Romasave (Property Services) Ltd v Revenue and Customs Commissioners
| Jurisdiction | UK Non-devolved |
| Judgment Date | 27 May 2015 |
| Neutral Citation | [2015] UKUT 254 (TCC) |
| Date | 27 May 2015 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
Judge Roger Berner, Judge Sarah Falk
Geraint Jones QC, instructed by Rainer Hughes, appeared for the Appellant/Cross-Respondent
Laura Poots, instructed by the General Counsel and Solicitor to HM Revenue and Customs, appeared for the Respondents/Cross-Appellants
Value added tax – Whether assessments duly notified to taxpayer – Value Added Tax Act 1994 (“VATA 1994”), s. 73(2), s. 83G and s. 98 – Interpretation Act 1978 (“INA 1978”), s. 7 – Companies Act 2006 (“CA 2006”), s. 1139 – Whether notification of assessment invalidated by error on the face of it – Whether FTT made error of law in taking into account earlier tribunal decision that had been set aside.
The Upper Tribunal has allowed the taxpayer's appeal against decisions of the FTT ([2013] TC 02675; [2014] TC 03675) to refuse its application to make late appeals against several assessments. In the circumstances of the case, copies of the assessments sent to the taxpayer's solicitors and accountants were not “notification” of those assessments to the taxpayer (and so did not set time running, with the result that the appeals lodged by the taxpayer at a later date were in fact “in time”, in any event). In the case of one other application to make a late appeal, the Upper Tribunal allowed HMRC's cross-appeal, and itself determined that the taxpayer's application should be refused, weighing the relevant factors including the significant and serious delay in making its appeal.
The taxpayer (R) had made applications to the First-tier Tribunal to bring late appeals against nine assessments made by HMRC concerning liability to VAT and to misdeclaration penalties. The FTT had refused the applications in eight cases, and allowed the other. R appealed six of the eight decisions of the FTT, and HMRC cross-appealed the ninth, to the Upper Tribunal. Out of the six:
– four cases concerned whether assessments to VAT were notified to R at a particular time or times (and whether in one of those cases, an admitted error on the face of the assessment anyway invalidated it) – it was agreed between the parties that if notified on the dates contended by HMRC, the applications to appeal would indeed have been made out of time;
– two concerned misdeclaration penalties in relation to one of the assessments – the parties were agreed that the outcome on these two appeals depended on the outcome of the appeal on the VAT assessment itself (as one of the four cases above).
The Upper Tribunal said the relevant statutory provisions were:
a) VAT Act 1994, s. 73(2) (power to make assessments), s. 83G (bringing of appeals), and s. 98 (service of notices);
b) the Interpretation Act 1978, s. 7 (service by post) and Companies Act 2006, s. 1139(1) (power to serve company at registered office).
In the first group of four cases above, the FTT had decided that copies of the assessments which HMRC had sent by post to R's solicitors (in three of those cases) and to R's accountants (in the fourth) constituted notification to R for the purpose of VAT Act 1994, s. 73(2); with the consequence that the appeals subsequently lodged by R were made out of time.
However, the UT said the evidence could not support a finding that R's solicitors either had or were held out to have authority to act for R in relation to the assessments generally, such that the sending of copies of the assessments to the solicitors constituted the giving of notice to R. R's prior signed authority to HMRC to deal with its solicitors “in relation to the demand of immediate payment in relation to [R's VAT registration number)” was not sufficient, nor did the solicitors' subsequent correspondence with HMRC hold them out as having any more extensive authority. The FTT had therefore made an error of law in deciding that the sending of copies of the assessments to the solicitors constituted the giving of notification of those assessments to R.
There was no evidence before the FTT as to the scope of authority given by R to its accountants, and the UT said there was no basis on which the FTT could have concluded that the accountants did have authority to receive notification of the relevant assessment. The mere receipt of copies, followed by the carrying out of work in relation to them, could not support such a finding. Had the copies of the assessments in fact been sent addressed to R at the accountants (whose address was the registered office address of R), that would have been good notification.
The UT determined that the FTT had been wrong to find that the assessments had been notified to R when copies were sent to its solicitors or accountants; the correct date of notification was later, when copies were eventually sent under cover of a letter addressed to R at the accountants. This meant the appeals made by R were all made “in time”.
One of the four assessments contained an error. Box 5 on the assessment referred to an amount of “net VAT to be reclaimed” in the sum of £5,666.66, when it should have referred to “an amount of VAT to be paid”. At the end of the assessment, however, it was stated (correctly) that the “net amount considered … to be properly payable” was £5,666.66, and that R's account with HMRC would be adjusted accordingly.
