GB Fleet Hire Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 16 September 2020 |
| Neutral Citation | [2020] UKFTT 365 (TC) |
| Date | 16 September 2020 |
| Court | First Tier Tribunal (Tax Chamber) |
[2020] UKFTT 365 (TC)
Judge Brooks
Procedure – Appeal notified to Tribunal February 2018 – Appellant's application dated 17 August 2020 to re-amend grounds of appeal dismissed – Application by HMRC that appeal be struck out allowed.
[1] On 12 February 2018 the appellant, GB Fleet Hire Limited (the “Company”), notified the Tribunal of its appeal against assessments and amendments, made by the respondents, HM Revenue and Customs (“HMRC”) under s 73 of the Value Added Tax Act 1994, in the sums of £1,686,905 and £19,682, “for output tax due in the absence of export evidence to support the zero-rating for VAT of supplies of cars in periods 01/16 to 06/17”.
[2] Following receipt of various applications (some of which are described below), on 29 January 2020 the Tribunal wrote to the parties to explain that I was:
… concerned at the apparent lack of progress in this matter notwithstanding the agreed directions endorsed by the Tribunal on 9 January 2020.
The letter continued:
In the circumstances [Judge Brooks] considers that a ½ day case management hearing should be listed to ensure the appeal can progress without undue delay.
[3] The parties were directed to provide their dates to avoid for such a hearing for the first available date after 2 March 2020 within ten days and, following exchanges of correspondence a case management conference was listed to be heard in Manchester on 14 April 2020. However, following the statement from the Prime Minister on 23 March 2020, the country went into lockdown.
[4] On 24 March 2020 the Chamber President issued a Practice Statement “to give guidance to the Tax Chamber and to Tribunal users in relation to the way the Tax Chamber will deal with proceedings during the Covid-19 pandemic.” This explained that:
Until further notice, there will be no hearings at which persons are physically present in any proceedings in the Tax Chamber of the First-tier Tribunal. A hearing involving physical attendance may take place only with the permission of the Chamber President or his delegate. …
All applications and substantive appeals will be dealt with on papers/email as far as possible and decided by a judge sitting alone.
If a matter cannot be dealt with on papers, a hearing by telephone (or video, if available) will be arranged as soon as possible.
As a result the 14 April 2020 case management conference was vacated and, as explained below, this video hearing was listed.
[5] As at 20 August 2020, the date of this hearing, the following applications remained outstanding:
- the Company's application, dated 13 May 2020, that HMRC be required to amend parts of a witness statement of Officer Mills and/or that parts of that witness statement be struck out;
- HMRC's application, dated 10 August 2020, that the appeal be struck out; and
- the Company s application, dated 17 August 2020 to re-amend its grounds of appeal and for consequential directions.
[6] Mr McNall, who appeared for the Company, agreed that the 13 May 2020 application fell away if the appellant succeeded in its application to re-amend its grounds of appeal. Clearly this would also be the case if the appeal was struck out. As such it has not been necessary to consider that application further. However, before turning to the two remaining applications, to put the applications in context it is convenient to first describe the procedural background leading to this hearing.
[7] The Company's grounds in its Notice of Appeal of 12 February 2018 state:
HMRC have refused to accept zero rating for export of vehicles which is contrary to statue and HMRC's internal guidance. More than adequate evidence of export has been provided to HMRC and input tax has been wrongly and/or unreasonably withheld by HMRC.
[8] On 28 August 2018 HMRC made an application for further and better particulars of these grounds of appeal. This was listed for a hearing on 28 May 2019 before Judge Fairpo and, although there was no written decision, the outcome of that hearing was that the Company agreed to file revised grounds of appeal by 11 June 2019. These were to clarify what exactly was being appealed and, if relevant, the basis on which the assessments/amendments were disputed on “best judgement” grounds.
