evasion or avoidance through the use of this provision.”
“43.— Groups of companies (1) Where under sections 43A to 43D any bodies corporate are treated as members of a group, any business carried on by a member of the group shall be treated as carried on by the representative member, and— (a) any supply of goods or services by a member of the group to another member of the group shall be disregarded; and (b) any supply which is a supply to which paragraph (a) above does not apply and is a supply of goods or services by or to a member of the group shall be treated as a supply by or to the representative member; … and all members of the group shall be liable jointly and severally for any VAT due from the representative member.”
“43B.— Groups: applications. (1) This section applies where an application is made to the Commissioners for two or more bodies corporate, which are eligible by virtue of section 43A, to be treated as members of a group. (2) This section also applies where two or more bodies corporate are treated as members of a group and an application is made to the Commissioners— (a) for another body corporate, which is eligible by virtue of section 43A to be treated as a member of the group, to be treated as a member of the group, (b) for a body corporate to cease to be treated as a member of the group, (c) for a member to be substituted as the group’s representative member, or (d) for the bodies corporate no longer to be treated as members of a group. (3) An application with respect to any bodies corporate— (a) must be made by one of them or by the person controlling them, and (b) in the case of an application for the bodies to be treated as a group, must appoint one of them as the representative member.”
“23 … the second sub-paragraph of art 4(4) of the Sixth Directive is a provision which, in order to be implemented by a member state, requires prior consultation by that state of the Advisory Committee on VAT and the adoption of national legislation authorising persons, in particular companies, established in the territory of that country who, while legally independent, are closely bound to one another by financial, economic and organisational links, no longer to be treated as separate taxable persons for the purposes of VAT in order to be treated as a single taxable person to whom a single VAT identification number is allocated and, accordingly, the sole person entitled to submit VAT declarations. …”
“48. It is not evident that the possibility for member states to regard as a single taxable person a group of persons including one or more persons who may not individually have the status of a taxable person runs counter to those objectives. It is, on the contrary, conceivable that, as Ireland and the interveners have submitted, the presence, within a VAT group, of such persons contributes to administrative simplification both for the group and for the tax authorities and makes it possible to avoid certain abuses, and that that presence may even be indispensable to that end if it alone establishes the close financial, economic and organisational links which must exist between the persons constituting that group in order for it to be regarded as a single taxable person.”
“28. However, it is common ground that Skandia Sverige is a member of a VAT group, created on the basis of art 11 of the VAT Directive and therefore forms with the other members a single taxable person. For VAT purposes, that VAT group was allocated a registration number by the competent national authority. 29. In this connection, treatment as a single taxable person precludes the members of the VAT group from continuing to submit VAT declarations separately and from continuing to be identified, within and outside their group, as individual taxable persons since the single taxable person alone is authorised to submit such declarations [citing Ampliscientifica]. It follows that, in such a situation, the supplies of services made by a third party to a member of a VAT group must be considered, for VAT purposes, to have been made not to that member but to the actual VAT group to which that member belongs. 30. Therefore, for VAT purposes, the services supplied by a company such as [Skandia America] to its branch which, such as Skandia Sverige, belongs to a VAT group, are considered not to be supplied to that branch but must be regarded as being supplied to the VAT group. 31. Inasmuch as the services provided for consideration by a company such as [Skandia America] to its branch must be deemed, solely from the point of view of VAT, to have been provided to the VAT group, and as that company and that branch cannot be considered to be a single taxable person, it must be concluded that the supply of such services constitutes a taxable transaction, under art 2(1)(c) of the VAT Directive.”
