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Opinion - Puzzles for
Arbitrators
This is puzzle 12 in a series of puzzles for arbitrators and aspiring arbitrators developed by Peter Horne. It deals with the arbitrator being asked to deal with various matters to do with VAT.
Answers or comments would be most welcome. You are arbitrator in a dispute of about £100,000 plus VAT of £13,250.
The 'prayer' in the Statement of Case includes the substantive sum, interest on the substantive sum from the time that the costs were incurred, VAT on various elements of the substantive sum and interest on the VAT from the date on which it was paid to HM Customs & Excise.
Part of the Respondent's case is that you have no jurisdiction to include a sum for VAT or any interest thereon in your award. The Claimant replies that it has already paid the VAT and is, in fact, claiming interest as damages which flowed naturally from the delayed payment.
The Respondent requests that you formulate your Award so that items which attract different VAT rates are readily identified.
The Respondent is a Local Authority which cannot reclaim the VAT and therefore wants it to be minimum while the Claimant Contractor would prefer to apply standard rate VAT to the entire amount awarded.
The Claimant has also requested that you award interest at 8% above base rate following your award on the substantive sum, the interest on the substantive sum, the amount of VAT and the interest on the VAT.
How do you deal with the 'post award' interest?
How do you deal with the matter of VAT?
Are you able to include for interest on VAT in your Award?
Peter Horne