R argued that this assessment was contradictory, and had to be internally consistent and plain on its face as to what it was conveying, in order to be valid. The UT quoted authority that a taxpayer is entitled “to be informed in reasonably clear terms of the effect of the assessment”, but that in doing so an element of common sense must be applied. In the circumstances, having regard to the assessment as a whole, no reasonable person could fail to understand that an assessment to pay was being made for the amount stated; and therefore, the UT held, R was given proper and adequate notification.
One decision of the FTT had been to allow a late appeal by R, and this was the subject of HMRC's cross-appeal before the UT. The UT noted that the FTT had found the delay (of some three months) in making the appeal had been significant, and the amount in issue had been substantial (some £54,000). But the FTT had gone on to refer to the fact that they were dealing with a matter that had been the subject of an earlier decision by a different First-tier Tribunal; in that earlier decision (which had been set aside), the Tribunal had granted leave to appeal late, and the FTT had considered it would be unfair, in the absence of new material, if R was put in a worse position. The FTT had therefore granted permission to bring a late appeal.
The UT agreed with HMRC that the FTT should not have taken into account the decision of the earlier Tribunal, but should have reached its own independent conclusion. The FTT had therefore made an error of law in reaching its decision based on the unfairness it perceived to R if it were to come to a different view to that of the earlier Tribunal, and HMRC's cross-appeal had to be allowed.
The UT decided it had sufficient information to re-make the relevant decision itself. It considered that the need for finality of litigation, and the prejudice to the proper operation of the appeals process, allied to the significant and serious delay of R in making its application, and the absence of any good reason for failing to do so on time, together clearly outweighed the undoubted prejudice to R in not being allowed to pursue an appeal in this respect.
The UT allowed R's appeal in respect of the six decisions; and, having allowed HMRC's cross-appeal on one of the other original decisions, the UT re-made that decision in refusing R permission to appeal out of time.
This decision of the Upper Tribunal contains a useful rehearsal of some principles concerning “agent's authority” (to receive notifications from HMRC on behalf of taxpayers), and concerning factors for consideration in “weighing the respective prejudices” (on applications to make late appeals).
[1] This is the appeal by Romasave (Property Services) Limited (“Romasave”), and the cross-appeal of HMRC, from the decision of the First-tier Tribunal (“FTT”) (Judge Staker) which was released on 3 June 2014. By that decision the FTT considered applications by Romasave to bring late appeals in relation to nine decisions of HMRC concerning liability to value added tax (“VAT”) and misdeclaration penalties. The FTT found that the appeals, which had been lodged on 22 February 2012, had been made late. It refused permission to appeal out of time in eight of those cases, and gave permission in one. With permission of the FTT, Romasave now appeals in respect of the FTT's refusal in six of the cases and HMRC cross-appeals in the one case in which the FTT allowed the late appeal to proceed.
[2] The FTT referred to the relevant decisions of HMRC numerically as Decisions 1 to 9. It is helpful for us to do likewise. We set out in the Appendix to this decision details of the nine HMRC decisions in question. Those that are the subject of Romasave's appeal are Decisions 2, 3, 4, 5, 6 and 8. HMRC's appeal is in respect of Decision 9. There is no appeal before us in respect of Decisions 1 and 7.
[3] In the case of Romasave's appeal, in relation to Decisions 2, 3, 4 and 8, the question is whether the relevant VAT assessments were notified to Romasave as required by the applicable statutory provisions in 2009 or (in the case of Decision 8) 2010. If and to the extent they were not, then Romasave's appeal in those respects will succeed, since in that event those decisions will not have been notified before 21 February 2012, and accordingly its appeals against those decisions will not have been made late. This question turns primarily on the steps that were taken by HMRC to notify the assessments to Romasave, but in...
To continue reading
Request your trial
-
Atherton
...between nine and twelve months late. [55] The Tribunal notes that the Upper Tribunal in Romasave (Property Services) Ltd v R & C Commrs [2015] BVC 518 at para. 96 stated that “a delay of more than three months cannot be described as anything but serious and significant.” It also notes that ......
-
Armstrong
...stages. [18] Denton Stage 1 is to ask whether the delay is serious or significant. In Romasave (Property Services) Ltd v R & C Commrs [2015] BVC 518 the Upper Tribunal found a delay of 3 months in the context of a 30 day time limit to be serious and significant. The delay here is just over ......
-
Snar Associates Ltd
...one month from the deadline of 20 December 2013. We note that the Upper Tribunal in Romasave (Property Services) Ltd v R & C Commrs VAT[2015] BVC 518 at para. 96 stated that “a delay of more than three months cannot be described as anything but serious and significant.” We also note that th......
-
Patrick
...shows on the balance of probabilities that the notice etc was not received: see Romasave (Property Services) Ltd v R & C Commrs VAT[2015] BVC 518 (“Romasave”) at [33] to the effect that despite the words “unless the contrary is proved” being only in the second part, they apply to the first ......