Neutral Citation Number: [2007] EWHC 1432 (Ch)
Case No: CH2005APP644
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 19 June 2007

Before :

THE HON MR JUSTICE BLACKBURNE
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Between :

	Midlands Co-operative Society Ltd	Appellant	
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	The Commissioners of HM Revenue and Customs	Respondents 	

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Kevin Prosser QC (instructed by KPMG LLP) for the Appellant
James Puzey (instructed by HM Revenue & Customs) for the Respondents

Hearing date: 17 May 2007
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Judgment

Mr Justice Blackburne :
Introduction 
1.	This is an appeal by Midlands Co-operative Society Ltd (“Midlands”) against a decision released on 20 July 2005 of the VAT and Duties Tribunal (“the Tribunal”) sitting in Manchester.   The Tribunal (Mr Colin Bishopp) dismissed Midlands’ appeal against the rejection by HM Commissioners of Customs and Excise (as they then were) of Midlands’ claim, made under section 80 of the Value Added Tax Act 1994 (“the VAT Act”) and under regulation 35 of the Value Added Tax Regulation 1995, for repayment of output tax overpaid.   It did so on the ground that Midlands had no standing to make the claim since the tax in question was overpaid, if at all, by Leicester Co-operative Society Ltd (“Leicester”) not by Midlands.
The facts
2.	The Tribunal’s decision set out the following, edited, version of the agreed statement of facts (altered only in this judgment to correct an obviously erroneous statutory reference in paragraph (9)).   The edited statement provides the relevant factual background to the appeal.
“(1)   	Midlands is an industrial and provident society registered in accordance with the Industrial and Provident Societies Act 1965 (the Act). 
(2)   	Midlands carries on business as a general retailer, selling food and non-food products through retail premises, providing funerals, acting as travel agents, and carrying on the business of a motor dealer. 
(3)   	Midlands has been registered for the purposes of VAT since 6 September 1997 although returns have been rendered with effect from the prescribed accounting period 02/92. 
(4)   	Leicestershire Co-operative Society Limited (Leicester) was an industrial and provident society registered in accordance with the Act carrying on a similar business to Midlands, including the business of a motor dealer.   Leicester was registered for VAT. 
(5)  	At general meetings of Leicester held on 7 March and 23 March 1995 the following special resolution was passed in accordance with section 51 of the Act: 
‘That this meeting of the members of [Leicester] hereby resolves to transfer the whole of the stock, property and other assets and all engagements of the Society to [Midlands] in consideration of [Midlands] issuing to each member of this Society paid up shares equal to the amount standing to the credit of each member in the share ledgers of this Society on the date when the transfer of engagements becomes effective. 
The transfer shall become effective immediately on the expiration of the Saturday following the date of the registration of this resolution.’ 
(6)   	At a meeting of the Board of Midlands on 26 January 1995 it was resolved that a special members' meeting be called to change the name of the society and: 
‘That this meeting of the Central Board of Directors of [Midlands] hereby agrees in consideration of this Society receiving the whole stock, property and other assets of [Leicester] to issue paid up shares equal to the amount standing to the credit of each such member in the share ledgers of [Leicester] on the date when the transfer of engagements becomes effective.’ 
(7)   	On 30 March 1995 the Register of Friendly Societies acknowledged … the registration that day of the Special Resolution of Leicester and the registration of the change of name of Midlands. 
(8)	In consequence of the registration of the Special Resolution 'immediately upon the expiration of' Saturday 1 April 1995 the engagements of Leicester were transferred to Midlands pursuant to section 51(1) of the Act.   At that moment Leicester had no spare members and no assets or liabilities whatsoever. 
(9)	On 30 April 1997, pursuant to section 16(l)(a)(iii) of the Act, the Registrar of Friendly Societies stated in respect of Leicester that: 
‘The registration of the above mentioned society is hereby cancelled on the ground that the society has ceased to exist following its Transfer of Engagements to [Midlands]’.  
(10)	On 30 June 2003 Midlands' representatives submitted two voluntary disclosure claims in respect of VAT claimed to have been over declared.   The first voluntary disclosure for £63,054 relates to the period 1 April 1973 to 30 November 1999 in respect of output tax over declared under the margin scheme on the sale of demonstrator cars.   The second voluntary disclosure for £38,493 relates to the period 1 April 1973 to October 1996 in respect of payments by car manufacturers of demonstrator discounts and bonuses.   The two claims were made as a consequence of the decisions: in the cases of Commission v Italian Republic (Case C-46/95) [1997] STC 1062 and Elida Gibbs v Customs and Excise Commissioners (Case C-317/94) [1996] STC 1387 respectively.
(11) 	Customs, by letter dated 18 May 2004, have refused to pay any part of the voluntary disclosure in so far as it relates to VAT paid originally by Leicester prior to its transfer of engagements to Midlands on 1 April 1995.”
