Haigh and Another

JurisdictionUK Non-devolved
Judgment Date01 January 1999
Date01 January 1999
CourtValue Added Tax Tribunal

VAT Tribunal

Haigh & Anor

The following case was referred to in the decision:

BICC plc VAT(LON/97/957) No. 15,324; [1998] BVC 2120

Repayment of tax - VAT overpaid through operation of disadvantageous retail scheme - Retrospective recalculation - Initial agreement in principle to repayment by commissioners - Claim based on corrected returns - Whether defeated by application of capping provisions - Whether claim by way of recovery of overpaid VAT under Value Added Tax Act 1994 section 80Value Added Tax Act 1994, s. 80 - Whether commissioners entitled to resile from initial alleged acceptance of claim -Value Added Tax Act 1994 section 25 section 80Value Added Tax Act 1994, ss. 25 and 80; SI 1995/2518 section 34Value Added Tax Regulations 1995 (SI 1995/2518), reg. 34;Finance Act 1997 section 47Finance Act 1997, s. 47.

The issue was whether the commissioners could rely on the three-year capping provisions to prevent the appellant from retrospectively recovering VAT overpaid through the use of an unfavourable retail scheme.

The appellants carried on a business as a confectioner, tobacconist and newsagent, having been VAT registered since 1981. From that date until January 1996, they operated Retail Scheme D. However, their accountants considered that their interests would be better served by operating Retail Scheme B1. Consequently, they recalculated the VAT due for certain periods. In February 1996, Customs wrote to the accountants confirming that "it will be in order for you to recalculate your clients' previous VAT returns provided the conditions as described on notice 727,Notice 727, para. 85 are adhered to". They also agreed that amounts, even those in excess of £2,000, could be claimed by adjusting future returns. As the accountants had difficulty in obtaining the relevant records to recalculate the VAT, the exercise had to be carried out piecemeal. Customs allowed an adjustment on the VAT return for June 1996 for four periods in 1992 and permitted a further recalculation to be made in the September 1996 return for the periods from December 1993 to September 1995. However, when the accountants made a further claim in December 1996 for the periods from March 1993 to September 1993 the commissioners disputed the claim, arguing that the three-year capping provisions applied.

The appellants contended:

  1. (2) that the claim was not a claim for repayment of "an amount paid to the commissioners by way of VAT which was not VAT due to them" (Value Added Tax Act 1994Value Added Tax Act 1994, s. 80(1)), because at the time of payment it was correctly and lawfully calculated in accordance with Scheme D under which it was properly due, so that Value Added Tax Act 1994s. 80(4) imposing a three-year limit in claims did not apply;

  2. (3) that the permitted method of recovering amounts claimed by way of correction of returns under SI 1995/2518Value Added Tax Regulations 1995 (SI 1995/2518), reg. 34 was not a claim made underValue Added Tax Act 1994s. 80; and

  3. (4) that the condition in Business Brief 3/97 (10 February 1997) whereby a specific claim agreed in writing by 18 July 1996 but unpaid by that date would not be capped, had been met by the terms of the letter of February 1996.

The commissioners contended that the claim under SI 1995/2518reg. 34 was limited by Finance Act 1997s. 47(8) of the Finance Act 1997, which stated that nothing contained in regulations made under Value Added Tax Act 1994Value Added Tax Act 1994, s. 25 or Value Added Tax Act 1994 schedule 11 subsec-or-para 2Sch. 11, para. 2 could be taken to confer an entitlement to receive a repayment which would not have arisen under a claim under Value Added Tax Act 1994Value Added Tax Act 1994, s. 80. As the appellants were time-barred by Value Added Tax Act 1994s. 80(4), their claim was defeated.

Held, dismissing the taxpayers' appeal:

1. The appellants' argument that the claim was not a claim for repayment of VAT which was not due to the commissioners could not be accepted. What had been paid in the first place was VAT, what was overpaid was also VAT and what was being reclaimed was the excess of VAT. It was thus a claim under Value Added Tax Act 1994s. 80.

2. Business Brief 3/97 lacked statutory authority and could not override statutory provisions. In any event, Customs' letter of February 1996 did not amount to an agreement of a specific claim.

3. Since the vires for SI 1995/2518reg. 34was Value Added Tax Act 1994 schedule 11 subsec-or-para 2para. 2 of Sch. 11, it fell within the scope ofFinance Act 1997s. 47(8) of the ...

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