Harleyford Golf Club Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 28 September 2011 |
| Neutral Citation | [2011] UKFTT 634 (TC) |
| Date | 28 September 2011 |
| Court | First Tier Tribunal (Tax Chamber) |
[2011] UKFTT 634 (TC)
Dr K Khan (Judge) (Chairman); Ruth Watts-Davies FCIPD, MIH
Mr Richard Vallat, Counsel, for the Applicant
Mr Robert Wastell, Counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents
Application for re-instatement of appeal or permission to appeal out of time - Whether agreement reached under Value Added Tax Act 1994, Value Added Tax Act 1994 section 85s. 85 - Whether re-instatement of appeal appropriate - Whether legitimate expectation that agreement reached - The applicant had earlier appealed against the refusal of the commissioners to repay amounts of VAT on taxable supplies of membership benefits - The claim was for £103,958 and covered periods 09/01 to 06/06 - The commissioners repaid £61,900, but refused to make payment for periods prior to 12/03 on the ground that there was only an invalid, unquantified claim - By the time the claim was quantified, in November 2006, it was out of time - The applicant now sought repayment of these amounts - The issues before the tribunal were: whether there had been a settlement of liability with quantum to be decided by the tribunal if not agreed; and whether the applicant's appeal should be re-instated - The applicant contended that the commissioners had accepted settlement in the appeal and had amended their statement of case to acknowledge the settlement - Consequently, the appeal was withdrawn - The commissioners said that there was no agreement and that the applicant unilaterally withdrew its appeal - They submitted that there was no express power given to the tribunal to re-open the appeal and no authority to suggest that it had the jurisdiction to do so - The applicant asked the tribunal to consider its rights of legitimate expectation, given that the commissioners had agreed to settle and make repayment - Further, the applicant submitted that although the commissioners had the power to treat a claim as invalid if it was not quantified, they were not obliged to do so and were entitled to waive the requirement - Once they had done so, they should not be entitled to invoke it later - According to the applicant, the commissioners had clearly waived the requirement by rejecting the claim for other reasons and had accepted the claim as validly made - The commissioners submitted that the applicant's case was weak - Under Value Added Tax Act 1994 section 80 subsec-or-para 4s. 80(4) of the Value Added Tax Act 1994 there was a time-limit beginning at the end of the period in which the money was accounted for to the time when a valid claim was submitted, and the requirements were mandatory - As regards the legitimate expectation argument, the commissioners did not accept that the tribunal had jurisdiction to determine the applicant's challenge - Held, that there was no agreement under Value Added Tax Act 1994 section 85s. 85 and the commissioners' amended statement of case could not on its own amount to an offer to settle the claim - Nor could the applicant's withdrawal of its appeal provide evidence of an agreement between the parties - There were no exceptional circumstances in this case which justified the waiving of the time-limits set out in the legislation and nothing to justify the re-instatement of the appeal or the grant of permission to appeal out of time - In the judgment of the tribunal, the legitimate expectation argument raised by the applicant was unfounded, since it was premised on the existence of an agreement by the commissioners to repay tax and such agreement did not exist - There was no settlement of liability and the appeal should not be re-instated to determine the quantum of VAT repayment, nor should leave be given for a new appeal out of time - Accordingly, the application was dismissed.
1.The Applicant applies for re-instatement of its appeal (or, alternatively, permission for appeal out of time) to allow determination of the quantum of a VAT repayment owed by the Commissioners of Her Majesty's Revenue and Customs ("Commissioners"). The Applicant also seeks interest under the Value Added Tax Act 1994 ("VATA 1994") Value Added Tax Act 1994 section 85A subsec-or-para 2section 85A (2) (alternatively under Section 84(8) on the amounts of VAT repaid. Such interest to be calculated on a commercial basis or on such other basis as the Tribunal may direct. The Applicant seeks the cost of the appeal and of this Application.
2.Harleyford appealed in 2003 against the refusal of the Commissioners to repay amounts of VAT on taxable supplies of membership benefits. The actual claim was for the repayment of output tax in the sum of £103,958.54 (as quantified in November 2006) for the periods 09/01 to 06/06. The Commissioners said that payment for debentures in a company formed to operate the Golf Club was non-monetary consideration for the supply of services, namely the grant of membership rights.
