Longcliffe Golf Club
| Jurisdiction | UK Non-devolved |
| Judgment Date | 21 June 2018 |
| Neutral Citation | [2018] UKFTT 383 (TC) |
| Date | 21 June 2018 |
| Court | First-tier Tribunal (Tax Chamber) |
[2018] UKFTT 0383 (TC)
Judge Rupert Jones
Noel Tyler, VAT consultant, representative appeared for the appellant
Gareth Hilton, Presenting Officer of HM Revenue and Customs appeared for the respondents
Value added tax – Repayment – Four year time limit for claim under VATA 1994, s. 80(4) – New claim or amendment to an existing claim – Stay of appeal pending decision in R & C Commrs v Bridport and West Dorset Golf Club Ltd (Case C-495/12) [2014] BVC 1 – Reed Employment Ltd [2011] TC 01069 – Whether claim arises out of same subject matter without extension to facts and circumstances outside the contemplation of the earlier claim – Appeal dismissed.
The FTT considered whether a claim for overpaid VAT could be adjusted and include periods after the original claim period but now covered by the four year cap.
Longcliffe Golf Club is a non-profit making members golf club. In common with many similar clubs it made a claim for VAT overpaid on green fees – a claim which was successful following the litigation in the Bridport case. The Bridport litigation took several years.
Longcliffe submitted a claim for the VAT periods 06/06 to 12/08 in April 2009, then in November 2013 it submitted an additional claim for the periods 03/09 to 09/13. Following the conclusion of the Bridport litigation, HMRC made repayments for all periods (subject to adjustments for unjust enrichment) except 03/09, 06/09 and 09/09. These three periods were – because the claim was made more than four years after the periods ended – capped due to VATA 1994, s. 80(4).
Longcliffe appealed against HMRC's decision on the basis that the November 2013 claim was an adjustment to the April 2009 claim.
The FTT acknowledged that a “claim” is not defined in VAT law but, considering the available case law on when a claim is made, it determined that the claims for the 03/09, 06/09 and 09/09 VAT periods were not extensions of the previous claim. In the words of the FTT “It was not a claim that arose out of the same subject matter as the earlier claim of April 2009 and it extended to the facts and circumstances which fell outside the contemplation of the earlier claim”.
This case underlines that the four year cap is applied strictly and, when a VAT period has fallen outside the capping period, it can rarely be adjusted.
When Longcliffe submitted the April 2009 claim it was not envisaged that the litigation on the liability of green fees would be so protracted. Taxpayers involved in longstanding disputes with HMRC must monitor their claims and ensure that claims for all affected periods are made within the four year time frame permitted.
[1] This is a revised decision of the Tribunal following a review conducted pursuant to rule 41 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (the “Tribunal Rules”). The Tribunal released a summary decision allowing the appeal on 9 January 2018 and, following a request from HMRC on 15 January 2018, released its full decision allowing the appeal on 7 February 2018. HMRC sought permission to appeal the full decision and provided grounds of appeal dated 29 March 2018.
[2] The Tribunal considered in accordance with rule 40(1) of the Tribunal Rules whether to review the original decision released on 7 February 2018 pursuant to the application for permission to appeal by HMRC dated 29 March 2018.
[3] On 16 April 2018 the Tribunal decided to undertake a review for the purposes of rule 41(1) because it was satisfied that there was an error of law in the decision. Pursuant to rule 41(3) it notified both parties that they had an opportunity to make representations before the Tribunal took any action such as amending the original decision. The Tribunal issued directions giving the Appellant 28 days to file any representations in relation to the review and in reply to the grounds set out in HMRC's permission to appeal application. Thereafter the HMRC were given 28 days to file any representations in reply.
[4] In compliance with those directions the Appellant provided further written representations dated 23 April 2018 and HMRC provided written submissions in reply dated 22 May 2018.
[5] In light of those additional submissions this is the Tribunal's revised decision. It amends and replaces its earlier decision of 7 February 2018 pursuant to the Tribunal's power to review its earlier decision. This revised decision is notification of the outcome of the review pursuant to rule 41(2).
[6] It should be stated at the outset that the Tribunal has considerable sympathy with the Appellant's position. The Appellant had very good reason to believe it had won its appeal as of 7 February 2018. Further, the reasons relied upon by the Tribunal in now dismissing the appeal are based upon arguments which were not raised by HMRC at the hearing of the appeal but only in the subsequent application for permission to appeal. The Tribunal pointed out HMRC's failure to raise many of these arguments at the hearing in its notification to the parties that it was conducting a review. The Appellant relied on HMRC's failure in part in its latest submissions.
