Revenue and Customs Commissioners v Bratt Auto Contracts Ltd and another
| Jurisdiction | UK Non-devolved |
| Judgment Date | 19 February 2016 |
| Neutral Citation | [2016] UKUT 90 (TCC) |
| Date | 19 February 2016 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
Mr Justice Warren, Judge Colin Bishopp
Mr Raymond Hill, counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs, appeared for the appellants in the first appeal and respondents in the second appeal
Mr Ian Bridge, counsel, instructed by Fieldfisher LLP appeared for the respondents in the first appeal and appellants in the second appeal
Value added tax – Repayment claims – Value Added Tax Act 1994 (“VATA 1994”), s. 80, Value Added Tax Regulations 1995 (SI 1995/2518), reg. 37 – Whether intimation of claim without particulars satisfies statutory requirements – No – Whether claim must be allocated to prescribed accounting periods – Yes – No claim within statutory meaning made.
The Upper Tribunal (UT) has allowed HMRC's appeal against the decision of the First-tier Tribunal (FTT) in Bratt Auto Services Ltd TAX[2014] TC 03799 finding that claims for repayment of overpaid output tax did not comply with the Value Added Tax Act 1994 (“VATA 1994”), s. 80 and the Value Added Tax Regulations 1995 (SI 1995/2518), reg. 37. VATA 1994, s. 80(1) and (2) required a claim to be made for an amount relating to “a prescribed accounting period” and specifying a global figure for a whole year did not suffice. It followed also that a “protective” claim which did not specify an amount at all did not satisfy the statutory requirements either.
Bratt Auto Services Limited (BAS) and Bratt Auto Contracts Limited (BAC) submitted repayment claims for recovery of overpaid output tax following the two decisions of the Court of Justice of the European Union (ECJ) in Elida Gibbs Ltd v C & E Commrs ECASVAT(Case C-317/94) [1997] BVC 80 (which related to the VAT treatment of car manufacturers' bonuses) and EC Commission v Italy ECASVAT(Case C-45/95) [1997] BVC 536 (which related to the VAT treatment of the profit margin on the sale of a car when input tax deduction had been blocked).
However, the claim letter specified only one amount which was BAS's Elida Gibbs claim for one year and which amount was a global figure for the year (rather than separate amounts for each accounting period within the year). The claim letter indicated an intention to claim for other years and for BAC, calculated in a similar manner, but without providing any figures and no calculations or amounts were put forward in respect of either company's Italy claims. HMRC rejected all of the claims on the grounds that they did not satisfy the statutory requirements of the VATA 1994, s. 80 and SI 1995/2518, reg. 37.
Further information was provided quantifying the Elida Gibbs claims for each company for all years but still only specifying a single figure for each year. HMRC remained of the view that the claims did not satisfy the statutory requirements and the preliminary issue of whether valid claims had been made came before the FTT in Bratt Auto Services Ltd TAX[2014] TC 03799. The FTT rejected all of the claims that did not specify an amount but found that BAS's Elida Gibbs claim did constitute a claim for the purpose of the VATA 1994, s. 80 because it complied with SI 1995/2518, reg. 37 in specifying an amount and the basis on which the amount had been calculated. Both companies and HMRC appealed the respective findings of the FTTs against them.
The UT first noted the provisions which governed the making of repayment claims as found in VATA 1994, s. 80 noting that s. 80(6) provided that “A claim … shall be made in such form and manner and shall be supported by such documentary evidence as the Commissioners prescribe by regulations; …”. The regulations to which s. 80(6) referred were SI 1995/2518, with the relevant provision being reg. 37, which provided that: “A claim under s. 80 of the Act shall be made in writing to the Commissioners and shall, by reference to such documentary evidence as is in the possession of the claimant, state the amount of the claim and the method by which that amount was calculated.”.
The UT expressed its view that the two provisions taken together meant that a claim could be treated as a claim only if it satisfied the requirements of form and manner which were prescribed and that left no room for a claim to be made without specifying the amount or the method of calculation. Judge Berner was correct that compliance with the reg. 37 requirements was mandatory, a claim which did not satisfy those requirements was not a claim within the statutory meaning and, therefore, the Italy claims must fail as the mere intimation of a claim with details to follow was not enough. Judge Berner was further correct in that what BAC provided in support of its Elida Gibbs claim was insufficient. At the time of the claim, although a proposed method of calculation was identified, no amount was even hinted at. Accordingly, all of BAS and BAC's appeals in respect of these claims were dismissed.