The relevant legislation 
3.	Section 80 of the VAT Act, under which the claims were made, was, at the material time (and so far as material), as follows:
“(1)	Where a person has (whether before or after the commencement of this Act) paid an amount to the Commissioners by way of VAT which was not VAT due to them, they shall be liable to repay the amount to him.
(2)	The Commissioners shall only be liable to 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, that repayment of an amount would unjustly enrich the claimant.
…
(7)	Except as provided by this section, the Commissioners shall not be liable to repay an amount paid to them by way of VAT by virtue of the fact that it was not VAT due to them.”
4.	Section 51(1) of the Industrial and Provident Societies Act 1965 Act (“the 1965 Act”) is as follows:
“(1)	Any registered society may by special resolution transfer its engagements to any other society which may undertake to fulfil those engagements; and if that resolution approves the transfer of the whole or any part of the society's property to that other society, the whole or, as the case may be, that part of the society’s property shall vest in that other society without any conveyance or assignment.”
The reference in that section to a “registered society” is to any industrial and provident society (such as Leicester and Midlands) registered in accordance with the 1965 Act. 
The issue
5.	It is not in dispute that, but for the transfer of engagements by Leicester to Midlands, Leicester would have been entitled to bring a claim under section 80 of the VAT Act in respect of any overpaid output tax for the periods in question and that, in principle, the Commissioners would have been liable to repay the amount of that tax.   There are other questions that arise, and with which the Tribunal was not concerned, relating to the quantum of the claim, and defences based upon limitation and unjust enrichment.   The sole question for decision by the Tribunal - in effect a preliminary issue - was whether, as the Commissioners maintained but Midlands disputed, Midlands had no standing to make the repayment claim under section 80 notwithstanding that Midlands was Leicester’s transferee in respect of the latter’s engagements.
6.	The Tribunal decided the question in the Commissioners’ favour.
The Decision
7.	The reasons for the Tribunal’s conclusion that Midlands had no standing to make the repayment claim appear in the following paragraphs of the Decision:
“13.	 I can see the attraction of Mrs Brown’s argument [for Midlands, the appellant] that Leicester has transferred the entirety of its assets, of every description, to Midlands, leaving only a shell, and that Leicester's members have likewise transferred their own rights, now attaching to the assets of Midlands, including those acquired from Leicester.   I also recognise the force of her argument that, if Midlands cannot claim the repayment, the right to claim is irretrievably lost, an injustice which I should seek to override if an interpretation of the legislation which does not lead to that result is possible.   Nevertheless, I am bound to agree with Mr Puzey [for the Commissioners, the respondents] that, absent any provision of European law which allows for the transfer of the right to reclaim an overpayment of VAT, the domestic legislation allows only of a narrow interpretation.   As the tribunal pointed out, in its decision in Shendish Manor, section 80(1) of the VAT Act provides that the Customs and Excise Commissioners (as they were) shall not be liable to repay tax except as provided by that section.   The section provides only for repayment to the taxable person who has made the over-payment.   In the absence of clear words, I do not think it is open to me to construe the requirement in a manner which allows an assignee to exercise an assignor's rights.   The absence of any indication that payment to an assignee shall discharge the Respondents' obligations suggests that the assignment of a right to recover an overpayment of VAT was not in the draftsman's contemplation.   Regulation 35 permits a taxable person to correct an error which he has made; it is impossible to read that provision in a manner which allows him to correct an error which someone else has made. 
14.	Alternatively, the Appellant’s argument requires me to conclude that, in some way, Midlands and Leicester are to be treated as if they were the same person.   I do not see how it is possible to do so.   Midlands may have taken over all of Leicester’s assets and its members, but it did not take over, or "become" Leicester: Leicester remained a registrable entity, even if it was no more than a shell, until its registration was cancelled in April 1997.   If instead the correct view is that it ceased to exist immediately following the transfer of its engagements, in 1995, the simple fact that it has ceased to exist is inconsistent with the proposition that, within Midlands, it nevertheless has some continuing existence.   I agree too with Mr Puzey, and for the reasons he gave, that the principle of effectiveness does not assist the Appellant. 
15. 	It may be that there is a lacuna in the legislation, and that some provision should be made to cater for situations of this kind.   I cannot, however, invent such a provision.   I am persuaded that the Respondents are correct and that the appeal must be dismissed.   …”
8.	It is evident therefore that the Tribunal construed section 80 as confining the right to repayment of overpaid tax to the person who made the overpayment (which Leicester was but which Midlands, the claimant, was not), and that there was no basis for treating Midlands and Leicester as if they were the same person.   The Tribunal appeared to recognise, and apparently accept, that the consequence of this conclusion was that “the right to claim [the repayment] is irretrievably lost” (see paragraph 13) and that this revealed a possible “lacuna” in the legislation (see paragraph 15).   
