Grattan Plc v HM Revenue and Customs
| Jurisdiction | UK Non-devolved |
| Judgment Date | 28 September 2011 |
| Neutral Citation | [2011] UKUT 399 (TCC) |
| Date | 28 September 2011 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
[2011] UKUT 399 (TCC).
Upper Tribunal (Tax and Chancery Chamber).
Judge Colin Bishopp, Judge Julian Ghosh QC.
Jonathan Swift QC, Peter Mantle and Philip Woolfe (instructed by the Solicitor to HM Revenue and Customs) for the appellants.
Paul Lasok QC and Rebecca Haynes (instructed by KPMG LLP) for the respondent.
The following cases were referred to in the judgment:
Cartesio Oktatóés Szolgáltató bt ECAS(Case C-210/06) [2008] ECR I-9641
Da Costa en Schaake NV v Nederlandse Belastingadministratie ECAS(Cases 28-30/62) [1963] ECR 31
Impact v Minister for Agriculture and Food ECAS(Case C-268/06) [2008] ECR I-2483
John Wilkins (Motor Engineers) Ltd v R & C Commrs UNKVAT[2011] EWCA Civ 429; [2011] BVC 246
T-Mobile (UK) Ltd v Office of Communications WLR[2009] 1 WLR 1565
Value added tax - Overpayment - Refund - EU law - Compound interest - Reference to ECJ - Simple interest available under statutory scheme - Compound interest only available by way of claim in restitution - Whether two different remedies breach of principles of effectiveness and equivalence - Whether reference of question by FTT to ECJ proper exercise of discretion - HMRC's appeal dismissed.
This was an appeal by HMRC against a decision of the First-tier Tribunal ([2011] UKFTT 31 (TC); [2011] TC 00908) to refer to the ECJ a question arising out of the taxpayer's claim to recover compound interest under EU law on the sum overpaid where VAT had been overpaid contrary to the provisions of EU law.
The question was whether it contravened the EU law principles of effectiveness and equivalence to require a taxpayer, which sought to recover compound interest on overpaid VAT, to obtain the full remedy in two jurisdictions, namely the Tax Chamber of the Tribunal and High Court. That circumstance arose because the Value Added Tax Act 1994, s. 78 and 80, provided only for simple interest, so that the difference between simple and compound interest had to be obtained by claims made in restitution, pre-supposing that there was a right to compound interest.
HMRC argued that the FTT had erred in the exercise of its discretion to refer that question to the ECJ, as the substance of the question did not relate to ascertaining, from the ECJ, guidance as to the content or interpretation of EU law, but rather related to how the principles of effectiveness and equivalence, which were well established, ought to be applied to the relevant UK procedure, which was a matter for the national courts and outside the jurisdiction of the ECJ.
Held, dismissing HMRC's appeal:
The question which was the subject of the appeal was, in substance, for all material purposes identical to the question which the Court of Appeal declined to refer in John Wilkins (Motor Engineers) Ltd v R & C Commrs [2011] EWCA Civ 429; [2011] BVC 246. However that did not mean that the FTT improperly exercised its discretion in deciding to refer that question. It might be that the ECJ declined to answer it, on the basis that it had already done so in previous case-law. But that did not mean that it was an improper exercise of discretion to have referred the question in the first place. It would be a misdirection if the question put to the ECJ was one which was outside the ECJ's jurisdiction to answer. But that was not the case. The substance of the question was whether the principles of effectiveness and/or equivalence would be offended if the taxpayer had to obtain (if successful in establishing a right to compound interest for overpaid VAT in the first place) part of its claim in satisfaction (to the extent of simple interest) under VATA 1994, s. 78 and 80, and the balance in a restitutionary claim before the English High Court. That was an enquiry as to the content and interpretation of the relevant principles of effectiveness and equivalence (in the special context of tax) rather than an enquiry as to their application to UK procedural rules on the assumption that those principles were now closed to further development. HMRC were not...
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