(C) PASSING ON
Although the defence of passing on is not generally available in the law of unjust enrichment,[1] it is recognized as applying to claims for restitution of overpaid VAT, in the form of the unjust enrichment defence,[2] and it is the only defence recognized by EU law[3] as regards San Giorgio claims to ensure that the taxpayer is not unjustly enriched by restitution.[4] This is considered to be a justifiable defence because restitution should not be awarded where the claimant has not borne the burden of the unlawful tax. The defence will only apply to San Giorgio claims to the extent that the taxpayer directly passed on the loss and even then it is necessary to consider carefully whether the loss has actually been passed on. There may, for example, have been a fall in sales by increasing prices which consequently reduced the loss which was passed on.[5] Outside of such claims and the restitution of overpaid VAT, it is unclear whether the passing on defence is applicable. In Woolwich Lord Goff left open the question of whether a taxpayer who has ‘passed on’ the burden of the tax to another should be precluded from seeking restitution.[6] Since the passing on defence is not available for claims in unjust enrichment generally, the preferable view is that it should not be available for claims founded on the Woolwich ground either, since the constitutional principle should prevail so that, as between the public authority and the taxpayer, the latter should obtain restitution.
- [1] See p 118, above. 3 Value Added Tax Act 1994, s 80(3). See p 406, above.
- [2] 168 Amministrazione delle Finanze dello State v SpA San Giorgio (1982) [1983] ECR 3595.
- [3] 169 Case C-398/09 Lady and Kid v Skatteministeriet [2012] STC 854, [20] and [25].
- [4] 170 Case C-310/09 Ministre du Budget, des Comptes Publics et de la Fonction Publique v Accor SA [2012]
- [5] STC 438, [74].
- [6] Woolwich Equitable Building Society v IRC [1993] AC 70, 177-8.
