Case details

Commissioners for Her Majesty's Revenue and Customs (Respondent) v Investment Trust Companies (In Liquidation) and others (Appellants)

Case ID: UKSC 2015/0058

Case summary

  1. Whether the ITCs (the ultimate consumer) have a direct mistake-based action in unjust enrichment against HMRC on the basis that HMRC was enriched at the ITCs' expense by the mistaken payment of VAT;
  2. Whether the ITCs' cause of action against HMRC in unjust enrichment for the recovery of VAT was excluded by VATA, s.80(7) (Value Added Tax Act 1994);
  3. Subject to the above, the extent to which HMRC has been enriched by the mistaken payment of VAT

This case concerns a claim in unjust enrichment following mistaken payment of VAT. The nine claimants in this case The Investment Trust Companies, ("the ITCS") are closed-ended investment funds constituted as limited companies. Between 1992 and 2002 they received supplies of investment management services from their investment managers ("the Managers"). It was generally understood that these services did not qualify for exemption from VAT. Therefore the Managers charged VAT on these services on the assumption that it was due and the ITCs paid the invoice together with VAT. The Managers made periodic VAT returns accounting for the VAT charges as output tax, reclaimed input tax and paid HMRC the net difference. Following the decision of the CJEU in Claverhouse, it transpired that these supplies should have been exempt from VAT. Accordingly, the Managers made claims to HMRC under s.80 VATA 1994 for repayment of sums accounted for and paid by them in error. HMRC met these claims but did not include any amounts relating to periods which were time-barred under the three-year period then provided by the statutory recovery scheme ("the Dead Periods"). The repayments were also limited to the net amounts the Managers had paid (e.g. the notional £75) rather than the full £100 paid by the ITCs. The Managers paid what they received in cash to the ITCs. The ITCs were therefore left out of pocket in respect of (1) the amounts paid during the Dead Periods and (2) in respect of the other periods, the difference between what they had paid (the notional £100) and the lesser net amounts that were repaid (the notional £75). The ITCs now claim directly from HMRC in unjust enrichment on the ground that HMRC has been enriched by payments made under a mistake of law.

Judgment appealed

[2015] EWCA Civ 82


  1. Kleinwort Overseas Investment Trust Plc
  2. F & C Income Growth Investment Trust Plc
  3. M & G Recovery Invest Trust Plc

Commissioners for Her Majesty's Revenue and Customs



Lord Neuberger, Lord Mance, Lord Reed, Lord Carnwath, Lord Hodge

Hearing start date

17 May 2016

Hearing finish date

19 May 2016

Watch hearing
17 May 2016 Morning session Afternoon session
18 May 2016 Afternoon session
19 May 2016 Morning session Afternoon session