Grand Entertainments Company (A Firm) v Revenue and Customs Commissioners
| Jurisdiction | UK Non-devolved |
| Judgment Date | 03 May 2016 |
| Neutral Citation | [2016] UKUT 209 (TCC) |
| Date | 03 May 2016 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
Mr Justice Snowden
Mr. Geoffrey Tack (of DLA Piper UK LLP) appeared for the appellant firm
Mr. Brendan McGurk (instructed by the General Counsel and Solicitor to HMRC) appeared for the respondents
Value added tax – Fleming claims for repayment of VAT – Whether further claims (1) had amended an earlier claim made by the deadline in Finance Act 2008 (“FA 2008”), s. 121 or (2) were separate claims made out of time and barred by Value Added Tax Act 1994 (“VATA 1994”), s. 80(4) – Held – The claims were separate claims and made out of time – Firm's appeal dismissed.
The Upper Tribunal (UT) dismissed the firm's appeal against the decision of the First-tier Tribunal (FTT) ([2013] TC 03735) that both its claim in November 2009 and its claim in January 2010 were stand-alone claims, rather than amendments of an earlier and in-time claim.
In March 2009, the firm sent to HMRC a Fleming claim (being a voluntary disclosure and the “Original Claim”) for output tax overpaid in the period 1980–96 regarding certain machine supplies, being mechanised cash bingo (MCB), amusement machines with prizes (AWP) and jackpot machines (JP).
In November 2009, the firm sent HMRC what was described as “an amendment” to the “Original Claim”. This “first amending claim” also concerned 1980–96, but was for output tax overpaid relating to a different type of supply.
In January 2010, the firm sent HMRC what was described as “a further amendment” to the “Original Claim”. This “further amending claim” concerned an earlier period (1973–80) and was for output tax overpaid from various types of bingo and machine. The “further amending claim” was sent soon after the firm discovered certain records for the period while its premises were being renovated.
HMRC rejected both the “first amending claim” and the “further amending claim”, because they were new claims, rather than amendments to the “Original Claim”. If the “first amending claim” and the “further amending claim” were new claims, then they were made outside the time limit and so must be rejected. If they amended or varied the “Original Claim”, then they were made in time.
The firm argued that, as the “Original Claim” had not been settled in full when the later claims were sent, it was still an “open” claim and was capable of amendment. Also, when sending the “Original Claim”, the firm had taken a “prudent” view, based on the then state of other litigation, to exclude any element of Main Stage Bingo (MSB). It was only on 20 August 2009, when HMRC issued Brief 55/2009, that it became clear they were contemplating the possibility that MSB might also be exempt. It was not until 8 December 2009 that HMRC accepted this argument by issuing Brief 75/2009.
In Reed Employment Ltd v R & C Commrs VAT[2013] BVC 1,593, Roth J said at para. 30:
There is no statutory definition of “claim” for the purposes of s. 80 that would provide a basis for distinguishing an amendment to an existing claim from a new claim. Nor is there any authority on this question, save for two VAT Tribunal decisions holding that once a claim has been paid, any further demand cannot constitute an amendment to that claim. This was accepted by Reed in this case …
The FTT dismissed the firm's appeal. At the UT, the firm argued that:
1) the FTT had failed to address the implications of what was the fundamental point decided in Rank Group Ltd VAT[2009] BVC 2,120 and [2008] BVC 2,482, i.e. all of the supplies referred to in the Original Claim, the November 2009 Claim and the January 2010 Claim must be treated in the same way. Since such supplies must be treated identically, and had all been accounted for together, all of the claims for repayment in respect of them should in substance be regarded as part of the same Original Claim, rather than as three separate claims (para. 28 of the decision);
2) the claims for MSB in the November 2009 Claim were not included within the Original Claim, because of a mistaken view (of law) that they could not be included; and
3) the claims for supplies before 1 November 1980 were not included within the Original Claim, because of a mistaken belief (of fact) that the documents needed under Value Added Tax Regulations 1995 (SI 1995/2518), reg. 37 were unavailable. Any such mistakes, whether based on a misapprehension as to law or fact, and even if only retrospectively apparent, amounted to a mistake which permits the taxpayer to amend a claim (para. 30 of the decision).