9.	One of the oddities of this conclusion is the apparent acceptance by the Tribunal, and also by the parties or at least by the Commissioners, that, although the resolution passed by Leicester was expressed as a transfer to Midlands of “the whole stock, property and other assets and all engagements” of Leicester (ie all of its assets of whatever kind and also, I should add, its liabilities), and although section 51(1) of the 1965 Act, in accordance with which the resolution was passed, provides that all property expressed to be transferred by such a resolution “shall vest in that other society without any conveyance or assignment”, and although the expression “property”  as used in section 51 is defined by section 74 of the 1965 Act as including “all real, personal … and moveable estate, including books and papers” and is thus plainly capable of extending to Leicester’s chose in action constituted by the claims, nevertheless the transfer was ineffective as regards Leicester’s section 80 claims, which, although (presumably) left with Leicester, thereafter simply disappeared or were extinguished.   In this connection, it is to be noted that, implicit in the second sentence of paragraph 8 of the agreed statement of facts (set out above) is that the effect of Leicester’s resolution, when in accordance with its terms it came into effect on 1 April, was to leave it with no assets even though, according to the Commissioners and also the Tribunal in its decision, the transfer was ineffective to vest the claims in Midlands.
10.	But how can an asset simply disappear?   The approach of the Commissioners’ (and, it would seem, of the Tribunal) would appear to be that the claims remained an asset of Leicester but became extinguished either when Leicester ceased to exist or when, as recited in paragraph (9) of the agreed statement of facts, Leicester’s registration as an industrial and provident society was cancelled on 30 April 1997.   Whether, assuming the Commissioners and the Tribunal are right in supposing that the benefit of Leicester’s section 80 claims was not transferred to Midlands, this is a correct conclusion - and the claims somehow disappeared - is, in my view, very much open to question.
11.	But, taking the Commissioners’ stance and, it would seem, the Tribunal’s conclusion, at face value, the consequence is startling: a transfer of engagements made under section 51(1) has the result, either when the transfer becomes effective or, possibly, when the transferor’s registration is cancelled, of destroying any section 80 claim.   It is the more startling if, as may well be the case, the transferor at the time of the transfer and subsequent cancellation does not even know or have the means of knowing about the claim.   In the instant case, the possibility of a claim appears only to have arisen as a result of court decisions reached long after the event: see paragraph (10) of the agreed statement of facts.   The aggregate amount of the claims is, in the instant case, just over £100,000.   So large sums may be involved.   In short, the position in law, if the Tribunal decision is correct, has all the makings of a trap for the unwary with potentially substantial adverse financial consequences.
12.	There is, I should say, an irony in the Commissioners’ present stance, although it is irrelevant to the outcome of this appeal since it has not been suggested that any estoppel arises as a result, in that it was Midlands that submitted the VAT return in respect of Leicester’s last period of VAT prior to the transfer and, without objection by the Commissioners, paid the VAT shown on the return.   What is more, when the Commissioners concluded that VAT had been under-declared for that last period and made an assessment on Leicester for the additional VAT claimed to be due and Leicester appealed against the assessment, Midlands was directed by the Tribunal, without objection by the Commissioners, to be substituted as appellant in Leicester’s place pursuant to regulation 13 of the Value Added Tax Tribunals Rules 1986.    (Regulation 13, which is expressed to apply “where, in the course of proceedings, the liability or interest of the applicant or appellant passes to another person (“the successor”) by reason of death insolvency or otherwise”, empowers the Tribunal to “direct, on the application of the Commissioners or the successor, and with the written consent of the successor, that the successor shall be substituted for the application or appellant in the proceedings.”)   The result of those proceedings, which involved an appeal to Lightman J (see [2002] STC 198), was, I am told, that Midlands was required to pay, and did pay, a further £750,000 in VAT, all of which was in respect of Leicester’s pre-transfer VAT liability.
The appellant’s submissions 
13.	For Midlands, Mr Kevin Prosser QC (who had not appeared before the Tribunal) submitted that (1) the chose in action constituted by the right to a repayment under section 80 is capable of assignment and was in fact assigned by Leicester’s resolution of March 1995, and (2) alternatively - indeed this was his primary submission - even if, for some reason, the right to repayment conferred by section 80 is not generally assignable, nevertheless the resolution passed under section 51(1) on taking effect following registration, was effective to transfer the right under section 80 (along with the other items of property and Leicester’s engagements as provided for by the terms of the resolution).   
14.	He submitted that there was nothing in section 80 or elsewhere in domestic VAT legislation to prevent the assignment or, if this was different, to prevent a transfer under section 51(1) of the 1965 Act operating to transfer the repayment claims.   The fact, he said, that neither section 80 nor anything else in domestic VAT legislation expressly permitted such a right of transfer was irrelevant provided that there was nothing in the legislation which either expressly or impliedly excluded such a right.   Not only was there no such prohibition in the legislation but the legislation assumed that the right to bring a repayment claim under section 80 was not confined to the actual person who had made the overpayment but extended to others, namely personal representatives, trustees in bankruptcy and the like.   Nor was there, said Mr Prosser, any policy reason why section 80 should be construed so as to prevent assignment/transfer.  