[9] The Company filed its “Amended and Supplemental Grounds of Appeal” on 10 June 2019. These stated:
1. The Appellant appeals against the following decisions:
- the decision of 7 September 2017 (as amended on 21 November 2017) to notify the Appellant of VAT assessments in the sum of £1,686,905 for output tax said to be due for the period 01/16 to 03/17, and a further decision of 28 November 2017 to notify the Appellant of an assessment in the sum of £19,682 for output tax said to be due for the period 07/16. All the output tax was said to be payable on sales of vehicles claimed by the Appellant to be zero-rated; and
- the related decision not to refund input tax paid in respect of certain purchased and imported vehicles in the sum of £310, 803.61. (Also outstanding is the sum of £805.53 in respect of a VAT reclaim for August 2017.
…
7. The Grounds of Appeal are as follows:
- The decision to notify output tax – ie VAT – assessments was based on a wrong overall appreciation of, as well as a failure to take into account adequately or at all, the detailed, copious and compelling evidence provided by the Appellant as to the export and destinations of the vehicles concerned;
- In fact, that evidence conclusively demonstrated that the vehicles in question had been exported as claimed and therefore that the VAT assessments were entirely unfounded;
- In any event, leaving the issue of export aside, the Appellant does not understand and has never understood the basis of the VAT assessments notified to the company (which remains to be explained), as acknowledged in correspondence from the legal representatives of HMRC;
- … 11Ground (iv) challenged views expressed by HMRC officers that the Company was established to perpetrate fraud.
[10] On 28 June 2019 HMRC made an application for parts of the Amended and Supplemental Grounds of appeal, including paragraph 7(i) and 7(iii), which were understood to be a challenge to “best judgment”, to be struck out on the grounds that paragraph 7(i) was:
… hopelessly inadequately pleaded as a “best judgment” Ground of Appeal, it therefore has no reasonable prospect of success and should be struck out pursuant to r 8(2)(c) of the [Tribunal Procedure] Rules.
As for 7(iii), HMRC contended:
This is not a Ground of Appeal that has any prospect of success. The Tribunal cannot discharge an assessment because the taxpayer does not understand the basis for it. Such a Ground of Appeal has no reasonable prospect of success and therefore should be struck out pursuant to r 8(2)(c) of the [Tribunal Procedure] Rules.
[11] The application was considered by Judge Poole initially on 5 August 2019 and then again on 30 August 2019 after having considered the Company's objection to HMRC's application which he had not previously seen. He agreed with HMRC in relation to that paragraph 7(iii) and directed that the paragraph be struck out. However, with regard to paragraph 7(i), he said:
… HMRC seek to strike out paragraph 7(i) of the amended and supplemental grounds of appeal, on the basis that [it] is “hopelessly inadequately pleaded as a “best judgment” ground of appeal”. It is HMRC's own characterisation of this appeal which founds their argument for it to be struck out. I do not agree with this view. Paragraphs 7(i) and 7(ii), taken together, clearly show arguable grounds of appeal based on the Appellant's assertion that “evidence conclusively demonstrated that the vehicles in question had been exported as claimed and therefore the VAT assessments were entirely unfounded.” The basis of this assertion is that “the decision to notify output tax … assessments was based on a wrong overall appreciation of, as well as a failure to take into account adequately or at all, the detailed, copious and compelling evidence provided by the Appellant as to the export and destinations of the vehicles concerned.” This is not a suppression case where there are substantive arguments about whether the officer's calculation of liability has been carried “to best judgment”: the disputed amounts seem to be clear and the issue to be decided by the Tribunal is whether the Appellant is entitled to the benefit of specific sums of input tax claimed or not. I therefore refuse this part of HMRC's application.
[12] On 26 September 2019 LSGA Solicitors, the Company's present solicitors, filed a Notice of Acting with the Tribunal.
[13] On 4 October 2019, as directed by Judge Poole, HMRC filed and served their statement of case. Paragraph 9 sets out HMRC's position:
[9] The Respondents' position, by reference to VAT periods 12/16, 04/17 and 05/17, is set out in the Schedule to the Statement of Case. In summary, [the Company's] export evidence either prima facie fails...
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