R & C Commissioners v GMAC UK Plc (formerly General Motors Acceptance Corporation (UK) Plc)
| Jurisdiction | UK Non-devolved |
| Judgment Date | 22 October 2012 |
| Date | 22 October 2012 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
Upper Tribunal (Tax and Chancery Chamber).
Warren J, Judge Charles Hellier.
Paul Lasok QC and Eleni Mitrophanous (instructed by the Solicitor to HM Revenue and Customs) for the commissioners.
Roderick Cordara QC and Jessica Wells (instructed by KPMG LLP) for GMAC UK plc.
Roderick Cordara QC and Lyndsey Frawley (instructed by BT Legal) for British Telecommunications plc.
Value added tax - Bad debt relief - Insolvency and property conditions for relief incompatible with EU law - Time limit for making claims - Whether repayment claim resulted in windfall contrary to EU law - Whether immediate reference to ECJ should be made on windfall issue.
This was a further hearing consequent on the decision of the Upper Tribunal in an appeal concerning the entitlement of the taxpayer (GMAC) to VAT bad debt relief in relation to supplies of cars made on hire-purchase terms between 1978 and 1997, and on preliminary issues in a tax appeal by the taxpayer (BT) before the FTT (see [2012] UKUT 278, 279 (TCC); [2012] BVC 1804).
There were two matters before the Upper Tribunal. One was an appeal by HMRC against the decision of the First-tier Tribunal (Tax) ([2010] UKFTT 202 (TC); [2010] TC 00504) allowing GMAC's appeal against HMRC's refusal of VAT bad debt relief. The other was the determination of three preliminary issues in BT's appeal. In GMAC the Upper Tribunal held that the insolvency and property conditions which the UK legislation required to be satisfied before relief was available at the relevant time were incompatible with EU law. The tribunal considered further submissions in order to decide whether to make a reference to the ECJ in relation to the issue whether the taxpayer, if its claim was successful, would receive a windfall which was impermissible under EU law. The tribunal held that GMAC's claims were not time-barred and also decided three preliminary issues of limitation in the BT case. HMRC submitted that an immediate reference should be made, because the tribunal had not yet determined HMRC's appeal from the FTT and a ruling from the ECJ was necessary to enable the tribunal to do so. GMAC submitted that a reference was premature.
Held, deciding in the GMAC case to make an immediate reference to the ECJ on the windfall issue:
1.In order to deal with GMAC's tax appeal, the tribunal needed an answer to the windfall issue and therefore needed to make a reference. That need was subject to one consideration; if it was wrong on either the compatibility issue or the time-limit issue, HMRC were entitled to succeed in their appeal against the decision of the First-tier Tribunal. If the Upper Tribunal knew the final answer (from the Court of Appeal or from the Supreme Court, assuming that neither of those courts considered a reference to be necessary) on those issues then a reference on the windfall issue would be necessary in order to dispose finally of the tax appeal only if the Upper Tribunal's decisions on both of those issues were correct.
2.The Upper Tribunal did not need to decide whether its previous decision had given rise to an appealable decision within the Tribunals, Courts and Enforcement Act 2007, s. 13 or whether there would be no such decision until after the appeal was finally disposed of following a reference to the ECJ. That was because the Upper Tribunal had wide case-management powers which would enable it to achieve whichever objective it wished to achieve, either in effect to force HMRC to appeal (assuming that they wished to) or to ensure that the reference was dealt with before any decision had to be made by HMRC about an appeal.
3.The balance came down in favour of making an immediate reference to the ECJ on the...
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