A marketing company has won a €2.55 million VAT battle with the Revenue Commissioners.
Revenue originally rejected the firm’s €2.55 million VAT repayment claims from 2016 to 2020.
However, an appeal to the Tax Appeals Commission (TAC) has succeeded in part, showing that the Revenue Commissioners were wrong to refuse the cumulative €2.55 million repayments.
After five days of evidence at the TAC, commissioner Clare O’Driscoll has concluded that Revenue’s decision to refuse the appellant’s claim for the repayment of VAT should be amended and Revenue will have to repay the firm the input VAT incurred by the company relating to its economic activities for the periods July-August 2016 to November-December 2020.
Ms O’Driscoll has also found that Revenue shall, following a detailed apportionment exercise between the parties, repay the firm the input VAT incurred by the company relating to its non-economic activities where there is a direct and immediate link with the company’s output transactions which give rise to a right of deduction for the periods July-August 2016 to November-December 2020.
In her ruling, Ms O’Driscoll cited sections of the European Union Principal VAT Directive as envisaged by the Court of Justice of the European Union (CJEU).
Ms O’Driscoll has directed that both sides will have to go through a detailed apportionment exercise to establish the precise details and amounts to determine the VAT to be repaid to the firm.
Ms O’Driscoll said that for her to make a determination as to apportionment following such an exercise would have required an oral hearing of weeks, if not months.
The “highly matrixed” organisation is registered for VAT and is engaged in economic and non-economic activities.
[ Almost €560m paid to Revenue in unpublished tax settlementsOpens in new window ]
In its argument before the TAC, legal representatives for the company contended that the firm was entitled to full input deduction in accordance with the law and case law concerning VAT input deduction.
The hearing was told that the appellant firm conducts a mixture of activities which are both taxable and outside the scope of VAT.
It stated that the case law of the CJEU has clarified that inputs used by a business both for taxable supplies and for outside the scope of VAT activity enjoy full VAT input deduction notwithstanding their partial utilisation for activity outside of the scope of VAT.
The case may ultimately be decided by the High Court as a note at the end of the 91 page ruling – heavily redacted in parts – states that the TAC has been requested to state and sign a case for the opinion of the High Court in respect of the determination.