3.There were procedural delays with the 2003 appeal with the Applicant providing further and better particulars and an amended grounds of appeal by letter dated 16 May 2006. They confirmed that they had not been making supplies of debentures since 21 August 2001. The Commissioners filed and served an Amended Statement of Case on 24 July 2006 accepting that no such supplies were made from that date. The Applicant withdraws his appeal in writing on 12 October 2006. On 23 November 2006, the Applicant made a qualified claim for voluntary disclosure in the sum of £103, 958,54 for the periods 09/01 to 06/06. The Commissioners repaid £61,900.14 for the periods 12/03 to 06/06. They refused to pay for the period before that time. They say there was only an invalid unquantified claim. When the claim was quantified in November 2006, it was out of time to make a claim going back more than three years. The Applicant now seeks repayment of the amounts relating to the periods being August 2001 and September 2003. The Commissioners would have paid the original claim had it been quantified at the time.
4.The issues before the Tribunal are:
(a) Whether there has been a settlement of liability with quantum to be decided by the Tribunal if not agreed; and
(b) Whether the Applicant's appeal LON/2003/658 should be reinstated.
The Tribunal believes the issue of the settlement should be considered first since there is no need to consider reinstatement if there has been a settlement of liability.
5.The Applicant's main contention is that there was an agreement within the meaning of Value Added Tax Act 1994 section 85section 85 VATA 1994 which left the quantum to be determined by the Tribunal, if not agreed. As such, it is not a question of reinstating the appeal which had been withdrawn but rather of finally determining a live appeal.
6.In the alternative, the Applicant says that the original appeal should be reinstated (if the tribunal has power to do so) or that the Applicant be given leave to appeal out of time.
7.The Commissioners say that there has been no section 85 VATA agreement between the parties. Further, there should be no reinstatement of the appeal since the tribunal has no power to do so or alternatively, there are no circumstances giving rise to reinstatement.
8.The Applicant has also raised underlying arguments on legitimate expectation and of the directory nature of Regulation 37 VAT Regulations 1995 ("Regulation 37"). They have asked the Tribunal to consider these arguments when considering whether to reinstate the appeal and/or extend time.
9.The parties provided the Tribunal with a Statement of Agreed Facts which is dated 28 March 2011. The Tribunal recites those facts below:
(2) Harleyford Golf Club Ltd ("Harleyford") is a company formed on 1 June 1995 to develop and manage a golf club on the Harleyford Estate.
(3) Following a decision of the VAT and Duties Tribunal in 1996 Harleyford had been accounting to HMRC for output tax on "notional interest" on debentures issued to members as part of the original recruitment process.
(4) On 21 May 2003, Harleyford wrote to HMRC seeking repayment of VAT paid on the notional interest from the second quarter of 2000 on the basis of the VAT and Duties Tribunal's decision in the Rugby Football Union case. Harleyford asked HMRC to treat the letter "as a claim under Value Added Tax Act 1994 section 80s.80 VATA 1994" and noted that they were "in the course of formulating the reclaim"
(5) On 11 June 2003 HMRC rejected the claim on the ground that Harleyford's situation was not on all fours with the RFU case which did not impinge on Harleyford's situation. HMRC told Harleyford that "we cannot accept your letter as notice of an intending claim for repayment of tax charged on National Interest in relation to debentures issued by HGP."
(6) Harleyford filed a notice of appeal on 7 July 2003 and HMRC filed a statement of case on 20 October 2003.
(7) On 23 June 2004 Harleyford filed amended grounds of appeal and on 21 January 2005 further and better particulars of the amended grounds.
(8) On 24 July 2006 HMRC filed an amended statement of case which accepted that "in relation to the period from 21 August 2001 the Applicant did not make any supplies of membership or membership rights and accordingly [the Commissioners'] decision is to that extent varied so as to relate only to the period up to 21 August 2001."
(9) On 24 July 2006 HMRC faxed Harleyford's then representatives attaching its amended statement of case and asking "please could you send me a copy of your client's voluntary disclosure? Neither my clients nor I have a copy although we do have a letter dated 21 May 2003 which indicates an intention to make one."
(10) Neither Harleyford nor its representatives responded to that request.
(11) On 12 October 2006 Harleyford filed a notice of withdrawal of the appeal on the basis that since the Commissioners had accepted the new argument, there was no longer any...
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Owd Ltd (t/a Birmingham Cash & Carry ((in Liquidation)))
...been deemed by statute to have been determined on an agreed basis. [38] In contrast, in the earlier case of Harleyford Golf Club Ltd [2011] TC 01476, the Tribunal effectively assumed that there was a discretion to reinstate a withdrawn VAT appeal, although the discretion was not exercised o......