15.	Mr Prosser referred in support of his primary submission to the decision of the Court of Appeal in Co-Operative Group (CWS) Ltd v Stansell Ltd [2006] EWCA Civ 538; [2006] 1 WLR 1704 (“Stansell”).   The question for decision in that case was whether a resolution passed in accordance with section 51(1) was effective to vest in the claimant as the transferee society the rights of the transferor society under a building contract entered into with the defendant, in particular the right to claim damages against the defendant for breach of that contract.   The contract provided expressly that neither the employer (the transferor society) nor the contractor (the defendant) should be able to assign the contract without the written consent of the other.   The defendant, whose consent to any assignment to the claimant was not obtained, contended that a transfer of engagements taking effect under section 51(1) could not override the requirement of the building contract for written consent if the right to bring a claim against it was to be assigned.   The claimants contended that it could.   Reversing the court below (myself as it happens) the Court of Appeal concluded that the transfer under section 51(1) was effective to override the need for the defendant’s consent and therefore that there had been an effective transfer of the benefit of the contract to the claimant.   In particular, it held that the wording of section 51(1), viewed on its own, was capable of extending to a transfer of the benefit of the building contract, notwithstanding the contractual prohibition and the absence of the counterparty's consent, and that there was no “context” to the contrary.   Relying on the apparent width of the provision it held that the resolution to transfer, which was itself in the widest terms, was effective to vest the benefit of the contract in the claimant (and with it the right to claim damages against the defendant) notwithstanding the express prohibition against assignment without consent and the absence of the defendant’s consent and that, in effect, it operated to override the contractual need to obtain that consent.   
16.	Mr Prosser pointed in particular to the reasoning of Mummery LJ contained in the following passages (at paragraphs [53] and [54] of his judgment):   
“A.   The legislative text
53.	First, I agree with Mr Mabb [counsel for the claimant] that the wording of section 51(1) is wide enough to achieve that result [ie overriding the contractual need to obtain the defendant’s consent].   I would put my trust in the legislative text on this point, unless that was a strong context to the contrary, which there is not …   The self-evident purpose of the provision was to enable or authorise one registered society to transfer to another society its engagements (its business undertaking) and its property with the minimum of formality - simply by passing a special resolution, which would have the stated statutory consequence of vesting the transferor’s property without the need for a conveyance or assignment.   The language of “a transfer of engagements” is broad enough to include the liabilities of a society to its members and to third parties and the rights of a society to its members and to third parties and the rights of a society against its members and against third parties; and to cover contracts which would not ordinarily be transferable without the consent of the other party, such as contracts of service with employees of the transferring society.   The force of the statutory language and purpose dispenses with the need for the consent of Stansell to the transfer to CWS of the benefit of the building contract.   
B.		The legislative context 
54.	Secondly, there is nothing in the scheme of the 1965 Act generally or in the context of section 51(1) in particular, which prevents the words of the subsection from having their natural and ordinary meaning.   On the contrary, it makes more sense for all the engagements of CRS as the transferring society, including contracts containing restrictions on assignment, to pass to CWS as the transferee society.    If the benefit of such contracts is left in CRS, which is then cancelled from the register on ceasing to exist as a registered society, the result would be either that the transferring society must continue to have some form of existence for as long as any of its assets are subject to a restriction on assignment, or the benefit of such contracts vests in the Crown as bona vacantia.   It is very unlikely that the legislation was intended to lead to either result.”
Longmore LJ agreed with this and found support in the fact that at the time the concept of a “transfer of engagements” first appeared in such legislation (in the Friendly Societies Act 1855), assignment of even the benefit of contracts was not permissible at common law and pointed out that in and around 1855 Parliament took specific steps (of which, he said, the Bills of Lading Act 1855 was a well-known example) to render assignments legally permissible in certain spheres of activity.   He stated (at [73]):
“In relation to friendly societies and industrial and provident societies Parliament was concerned, having decided that it should be permissible to assign the benefit of a contract, to ensure that the counterparty to the original contract or engagement was not prejudiced by such permissible assignment.   That is why it was provided that the transferee had to undertake to fulfil the engagements of the transferor and, later, that rights against the transferor were to be preserved (see section 11(5) of the Industrial and Provident Societies Act 1976).   But I venture to think that, in these examples of statutory assignment, Parliament would be surprised to be told that although it was now to be lawful to transfer the benefits of contracts or engagements, such lawfulness only applies to such transfers as were contractually permissible.   That would have defeated the purpose of the beneficial statutory intervention.”
Jacob LJ agreed with both judgments.
17.	It was therefore irrelevant to the efficacy of a transfer of property and engagements that the property in question, in that case the benefit of the building contract, was contractually non-assignable in the absence of the counterparty’s written consent.   The question here, said Mr Prosser, was whether, given the width and purpose of the statutory enabling provision contained in section 51(1), Leicester’s resolution was effective, following registration, to transfer to Midlands the right to claim repayment under section 80.   If it was it was unnecessary, he said, to consider whether, apart from a transfer under section 51(1), the right could in any event be assigned (Mr Prosser submitting that, if necessary, he would argue that it could).
