Revenue and Customs Commissioners v Noor

JurisdictionUK Non-devolved
CourtUpper Tribunal (Tax and Chancery Chamber)
Judgment Date14 February 2013
Neutral Citation[2013] UKUT 71 (TCC)
Date14 February 2013

[2013] UKUT 71 (TCC).

Upper Tribunal (Tax and Chancery Chamber).

Warren J, Judge Colin Bishopp.

Revenue and Customs Commissioners

Peter Mantle, counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs appeared for the Appellants.

The Respondent in person for part of the hearing otherwise not present or represented.

VAT - Whether First-tier Tribunal had jurisdiction to consider legitimate expectation to recover pre-registration input tax on supply of services - No - Decision of First-tier Tribunal allowing taxpayer's appeal reversed.

The First-tier Tribunal (FTT) had no jurisdiction, when dealing with a VAT appeal, to consider a taxpayer's claims to recover pre-registration input tax on a supply of services based on the public law concept of "legitimate expectation".


HMRC disallowed an input tax claim of £3,628 in the taxpayer's first VAT return on the basis that it related to services received more than six months before his effective date of registration. The taxpayer's case was that he had contacted HMRC and was allegedly advised that he could claim the VAT within three years. HMRC refused to repay the VAT as it could not be treated as input tax under the Value Added Tax Regulations 1995 (SI 1995/2518), reg. 111.

The FTT, relying on Oxfam v R & C CommrsVAT[2010] BVC 108, held that, as a result of what the taxpayer had allegedly been told during his telephone conversation with HMRC, he had a legitimate expectation that he would be able to claim the input tax shown on the invoices ([2011] UKFTT 349 (TC); [2011] TC 01209). HMRC appealed, contending that the language of VATA 1994, Value Added Tax Act 1994 section 83s. 83 could not be extended to enable the tribunal to consider the conduct of HMRC and to review whether they were precluded from collecting VAT which was due as a matter of law.


Whether the FTT had erred in law in deciding that it had jurisdiction to consider the question of legitimate expectation.


The Upper Tribunal (Warren J and Judge Bishopp) allowed HMRC's appeal.

The FTT did not have jurisdiction to give effect to any legitimate expectation which the taxpayer might be able to establish in relation to any credit for input tax. The right of appeal given by Value Added Tax Act 1994 section 83 subsec-or-para 1s. 83(1)(c) was an appeal in respect of a person's right to credit for input tax under the VAT legislation.

A claim based on legitimate expectation went behind a person's entitlement ascertained in accordance with the VAT legislation; in such a case, the legitimate expectation was a matter for remedy by judicial review in the Administrative Court; the FTT had no jurisdiction to determine the disputed issue in the context of an appeal under Value Added Tax Act 1994 section 83s. 83. The jurisdiction of the FTT was appellate. It had no general supervisory jurisdiction over the decisions of HMRC. That did not mean that under s. 83(1)(c) the FTT could not examine the exercise of a discretion, given to HMRC under primary or subordinate VAT legislation relating to the entitlement to input tax credit, and adjudicate on whether the discretion had been exercised reasonably. Although that jurisdiction could be described as supervisory, it related to the exercise of a discretion which the legislation clearly conferred on HMRC. That was to be contrasted with the case of an ultra vires contract or a claim based on legitimate expectation where HMRC were acting altogether outside their powers.

The words "with respect to" inValue Added Tax Act 1994 section 83 s. 83 were not wide enough to cover any legal question capable of being determinative of the issue of the amount of input tax which should be attributed to a taxpayer, such as by way of a legitimate expectation (Oxfam v R & C CommrsVAT[2010] BVC 108 not followed).

On the facts no reasonable tribunal properly directing itself in law could have concluded that the taxpayer had a legitimate expectation such that it would be so unfair as to amount to an abuse of power for HMRC to refuse his claim in respect of the VAT on the invoices.


[1]The central issue raised on this appeal is whether the First-tier Tribunal ("the F-tT") has any jurisdiction, when dealing with a VAT appeal, to consider a taxpayer's claims based on the public law concept of "legitimate expectation". It is an important point: both HMRC and the judiciary of the F-tT need to know the extent of the F-tT's jurisdiction. It is, moreover, an issue on which different conclusions have been reached by differently constituted panels of the F-tT. However, while it is inevitable that much of what we say will be seen as relevant to other aspects of the jurisdiction of the F-tT, the issue of jurisdiction arises in this appeal in the context of a claim for input tax credit, and we emphasise that our actual decision relates only to that claim.