Turning to HMRC's appeal against BAS's Elida Gibbs claim, HMRC had appealed the FTT's decision on two grounds:
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1) specifying an amount for one year, with an indication that it proposed to apply the same method of calculation to other years, did not sufficiently comply with the statutory requirements in respect of the other years. The FTT had rejected the other claims on the basis that no amount had been specified and it was inconsistent not to apply that reasoning to BAS's Elida Gibbs claims for the other years;
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2) the claim for that one year was also invalid because VATA 1994, s. 80(1) provided for the recovery of an amount of output tax which was not due but for which the taxpayer had “accounted to the Commissioners … for a prescribed accounting period”. S. 80(2) provided that HMRC were liable to credit or repay “an amount under this section on a claim being made for the purpose”. Thus reading the two subsections together it was apparent that the claim must be made in respect of an amount relating to a prescribed accounting period and it was not permissible to claim a global amount referable to several accounting periods.
The UT agreed on both counts. On the second ground, it was impossible to read VATA 1994, s. 80(1) in any other way than as referring to an amount for a prescribed accounting period and the amount in s. 80(2) was clearly the same amount. Even if the overall claim related to several prescribed accounting periods, a separate claim had to be made for each such period identifying the period, the amount and the method by which the amount had been calculated, even if that were merely a statement that the same method of calculation applied to each period and even if a figure arrived at for a whole year was simply apportioned equally to the accounting periods falling within the year. There was a purpose to the allocation of the amounts claimed to accounting periods, in part because of the impact on the calculation of any interest that might be due but more particularly because of the manner in which the question as to whether the time limit had expired must be determined.
Accordingly, the UT disagreed with Judge Berner in respect of BAS's Elida Gibbs claim for the one year and it followed that they also disagreed with him that the claim letter constituted a claim in proper form for the other years mentioned in it.
HMRC's appeal was allowed and BAS and BAC's appeals were dismissed.
In this case, BAS and BAC submitted protective claims for repayment of overpaid VAT following the decisions of the ECJ in Elida Gibbs Ltd v C & E Commrs ECASVAT(Case C-317/94) [1997] BVC 80 and EC Commission v Italy ECASVAT(Case C-45/95) [1997] BVC 536. The claim letter was submitted on the penultimate day of the time limited for making such claims and due to a loss of documents, the letter specified only one amount which was for BAS's Elida Gibbs claim for one year only, stating that amounts for other years and BAC were to be calculated on the same basis. No amounts were put forward in support of either company's Italy claims. HMRC rejected all claims on the basis that for a claim to be valid, amounts had to be specified and the amounts specified had to be for each prescribed accounting period, a global yearly total did not suffice. The FTT agreed that amounts had to be specified and rejected both company's Italy claims and BAC's Elida Gibbs claims but found that BAS's Elida Gibbs claim did comply with the statutory requirements by specifying an amount and basis of calculation. The UT, however, has found that this latter finding of the FTT was incorrect, a total for several accounting periods did not comply with VATA 1984, s. 80(1) and (2) and neither did the claims for the other years for which no amounts were specified.
[1] This decision relates to appeals by both parties from a decision of Judge Berner, sitting in the First-tier Tribunal (“the F-tT”), by which he determined a preliminary issue in related appeals by Bratt Auto Services Limited (“BAS”) and Bratt Auto Contracts Limited (“BAC”) against the rejection by HMRC of their respective VAT repayment claims. BAS and BAC are associated companies, both of which owned fleets of vehicles which were rented or leased to their customers; BAS dealt in short-term rentals and BAC in long-term contract hire.
[2] By a letter dated 30 March 2009, written by the solicitors then acting for both companies, BAS and BAC made, or purported to make, claims for the recovery of output tax for which they said they had incorrectly accounted in various periods ending on or before 30 April 2007. The claims were founded upon two well-known decisions of what is now the Court of Justice of the European Union (“CJEU”)...
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