18.	He submitted that, in the light of the decision and reasoning in Stansell, there is no reason why a transfer of engagements effected under section 51(1) should not carry with it rights and liabilities concerned with VAT (such as a repayment claim under section 80), not least when VAT is a paradigm of a business tax in that it is concerned with supplies made and supplies received in connection with a person’s business and, as such, intimately bound up with the business undertaking which, as the Court of Appeal held in Stansell, may be transferred by resolutions passed under and in accordance with section 51(1).   Indeed, said Mr Prosser, since the definition of property in section 74 of the 1965 Act includes the “books and papers” of the transferor society, it would be very odd if the transfer under section 51(1) effected a transfer of the business’s books and papers (ie its records) but not the transferor’s rights in respect of VAT to which those books and papers related.   Moreover, there was no reason to think that the liabilities transferred by resolution under section 51(1) should be confined to those which, as was in issue in that case, should be contractual in nature.   Liabilities in tort, he said, would also be included.   And if capable of passing common law rights and obligations, why not statutory rights and obligations, at any rate insofar as they relate to or arise from the business which is the subject matter of the transfer?   
19.	He submitted that the Tribunal attached undue significance to the fact that by the terms of section 80 (in particular that “…they [the Commissioners] shall be liable to repay the amount to him” (emphasis added)) the right to repayment of overpaid VAT was conferred on the person who has paid the VAT.   The reference to “to him” identifies the person on whom the right to repayment is conferred but that, said Mr Prosser, is quite separate from the question whether the right may be transferred.   As to that, he pointed out, the section is silent.   The fact that the right is conferred on the person who has overpaid does not entail that the right to repayment is incapable of vesting in, and being enforced by, another.   Likewise, he said, the section is silent on the question whether the right to repayment passes to the personal representatives (in the case of death) or trustee in bankruptcy (in the case of bankruptcy) of the person who made the overpayment.   The Commissioners correctly accepted that the right does pass in such circumstances.
20.	Nor, he said, is section 80(7) in point: that provision does no more than state that it is only under section 80 that a claim may be made for the repayment of the overpaid tax: that limitation is no more breached by enabling the right under the section to be transferred to another than it is by allowing the personal representatives or trustee in bankruptcy of the overpayer in the event of death or bankruptcy (as the case may be) to claim and recover the repayment.   He accepted that any defence which might have been available to a claim made by the person who overpaid (for example under section 80(3) in the case of unjust enrichment) would be equally available against the transferee.   
21.	As a matter of policy, he submitted, there could be no reason why the right to repayment conferred by section 80 should not pass to Midlands as Leicester’s transferee (along with Leicester’s other VAT rights and liabilities) on a transfer under section 51(1) of the 1965 Act: no prejudice to the Commissioners or to the interests they represent had been identified.   On the other hand, there were good reasons to interpret the legislation to allow such a transfer, namely to enable Midlands as successor in respect of Leicester’s business undertaking, including not least its liabilities, to recover whatever sum might be due by way of repayment of Leicester’s earlier overpayment of output tax and, if the Commissioners are otherwise correct, avoid the Commissioners from enjoying a windfall gain to the extent of the overpayment. 
The Commissioners’ submissions
22.	For the Commissioners, Mr Puzey submitted that the VAT Act and the regulations passed under it (“the statutory code”) make specific provision for the transfer of rights and liabilities in certain circumstances such as to leave no scope for the transfer of rights and liabilities in any other circumstances whether by the 1965 Act or by operation of the common law.   Those circumstances, he said, did not exist in the instant case, namely a transfer of engagements, and that was so whether the transfer was viewed as effected under and in accordance with section 51(1) of the 1965 Act or, more simply, as an assignment of rights at common law.   He accepted that the submission cut both ways in that if Leicester’s rights in respect of VAT were not transferred then neither were its VAT liabilities.   
23.	The only provision allowing a transfer of rights and liabilities, he submitted, occurs in the circumstances set out in section 49 of the VAT Act, as supplemented by regulation 6 of the Value Added Tax Regulations 1995 (“the VAT Regulations”).   Section 49, headed “Transfers of going concerns”, provides, so far as material as follows:
“(1)	Where a business carried on by a taxable person is transferred to another person as a going concern, then -
(a)	for the purpose of determining whether the transferee is liable to be registered under this Act he shall be treated as having carried on the business before as well as after the transfer and supplies by the transferor shall be treated accordingly; and
(b)	any records relating to the business which, under paragraph 6 of Schedule 11, are required to be preserved for any period after the transfer shall be preserved by the transferee instead of by the transferor, unless the Commissioners, at the request of the transferor, otherwise directs.”