“21. There is, however, an exception to that principle. As the court stated in … San Giorgio,the protection of the rights so guaranteed by the Community legal order does not require repayment of taxes, charges and duties levied in breach of Community law where it is established that the person required to pay such charges has actually passed them on to other persons (…). 22. In such circumstances, the burden of the charge levied but not due has been borne not by the trader, but by the purchaser to whom the cost has been passed on. Therefore, to repay the trader the amount of the charge already received from the purchaser would be tantamount to paying him twice over, which may be described as unjust enrichment, whilst in no way remedying the consequences for the purchaser of the illegality of the charge. 23. It is accordingly for the national courts to determine, in the light of the facts in each case, whether the burden of the charge has been transferred in whole or in part by the trader to other persons and, if so, whether reimbursement to the trader would amount to unjust enrichment. 24. In this respect it should be made clear, first, that if the final consumer is able to obtain reimbursement through the trader of the amount of the charge passed on to him, that trader must in turn be able to obtain reimbursement from the national authorities. On the other hand, if the final consumer can obtain repayment directly from the national authorities of the amount of the charge which he has paid but which was not due, the question of reimbursing the trader does not, as such, arise.”
“35. … Where, although the charge has been passed on to the purchaser, domestic law permits the trader to claim that the illegal levying of the charge has caused him damage which excludes, in whole or in part, any unjust enrichment, it is for the national court to give such effect to the claim as may be appropriate.”
“22. Similarly, the member state may not reject an application for reimbursement of an unlawful tax on the ground that the amount of that tax has been set off by the abolition of a lawful levy of an equivalent amount. … 24. That abolition falls within the ambit of choices made by the state in the field of taxation which express its general policy in economic and social matters. Such a choice can easily have the most diverse of consequences which, disregarding the potential difficulties in ascertaining whether and, if so, to what extent one tax has, in reality, purely and simply replaced another, preclude the reimbursement of an unlawful tax in such a context [as] being regarded as giving rise to unjust enrichment.”
“76. In those circumstances, the answer to the second question is that where a national tax regime such as that at issue in the main proceedings does not of itself lead to the passing on to a third party of the tax unduly paid by the person liable for that tax, EU law precludes a member state refusing to reimburse sums paid by the parent company on the grounds either that such reimbursement would lead to the unjust enrichment of the parent company, or that the sum paid by the parent company does not constitute an accounting or tax charge for it but is set off against the total of the sums which may be redistributed to its shareholders.”
“27. In that regard, given the purpose of the right to the recovery of sums unduly paid, … observance of the principle of effectiveness requires that the conditions under which an action may be brought for recovery of sums unduly paid be fixed by the Member States, pursuant to the principle of procedural autonomy, in such a way that the economic burden of the duty unduly paid can be neutralised …. 28. Therefore, it is on condition that the economic burden that the tax unduly paid imposed on the taxable person has been completely neutralised, that a Member State may refuse to repay part of that tax on the ground that such repayment would give rise to unjust enrichment for the benefit of the taxable person.”
“37. The final consumer to whom an indirect charge levied contrary to European union law, such as the Danish lubricant oil duty, has been passed on, is therefore also to be regarded as an individual on whom rights have been conferred by the European Union provisions prohibiting such charges. He, too, must be able to obtain repayment of the charge passed on to him.”
“61. In that respect the principle of effectiveness also requires that that claim actually be, by its very nature, a restitutionary claim, since it would be made excessively difficult for the final consumer to exercise his rights if he had, for example, to satisfy the more stringent conditions which apply, in accordance with case law to claims for damages based on European Union law. Nor is it possible to see why, in such a case, the state should be able to seek refuge behind those more stringent claim conditions. After all, it has still been enriched by the amount of the charge levied contrary to European Union law, and it is solely a question of repaying that amount to the person who was last to bear it economically. 62. If national law grants to the economically burdened final consumer a claim for restitution against neither the state nor the taxable person, it still follows from the principle of effectiveness that at least one of those two claims for repayment must be created, since the principle of effectiveness requires the member states to provide for the instruments and the detailed procedural rules necessary to enable the final consumer to recover the charge levied contrary to European Union law. Here again, the standard of protection required by European Union law would not be met if the final consumer was referred to any claims for damages against the state.”