The UT held that the relevant question was whether the demands for repayment of overpaid VAT contained in the November 2009 Claim and the January 2010 Claim were barred by s. 80(4). This depends on whether those demands could be regarded as a claim made before 1 April 2009 so as to fall within s. 121. Logically, this is a different question to that raised in Rank of whether two separate supplies should be treated in the same way for the purposes of the exemptions and fiscal neutrality (para. 32 of the decision).
The UT held that the FTT had not erred in any way in not considering the impact of the decision in Rank (para. 34 of the decision).
Also, the UT held that the Original Claim did not include and did not contemplate a repayment claim in respect of MSB, or a claim in respect of any supplies made during periods before 1 November 1980. The wording of the Original Claim referred only to MCB, AWP and JM. On any objective reading, the Original Claim did not include a claim in respect of MSB. Tim Deeming, a partner in the firm, said “I was advised that I could also claim for MSB” and no one thought that the Original Claim included a claim for MSB (para. 36 and 37 of the decision).
When Roth J referred in Reed to the correction of mistakes by amendment, “whether that be an arithmetical error or through the omission of some supplies that were clearly intended to be included”, he was referring to the correction of accidental errors or omissions. The concept of mistake in this context cannot include a conscious decision by a taxpayer not to include certain items in a demand. That is so even if, with the benefit of hindsight as to law or fact, the taxpayer later appreciates that it would have been preferable to have included further supplies and his earlier decision not to do so turned out not to be to his best advantage (para. 38 of the decision).
The UT also rejected the argument that the firm should not suffer for not including the MSB claims in its Original Claim, because at the time HMRC's published position was that VAT was chargeable on participation fees for MSB and it would therefore have rejected a claim for MSB. The fact that, at a relevant time, HMRC were advancing a view of the law, which was subsequently conceded to be wrong, does not stop it relying on a limitation period (para. 40 of the decision).
As regards the claims in respect of supplies before 1 November 1980, the fact was that the Original Claim was expressly made by reference to the period from 1 November 1980 to 4 December 1996 and made no mention of any other periods (para. 42 of the decision).
Even though the nature of the supplies included in the January 2010 Claim were the same as those included in the Original Claim, it does not follow that the subsequent claim in respect of different accounting periods must be regarded as being part of, or an amendment to, the earlier claim (para. 43 of the decision).
Although the wording of the January 2010 Claim letter suggested that the limitation of the Original Claim to periods after 1 November 1980 was due to an “oversight”, the evidence was that the firm did not originally intend to claim for periods before 1 November 1980, because it did not think that it had the supporting documents. Nor does it appear that such a claim was in contemplation, because the necessary documents were not discovered as a result of a search in order to find them for a claim, but were only “accidentally found” later (para. 44 of the decision).
A taxpayer, who wished to claim, but was temporarily unable to calculate the full figures and provide the documents required by reg. 37, could legitimately make a claim, indicate that he was searching for the documents, and then later amend that extant claim to supply a final calculation by reference to the supporting documents. If it had wanted to do so, the firm could have said so in its Original Claim (para. 45 of the decision).
Thus, the firm's appeal failed.
This was an easy appeal for the UT to dismiss. Presumably, the firm's decision to proceed was driven mainly by the significant amount at stake. If the firm had been dissatisfied with HMRC's view of the law in relation to MSB, the appropriate and prudent course for it to have taken (especially given the impending cut-off date for claims of 1 April 2009) would have been to claim for MSB and then appeal its rejection. The fact that the later claims were expressed as amending the original claim did not affect their true nature.
[1] This appeal raises the issue of what amounts to an amendment of an existing claim for repayment of overpaid VAT for the purposes of section 80(4) of the Value Added Tax Act 1994 (“VATA”). If the relevant communications sent on behalf of the Appellant to HMRC were amendments of an existing claim, they would be regarded as made within the statutory time limit; if they were new claims, they were made outside the statutory time...
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