Subsections (2) and (3) then deal with the power of the Commissioners to make regulations for the purpose of “securing continuity in the application of this Act in cases where a business carried on by a taxable person is transferred to another person as a going concern and the transferee is registered under this Act in substitution for the transferor.”   Regulation 6 sets out the conditions which are to be fulfilled where there is a transfer of a business as a going concern if the Commissioners are to cancel the transferor's registration under schedule 1 to the VAT Act and register the transferee under that schedule with the registration number previously allocated to the transferor.  Those conditions include that the business is transferred as a going concern and that application is made in a prescribed form by or on behalf of both the transferor and the transferee of the business for the registration number previously allocated to the transferor to the registered in the name of the transferee.   When on fulfilment of the conditions, the transferee of a business has been registered under schedule 1 to the VAT Act in substitution for the transferor of the business and with the transferor’s registration number, the regulation then goes on to state, by paragraph (3), what consequences flow in terms of rights and obligations passing to the transferee in respect of the transferor’s liability to make a return or to account for or pay VAT or as regards the transferor’s right to credit for, or to repayment of, input tax.   
24.	The fact that section 49 of the VAT Act enables the transferee of a business, where the business is transferred to that person as a going concern, to be registered in substitution for, and with the same registration number of, the transferor, with the result that the transferee succeeds to certain VAT rights and liabilities of the transferor is irrelevant, said Mr Puzey, to the question whether the right to repayment under section 80 is transferable.   He pointed out that those rights are not expressed to include a right to repayment under section 80.   He emphasised that, as was clear from the terms of regulation 6, it was not sufficient simply to effect a transfer of the business: the parties had to make a joint application in prescribed form to enable the transferee to take on the registration number of the transferor.   Moreover, it was common ground that Midlands did not, and because it already had its own registration number could not, take advantage of that transfer regime.   In any event, the Commissioners have a discretion in the matter.   This is made clear, he said, by regulation 6(1) which provides that, subject to fulfilment of the conditions laid down by that paragraph:
“The Commissioners may as from the date of the said transfer cancel the registration under Schedule 1 to the Act of the transferor and register the transferee under that Schedule with the registration number previously allocated to the transferor.” (emphasis added)
25.	Mr Puzey referred to the transfer of rights and liabilities as “a serious step” in that, as he described the matter, it “sanctioned the passage of the personality of the transferor to the transferee” through the passing over to the transferee of the transferor’s VAT registration number.   He submitted that, as reflected in the conditions to be fulfilled if such a transfer were to be permitted, Parliament had taken care to ensure that the transfer was properly regulated.   The care with which the qualifying conditions set out in the regulation had been drawn carried the strong implication, he submitted, that, except as set out by section 49 and regulation 6, the statutory code did not permit the transfer of a going concern so as to enable the transferee to take advantage of the VAT rights (and be subject to the VAT liabilities) of the transferor.
26.	He went on to submit that Parliament cannot be taken by omission to have intended transfers to be effected in circumstances other than those for which it had made express provision (as in section 49 and regulation 6).   It follows, he said, that the right to repayment under section 80(1) is effectively an inalienable right except as expressly permitted by the VAT legislation.   For completeness he referred me also to the views expressed by the tribunal in Shendish Manor Ltd (2004) VAT Decision 18474 (Mr Theodore Wallace, Chairman, and one other) - and referred to in the Tribunal’s decision in this case - in which, at paragraph [16], it was stated that section 80 of the VAT Act “is clearly structured on the basis that the claimant will be the person who paid the tax” and, at paragraph [18], that “we can see no way in which the final words [of section 80(1)] ‘repay the amount to him’ could be read as covering a successor or assignee.” 
27.	Mr Puzey submitted that the decision in Stansell did not assist: that case was concerned with the transferability of a right to sue for breach of contract, an item of property inherently capable of alienation, where the question was whether the effect of section 51(1) of the 1965 Act was such as to override the need for the consent of the other party to the contract to the assignment of the right.   Here by contrast the court is concerned with a statutory right to reclaim overpaid tax.   The question whether that right is alienable depends on the words of the statute conferring that right (as part of the statutory code setting out the circumstances in which VAT is to be charged and accounted for) and not on the provisions of the 1965 Act which, however wide, cannot be relied upon to render transferable what the legislation creating the right does not permit. 
28.	He also submitted that it was incorrect to suggest that the VAT Act assumed, without express provision, the transferability to the personal representatives of a deceased overpayer or to the trustee in bankruptcy of a bankrupt overpayer of the overpayer’s right under section 80 to reclaim overpaid tax.   He referred me to section 46(4) of the VAT Act which permits the Commissioners, by regulations, to make provision for persons who carry on a business of a taxable person who has died, become bankrupt, had his estate sequestrated or become incapacitated “to be treated for a limited time as a taxable person, and for securing continuity in the application of [the VAT] Act in cases where persons are so treated”.   