“80.— Credit for, or repayment of, overstated or overpaid VAT (1) Where a person— (a) has accounted to the Commissioners for VAT for a prescribed accounting period (whenever ended), and (b) in doing so, has brought into account as output tax an amount that was not output tax due, the Commissioners shall be liable to credit the person with that amount. [(1A) and (1B) make equivalent provision where HMRC have wrongly assessed the tax which is then paid rather than where the taxpayer has accounted for the tax]. (2) The Commissioners shall only be liable to credit or repay an amount under this section on a claim being made for the purpose.”
“(3) It shall be a defence, in relation to a claim under this section by virtue of subsection (1) or (1A) above, that the crediting of an amount would unjustly enrich the claimant. (3A) Subsection (3B) below applies for the purposes of subsection (3) above where— (a) an amount would (apart from subsection (3) above) fall to be credited under subsection (1) or (1A) above to any person (“the taxpayer”), and (b) the whole or a part of the amount brought into account as mentioned in paragraph (b) of that subsection has, for practical purposes, been borne by a person other than the taxpayer. (3B) Where, in a case to which this subsection applies, loss or damage has been or may be incurred by the taxpayer as a result of mistaken assumptions made in his case about the operation of any VAT provisions, that loss or damage shall be disregarded, except to the extent of the quantified amount, in the making of any determination— (a) of whether or to what extent the crediting of an amount to the taxpayer would enrich him; or (b) of whether or to what extent any enrichment of the taxpayer would be unjust. (3C) In subsection (3B) above— “the quantified amount” means the amount (if any) which is shown by the taxpayer to constitute the amount that would appropriately compensate him for loss or damage shown by him to have resulted, for any business carried on by him, from the making of the mistaken assumptions; … (7) Except as provided by this section …, the Commissioners shall not be liable to credit or repay any amount accounted for or paid to them by way of VAT that was not VAT due to them.”
“80A.— Arrangements for reimbursing customers. (1) The Commissioners may by regulations make provision for reimbursement arrangements made by any person to be disregarded for the purposes of section 80(3) except where the arrangements— (a) contain such provision as may be required by the regulations; and (b) are supported by such undertakings to comply with the provisions of the arrangements as may be required by the regulations to be given to the Commissioners. (2) In this section “reimbursement arrangements” means any arrangements for the purposes of a claim under section 80 which— (a) are made by any person for the purpose of securing that he is not unjustly enriched by the crediting of any amount in pursuance of the claim; and (b) provide for the reimbursement of persons who have for practical purposes borne the whole or any part of the amount brought into account as mentioned in paragraph (b) of subsection (1) or (1A) of that section.”
“40. We draw the following principles from these cases: (1) during the currency of grouping, domestic legislation is required to have the effect that the only taxable person is the single taxable person so that the individual members of the group are not treated as taxable persons. This affects in particular whether or not a supply is made and the quantification of VAT liability; (2) the purposes of Article 4(4) are administrative simplification and the avoidance of abuse; (3) member states have a margin of discretion in the implementation of Article 4(4), but must exercise that discretion having regard to the purpose of the Article and in accordance with EU law principles including that of fiscal neutrality (whereas fiscal neutrality is not an object of grouping (if it were one would expect grouping to be mandatory), member states must exercise their discretion with due regard to that principle). 41. Although the subject matter of the decisions did not concern persons leaving a group or a group being dissolved there is no hint in the judgments that such events should unwind previous treatment so that supplies originally treated as made by the single taxable person would be treated as no longer having been so made and instead treated as having been made only by one of the persons who had been treated as a single person. Indeed it seems to us that the obligation to exercise the discretion within EU principles includes having due regard to the principle of legal certainty, which, in the context of taxation, requires that a person should be able to know the tax effects of his action at the time he takes it, militates against the implementation of a regime in which a later event, leaving a group, can affect the rights and obligations which accrue from earlier ones. 42. None of these cases deals directly with the way in which the rights and obligations of the several persons who are treated as the single taxable person are permitted or required to be allocated among them. The concept of the single taxable person is helpful when considering whether a supply is made and in the quantification of any VAT liability, but the Court’s judgments are of less help in assessing how the rights and liabilities of that single taxable person give rise to rights or liabilities of the persons who are members of the VAT group (a question which may not be one of EU law at all, but only one of domestic law). It seems to us however that it is at the least consistent with these judgments for the rights and obligations which have arisen during the grouping to continue to be treated as rights and obligations of the members, treated as a single person, after grouping ceases.”