[7] Nonetheless, while it is unattractive that HMRC did not argue its case fully at the hearing of the appeal, or at least in a way that was capable of persuading the Tribunal, they are entitled to raise arguments of law in making their permission to appeal application. No new issues of fact have been raised and the Tribunal is empowered to conduct a review where it is satisfied that it has erred in law.
[8] While the Appellant may feel understandably aggrieved, it has been given an opportunity to reply to HMRC's submissions of law and, as set out below, the Tribunal has permitted the Appellant to raise a further legal argument it did not raise at the hearing of the appeal. This argument is considered and rejected below.
[9] The Appellant appeals against a review decision of HMRC dated 30 May 2014 confirming their original decision of 27 February 2014 refusing a claim for repayment of VAT said to have been overpaid between 1 January 2009 and 30 September 2009.
[10] The facts are not in dispute and were agreed between the parties and evidenced by documents provided to the Tribunal.
[11] The Appellant is a not for profit member's club operating as a golf club and registered for the purpose of VAT under number 114 5162 07 with an effective date of registration of 1 April 1973.
[12] By letters dated 31 March 2009 in respect of accounting periods 07/73 to 12/89, and 8 April 2009 in respect of accounting periods 06/06 to 12/08, the Appellant wrote to HMRC seeking the repayment of VAT said to have been overpaid in respect of fees charged to non-members visiting the club to play golf.
[13] These fees, which are commonly known as “green fees”, were said by the Appellant to be required to be treated as exempt from VAT.
[14] By a letter dated 13 July 2009 HMRC rejected the Appellant's claims on the basis the supplies in question fell outside the exemption provided for by item 3 of Group 10 of Schedule 9 to the Value Added Tax Act 1994 (VATA) as the exemption was limited to supplies made to members or eligible bodes where the membership was granted for a period of three months or more.
[15] The Appellant appealed under reference TC/2009/15760 and this appeal was stayed behind that of Bridport and West Dorset Golf Club. Following the judgment of the Court of Justice of the European Union in Bridport released on 19 December 2013, HMRC then accepted that the supplies in question were exempt from VAT but the appeal remained stayed pending HMRC's investigation into a defence of unjust enrichment.
[16] By a letter dated 11 November 2013, the Appellant sought the payment of an additional amount of VAT in the sum of £77,164 said to have been overpaid in the accounting periods 12/07 to 09/13.
[17] By a letter dated 11 December 2013, this claim was reduced to the sum of £48,687 to take account of disallowed input tax recovery.
[18] For the periods 03/09, 06/09 and 09/09 HMRC rejected the claim of 11 December 2013 by letter dated 27 February 2014.
[19] HMRC accepted, in relation to the periods 12/07 to 12/08, that the claim represented an adjustment to the Appellant's claim made in 2009. However, they treated the claim in respect of all subsequent periods as a new claim.
[20] As the claim for the periods 03/09, 06/09 and 09/09 was made more than four years after their end, HMRC considered that the claim for these periods fell outside the time limit provided by section 80(4) of the Value Added Tax Act 1994 (“VATA”). The amount claimed in respect of these periods, and subject to appeal, is £9,070.
[21] Following subsequent correspondence, HMRC confirmed their rejection of the Appellant's claim in their review decision letter dated 30 May 2014. It is this decision which is subject to the appeal.
[22] The Appellant appeals by way of a notice of appeal dated 11 June 2014 on the grounds summarised as follows: the Appellant's claim dated 11 December 2013 in respect of the disputed periods was not a new claim but an amendment or adjustment to the existing claim made by the Appellant in 2009.
[23] In late 2016 a single repayment of the Appellant's entire claim, minus 10% for unjust enrichment was made by HMRC covering all VAT quarters with the exception of the periods 03/09 to 09/09 which are the subject of this appeal. A few days later, a separate payment was made by HMRC in respect of interest. As a result of these repayments, the appeal under reference TC/2009/15760 was withdrawn.
[24] The Appellant's claim of November / December 2013 (whether an amendment to the 2009 claim or new claim) was made at a time when the 2009 claim was still open and had not been completed by HMRC making the repayments it subsequently did.
[25] Section 80(4) of the Value Added Tax Act 1994 (“VATA”) provides that HMRC are...
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