29.	He referred also to regulation 9(1) of the VAT Regulations.   That regulation provides that:
“(1)	If a taxable person dies or becomes bankrupt or incapacitated, the Commissioners may from the date on which he died or became bankrupt or incapacitated treat as a taxable person any person carrying on that business until some other person is registered in respect of the taxable supplies made or intended to be made by that taxable person in the course or furtherance of his business or the incapacity ceases, as the case may be …”   (emphasis added).
The regulation then goes on to provide for notification to the Commissioners in cases where any person carries on such business and for the regulation to apply to stated corporate insolvency events as well.   
30.	He next referred to regulation 30 which is concerned with persons acting in a representative capacity.   So far as material regulation 30 provides that:
“Where any person subject to any requirements under this Part [ie Part V, concerned with accounting, payment and records] dies or becomes incapacitated and control of his assets passes to another person, being a personal representative, trustee in bankruptcy, receiver, liquidator or person otherwise acting in a representative capacity, that person shall, if the Commissioners so require and so long as he has such control, comply with these requirements …”   (emphasis added)
The regulation then goes on to provide that any requirement to pay VAT is only to apply to that other person to the extent of the assets of the deceased or incapacitated person that he has under his control but that subject to that limitation Part V “shall apply to such a person, so acting, in the same way as it would have applied to the deceased or incapacitated person had that person not been deceased or incapacitated”. 
31.	It is to be noted, said Mr Puzey, that not only does the legislation make express provision for such cases but, as the emphasised words in the two regulations indicate, the regulations leave an element of discretion to the Commissioners whether to permit any person to assume such representative capacity.   By contrast, there is no provision dealing with the situation where one business takes over the affairs and business undertaking of another (as Midlands did in the case of Leicester) so as to assume on its own account and for its own benefit the rights and duties of the latter under VAT legislation (and without any right in the Commissioners to object) except for the provisions, already considered, contained in section 49 of the VAT Act and regulation 6 concerned with the transfer of a going concern.
32.	The plain fact of the matter is, said Mr Puzey, that the provisions of the statutory code applicable to VAT do not envisage the present situation and it was not possible to enlarge the scope of the clear provisions of that code to accommodate such a situation.   The Commissioners did not, he said, suggest that a repayment could not be made to persons acting in a representative capacity but Midlands does not act in that capacity (but acts entirely on its own account and for its own benefit as transferee of Leicester’s business undertaking) and it was not tenable to draw an analogy between the provisions in the legislation dealing with those who act in a representative capacity (for which express provision was made) and the transferee of a business undertaking such as Midlands to whom, as was common ground and as already mentioned, the transfer of going concern provisions did not apply. 
33.	Nor, submitted Mr Puzey, was there merit in Mr Prosser’s purposive analysis.   The Commissioners were not seeking to argue that Midlands somehow assumed Leicester’s VAT liabilities but not its rights.   Moreover, the fact was that Leicester had ceased to exist and cannot therefore be said to be suffering any injustice by reason of any overpaid VAT.
Conclusions
34.	A cornerstone of Mr Prosser’s submissions was his reliance on section 51(1) of the 1965 Act as applied and explained in Stansell, particularly in the judgment of Mummery LJ from which I have quoted.
35.	I am of the view, however, that the question is not so much the scope and effect of section 51(1) but whether, on its proper construction, the statutory code (as Mr Puzey described the VAT Act and its associated regulations) allows the benefit of a claim under section 80 for overpaid output tax to be assigned, whether through the mechanism of a resolution taking effect under section 51(1) in the case of a transfer between registered industrial and provident societies, or otherwise.   For if it does, there can be no doubt that the transfer of engagements by Leicester to Midlands was effective to pass the benefit of Leicester’s claim.   By contrast, if on its true construction the statutory code does not permit the benefit of an overpayment claim to be assigned to another, I do not consider that section 51(1) can be prayed in aid to achieve that result - in defiance of the statutory code - in the case of a transfer of engagements between industrial and provident societies.
36.	In my judgment, therefore, the question to be answered is whether there is anything in the statutory code which, either expressly or by necessary implication, prevents the assignment of the benefit of such a claim.   If there is not, I can detect no reasons of general policy - and none were credibly suggested in argument - which would prevent one person from passing the benefit of such a claim to another and good reasons, not least those identified at paragraph 11 above, why a person should be permitted to do so.