“113. The conferring of that right upon the notional single person and giving it effect by paying the representative member for the members to deal with between themselves is an effective implementation of the right they together hold. Conferring the right on the [real world supplier] alone would ignore the fact that the burden fell on the members treated as a single person, not just the [real world supplier]. Treating the right as reverting to or remaining with a [real world supplier] is, … inconsistent with the principle that all the members should be treated as the single taxable person.”
“127. … The members can choose how the representative member holds the rights which arise and how the members bear the cost of payment between them. That satisfies the requirement of art 4(4) that they should be treated as holding the rights as if they were the notional single person. If together the members decide how a right should be exercised by the representative member and how its proceeds shall be divided between them then they are being treated as the holder of the right. That is the case whether the right is to credit repayment of input tax or a San Giorgio right to recover wrongly collected tax. 128. … The representative member is not the notional single taxable person but mechanically fulfils the need created by any implementation of art 4(4) for a person recognised by the legal order of the member state for the administration of the tax; in that sense it embodies, reflects, manifests or represents the single person or gives effect to the scheme of art 4(4).”
“167. But neither the words, context nor purpose of Article 4(4) specify how the rights and obligations of the notional single person accrued to the actual persons who are members of the group. Those rights and obligations have to take effect under the scheme of each member state’s national law. The way in which they are recognised falls within the margin of discretion afforded to the member state as long as it recognises the relevant requirements. 168. In our view, the scheme created by section 43 may easily be read as giving effect to these requirements. The transactions undertaken by each member are treated as if undertaken by one person, each individual member is no longer a taxable person and intra group transactions are disregarded. This reflects and satisfies the requirement that members are treated as if they were a single person.”
“It does not lay down a template as to how a member state will treat a group of persons as the single taxable person”
“ … the UK chose to achieve the end which the Directive authorised not by deeming the group to be a quasi-person but by treating the representative member as the person which supplied or received the supply of goods or services.”
“the single taxable person is the representative member”
“23. … had the effect that companies in a VAT group were no longer treated as separate taxable persons for the purpose of VAT but were to be treated as a single taxable person. This precluded such companies from submitting VAT declarations separately ‘since the single taxable person alone is authorised to submit such declarations’. It followed that the national implementing legislation had to provide that ‘the taxable person is a single taxable person and that a single VAT number be allocated to the group’. 24. In the UK the model which achieves that result is that of the representative member. The words in s 43(1) are clear beyond question: ‘any business carried on by a member of the group shall be treated as carried on by the representative member’. It has not been suggested that the UK failed to consult the VAT committee before adopting this model … and no challenge has been made to the effect that the model does not faithfully implement the option which art 11 of the Principal Directive or its predecessor made available to member states. There is no reason to doubt that the model which the UK has adopted is consistent with the EU legislation.”
“29. … It therefore follows from the operation of s 43 of VATA that where there have been overpayments of VAT by the representative member of a VAT group, the person entitled to submit a claim during the currency of a VAT group, unless the claim has been assigned, is either the current representative member of the VAT group or a person acting as agent of that representative member. 30. I therefore agree with [the Court of Session, Inner House] that it is only the representative member who has any interest in making the claim. My disagreement is simply that one does not need the complication of viewing the group as a quasi-persona to reach that conclusion.”
“The Court asks the former question not the latter.”