[2]The appeal is from the decision released on 26 May 2011 ("the Decision") of the F-tT (Judge Brooks and Mr Corke) ("the Tribunal"). The Tribunal allowed Mr Noor's appeal from a refusal by HMRC to refund to him an amount of VAT which he claimed as an input in the circumstances which we will come to in a moment when setting out the facts of the case. But before we come to that, we wish to make the following observations.

[3]HMRC was represented at the hearing of this appeal by Mr Peter Mantle, an experienced barrister. Mr Noor was not represented. He had not been represented before the F-tT. It was known to the staff and to the Chamber President of the Tax and Chancery Chamber of the Upper Tribunal that Mr Noor would not be represented at the hearing of HMRC's appeal. Given the importance of the point to HMRC and to the F-tT judiciary, HMRC were asked if they would provide funding for Mr Noor's appeal, but that was refused. We make no criticism of HMRC for that. The Tribunal therefore took steps to ensure that Mr Noor's appeal would be heard together with another appeal raising the same issue. That other appeal was not an appeal from the F-tT but was a statutory appeal to be heard at first instance by this Tribunal, having been transferred under the rules of the F-tT. In that statutory appeal, the taxpayer was represented by leading and junior counsel. We were therefore confident that all of the relevant arguments would be fully addressed; Mr Noor would not be disadvantaged by being unrepresented. Having addressed, as we thought, the problem of Mr Noor's lack of representation, we did not seek to obtain pro bono assistance for him or to seek the appointment of an advocate to the Tribunal.

[4]Unfortunately for us (although not for the other taxpayer), the statutory appeal settled, but only a very few days before the date listed for the commencement of that appeal and Mr Noor's appeal on 10 December 2012. We would have welcomed an adjournment in order to attempt to obtain pro bono assistance for Mr Noor. However, Mr Noor wanted his appeal to proceed even in the absence of representation because, quite understandably, he wanted finality in relation to what, after all, is not a large amount of money: the tax at stake is less than £4,000. That sum, whilst not trivial or insignificant, was not an amount over which Mr Noor wanted to spend more time and effort, with uncertainty hanging over him.

[5]Accordingly, we considered it right to proceed to hear the appeal. Mr Noor stayed for most of the first day of the hearing. He left in the middle of the afternoon to make his way back to his home in Wales, asking us to complete the hearing in his absence. We did so, finishing during the course of the following morning. He did not wish to make any submissions. That is not surprising. The technical nature of the issue is not something about which he could be expected to be able to add to what Mr Mantle would say in fulfilment of his duty, as Counsel, to the Tribunal against HMRC's case.

[6]We have gone into this detail because it is important to appreciate that our decision is reached without the benefit of full argument in opposition to HMRC's appeal. We have done our best, with the help of Mr Mantle's submissions, to identify the points which could be made in favour of Mr Noor and to deal with them in this decision. But that is no substitute for independent argument. Our decision may not, therefore, be as persuasive as it might otherwise be, although as a matter of precedent it will be binding on the F-tT.

The facts

[7]The facts fall within a very narrow compass. We take the following from the Decision:

  1. 3.We heard from Mr Noor who told us that he encountered problems with a builder during the construction of a small commercial property. This resulted in legal action and a reference to adjudication before the building was completed. As a result he received three invoices from the solicitors, dated 24 August 2007, 16 October 2007 and 29 February 2008 and an invoice from the Adjudicator dated 3 December 2007 (the "Invoices").

  2. 4.At the end of 2007, anticipating the final invoice from the builder, Mr Noor visited the Llanishen office of HMRC, armed with the Invoices then in his possession, to seek advice as to when he should register for VAT so as to be able to claim input tax in respect of the costs incurred on the construction of the property. He was directed to a telephone on a wall of the office on which he could contact HMRC's telephone National Advice Service ("NAS").

  3. 5.On telephoning the NAS Mr Noor explained about the construction of the property, he referred to the Invoices as these related to the property and that he was expecting the final invoice from the builder. He was told that he should keep all invoices relating to the new build as he could claim VAT under the option to tax within three years.

[8]It is to be noted that the Invoices (as defined) related only to the invoices from the solicitors and the Adjudicator. The VAT on other invoices relating...

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