CAMBRIA AUTOMOBILES (SOUTH EAST) LIMITED INVICTA MOTORS LIMITED v THE COMMISSIONERS OF HIS MAJEATY'S REVENUE AND CUSTOMS [2023] UKUT 00249 (TCC
| Jurisdiction | UK Non-devolved |
| Judge | JUDGE PHYLLIS RAMSHAW JUDGE KEVIN POOLE |
| Subject Matter | 13 October 2023 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Published date | 07 November 2023 |
Neutral Citation: [2023] UKUT 00249 (TCC) Case Numbers: UT/2022/000043
UT/2022/000028
UPPER TRIBUNAL
(Tax and Chancery Chamber) Rolls Building, Fetter Lane, London EC4
VAT – margin claim for demonstrator cars settled by agreement under section 85 VATA in
2006, with quantum agreed on basis of tables published by HMRC showing margins they would
be prepared to accept in the absence of records – those tables subsequently amended, allowing
larger claims – further claims made to recover the difference – whether settlement of “the
Appellants’ claim for overpaid VAT” in the section 85 agreement precluded such further claims
Heard on: 27-28 February 2023
Judgment date: 13 October 2023
Before
JUDGE PHYLLIS RAMSHAW
JUDGE KEVIN POOLE
Between
CAMBRIA AUTOMOBILES (SOUTH EAST) LIMITED
INVICTA MOTORS LIMITED Appellants
and
THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS
Respondents
Representation:
For the Appellants: Peter Mantle, Counsel, instructed by DMC Partnership Limited
For the Respondents: James Puzey, Counsel, instructed by the General Counsel and Solicitor
to His Majesty’s Revenue and Customs
1
DECISION
INTRODUCTION
1. Claims were made to HM Customs & Excise in June 2003 (“the 2003 claims”) in respect
of the Appellants (respectively “Cambria” and “Invicta”, and together “the Companies”) to
recover historical overpaid VAT arising out of the CJEU Italian Republic case (see [5] below)
in respect of demonstrator vehicles. The 2003 claims were rejected and appeals against that
rejection were notified to the VAT Tribunal. Before the appeals were heard, and after various
adjustments were made following lengthy negotiations, the 2003 claims were settled in March
2006 by agreement between the parties under section 85 Value Added Tax Act 1994 (“VATA”)
(“the Section 85 Agreement”).
2. Subsequently the quantum of the 2003 claims was considered to have been understated,
because of errors in the tables originally published by HM Customs & Excise which showed
the basis upon which they were prepared to accept Italian Republic claims. These tables had
formed the basis of the 2003 claims. New claims were then submitted by the Companies to
HMRC
1
in March 2009 (“the 2009 claims”), seeking to recover the shortfall in the original
2003 claims.
3. HMRC ultimately rejected the 2009 claims. Appeals against this rejection were notified
to the First-tier Tribunal (the “FTT”) in 2009 and 2010 but the appeals were stayed for other
reasons. Ultimately the stays were lifted and the appeals were heard by the FTT. In a decision
dated 9 November 2021 (“the Decision”), the FTT (Judge Popplewell) decided (in summary)
that the 2009 claims were precluded from being brought by virtue of the Section 85 Agreement,
they amounted to an abuse of the process of the FTT and therefore ought to be struck out as
having no reasonable prospects of success.
4. Cambria and Invicta appeal against that decision.
THE FACTS
5. The FTT made extensive and detailed findings of fact, but for present purposes the brief
summary of the facts and the dispute between the parties set out at paragraphs [1] to [5] of the
Decision gives a sufficient outline:
1. This case concerns VAT and, in particular, whether HMRC’s decision to
reject claims made by the appellants in 2009 for overpaid VAT on the sale of
demonstrator motor vehicles sold by the appellants between 1973 and 1996,
is correct.
2. During the course of the appellants’ business between 1973 and 1996, they
sold ex demonstrator vehicles and accounted for VAT on the profit margin of
those vehicles sold at a profit, in line with HMRC’s interpretation of the law
at that time. As a result of the European Court of Justice decision in
Commission v Italian Republic C-45/96 HMRC (or as they were then, HM
Customs & Excise (“Customs”)) accepted that the sales of ex demonstrator
motor vehicles were exempt from VAT and consequently motor dealers could
seek to reclaim overpaid output tax pursuant to Section 80 VAT Act 1994
(“Section 80”).
3. On 26 June 2003 the appellants brought overpayment claims under Section
80 (the “2003 claims”). Customs decided to reject these claims and the
appellants appealed against that decision. Those appeals were the subject of
1
In this decision, “HMRC” refers either to the Commissioners for Her (or, as the context requires, His) Majesty’s
Revenue and Customs or their predec essor body the Commissioners of Customs and Excise, as the context
requires.
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