37.	There is nothing in the statutory code which expressly prohibits a taxable person, entitled to the benefit of an overpayment claim under section 80, from passing the benefit of that claim to another.   None was suggested.   Nor, in my judgment, is it a necessary implication of the legislation that the benefit of such a claim may not be transferred to another.   The provisions of section 49 of the VAT Act, as supplemented by regulation 6 of the VAT Regulations, relating to transfers of going concerns, are directed to very specific matters: (1) whether and in what circumstances (and with what consequences) the transferee of a business, which has been carried on as a going concern by a taxable person, is himself liable to be registered under the statutory code and (2) the extent to which (and with what consequences) the Commissioners may, for the purpose of securing continuity in the application of the VAT Act to a business carried on by a taxable person which is transferred as a going concern to another, allow the transferee to be registered under the VAT Act in substitution for the transferor.   It is to the second of those two matters that regulation 6 is directed.   Its purpose is to regulate the circumstances in which the transferee of a business which has been transferred to him as a going concern may step into the shoes of the transferor in regard to the latter’s registration as a taxable person under the VAT Act.   It is enabling in nature.   The provision has nothing to do with the transfer of the benefit of an accrued claim to recover an overpayment under section 80 which is in no way dependent upon the continuity as a going concern of the business in respect of which the overpayment claim arises.   In my view, nothing in the provision casts any light on whether such a transfer is permissible.   As Mr Prosser submitted, it is not a necessary implication of the existence of section 49 that transfers in other circumstances are, or in particular that the transfer of the right to make a repayment claim under section 80 is, excluded. 
38.	Nor can Mr Puzey draw any comfort from regulations 9 and 30 in answer to Mr Prosser’s point that it has never been suggested, and would be surprising if it were otherwise, that the benefit of an overpayment claim under section 80 does not pass from a deceased overpayer to his personal representatives or from a bankrupt overpayer to his trustee in bankruptcy.  I accept Mr Prosser’s submission that there is nothing in the statutory code, at all events nothing to which my attention was drawn, which expressly enables this to happen.   It happens (a) because it is not prohibited by the statutory code (either expressly or by necessary implication) and (b) because other legislation (section 1 of the Administration of Estates Act 1925 combined with the general law on executors and administrators in the case of a deceased overpayer, and section 306 of the Insolvency Act 1986 in the case of a bankrupt overpayer) enables this to happen.   
39.	Regulation 9, which is concerned with the death, bankruptcy or incapacity of a taxable person, does not, contrary to Mr Puzey’s submissions, provide generally for what is to happen when a taxable person dies, or becomes bankrupt or incapacitated.   It is concerned with the extent to which any person carrying on the business of the deceased, bankrupt or incapacitated person (being in any such case a taxable person) after the date of the death, or onset of the bankruptcy (defined to include certain insolvency events in the case of a company) or incapacity, may be treated by the Commissioners as a taxable person with the result that the statutory code should apply to such person as though he were a registered person.   It assumes that the taxable person’s business continues to be carried on.   It makes no assumption about the capacity in which the other person carries on that business following the death or other triggering event.
40.	Nor is regulation 30, the other provision to which Mr Puzey directed my attention, in point.  That regulation is concerned with the extent to which the Commissioners may require a personal representative, trustee in bankruptcy, receiver, liquidator or person otherwise acting in a representative capacity in respect of a person who is subject to the requirements of Part V of the VAT Regulations (concerned with accounting, payment and records) and control of whose assets passes on his death, bankruptcy or incapacitating event, to comply with the requirements of Part V.   It has nothing to do with the extent to which the Commissioners are obliged to give effect to a claim for overpayment under section 80 made by someone to whom, whether by operation of law or by express assignment, the benefit of the claim has passed.
41.	Mr Puzey referred me to regulation 37 of the VAT Regulations concerned with claims under section 80.   That regulation provides that:
“Any claim under section 80 of the Act shall be made in writing to the Commissioners and shall, by reference to such documentary evidence as is in the possession of the claimant, state the amount of the claim and the method by which that amount was calculated.”
The provision, which is made pursuant to section 80(6), sheds no light on whether and in what circumstances a person who has made an overpayment and therefore has a claim for repayment under section 80 may transfer that claim to another.   It merely stipulates how such a claim is to be made.
42.	Since there is nothing in the statutory code, either expressly or by necessary implication, to prevent a person who has a claim under section 80 from passing that claim to another, I am of the view that the transfer of engagements between Leicester and Midlands was effective to transfer to Midlands the benefit of Leicester’s claim under the section.   It follows that the Tribunal reached the wrong conclusions and therefore that the appeal succeeds.   It also follows that the views expressed in Shendish Manor Ltd, set out at paragraph 27 above, can no longer be regarded as correct in law.
43.	This conclusion renders it unnecessary to deal with Mr Prosser’s further submission that, in any event, Leicester’s right to repayment of overpaid VAT passed to Midlands pursuant to (and is directly enforceable under) articles 5(8) and 6(5) of the EC Sixth Council Directive (on the harmonisation of Member States’ laws relating to turnover taxes).   Mr Prosser’s argument depended heavily on observations of Advocate General Jacobs in Finanzamt Offenbach am Main-Land v Faxworld Yorgrűndungsgesellschaft Peter Hűnninghausen and anr [2005] STC 1192.   I prefer to express no view on the submission which, for reasons I do not need to elaborate, raised a number of difficult and contentious issues.
Result
44.	I will allow the appeal and remit the matter to the Tribunal to determine, failing agreement, the amount of the overpaid tax and whether there are any other and if so what defences to it.