TC03578: Iveco Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 13 May 2014 |
| Neutral Citation | [2014] UKFTT 451 (TC) |
| Date | 13 May 2014 |
| Court | First-tier Tribunal (Tax Chamber) |
[2014] UKFTT 451 (TC)
Judge Roger Berner
Value added tax - Preliminary issue - Whether EU law required a claim to enforce a directly-effective right under the Sixth VAT Directive to be made within a reasonable period - R & C Commrs v British Telecommunications plc[2014] BVC 24 - Resolution of issue following issue of judgment of court of appeal.
The First-tier Tribunal (FTT) held that EU law does not require that Iveco Ltd's claim be brought within a reasonable period after the assumed price reduction that led to the VAT overpayment.
Iveco Ltd (Iveco) sold commercial vehicles. Later apparently it paid rebates to customers. On 9 November 2011, Iveco claimed under article 11Cart. 11C(1) to recover VAT arising from payments of rebates made in the period 1978 to 1989. Such payments cut the consideration for the sale of the vehicles, so it claimed a repayment of output tax on such sales. The repayment was calculated by applying the VAT fraction to the cut in the consideration.
This decision is the final part of the decision on the preliminary issue of whether Iveco's claim to recover VAT arising from payments of certain rebates that occurred in the period 1 January 1978 to 31 December 1989 is subject to the time limit in section 80 subsec-or-para 4s. 80(4), or is otherwise time-barred. The earlier decision (reported at [2014] TC 03141) was that s. 80 did not apply to Iveco's claim in respect of its directly effective right under art. 11C(1) to cut the taxable amount of certain of its supplies, and that in consequence the time limit in s. 80(4) did not apply to that claim. Thus, Iveco could adjust under reg. 38 to enforce to its directly effective right.
The outstanding aspect of the preliminary issue was whether, as HMRC argued, a directly effective right under the Sixth VAT Directive (which Directive applied at the time) must be exercised within a reasonable time after the relevant price cut leading to the overpayment. That aspect was stood over pending the judgment of the Court of Appeal in R & C Commrs v British Telecommunications plcVAT[2014] BVC 24 (the BT case).
HMRC unsuccessfully argued that, under EU law, the principle of legal certainty imposes an obligation to act within a reasonable time in all cases, except where the law expressly excluded, or laid down a specific, time limit. As Iveco had not claimed within a reasonable time, its claim failed.
The FTT found for Iveco, as it was bound by the judgment in the BT case, where at para. 89 Rimer LJ rejected the same argument by HMRC:
… the application or otherwise of limitation periods to the bringing of claims is a matter for the domestic law of the member state where the claim is brought. HMRC can … point to nothing in such domestic law that can justify its assertion that the direct enforcement by BT of its EU law rights under [VATA 1994,] sections 12 and 22 (as appropriately moulded) would have been subject to the condition that such claims must be brought within a reasonable time. In particular, if the domestic legislation had properly implemented article 11(C)(1) but had expressly provided that refund claims could be brought without limit of time, that might have been unusual, but would not have been unlawful … I can see no reason why the implied unlimited time for the bringing of BT's directly effective claims under the section 22 machinery is not equally lawful.
The VAT at stake is £73,361,865, so this case is hotly contested, but it affects few persons.
[1]This is the final part of my decision on the preliminary issue in this case, namely whether the claim of the Appellant, Iveco Limited ("Iveco"), to recover VAT arising from payments of certain rebates that occurred in the period 1 January 1978 to 31 December 1989 is subject to the statutory time limit prescribed by section 80 subsec-or-para 4s 80(4) of the Value Added Tax Act 1994 ("VATA"), or is otherwise time-barred.
[2]For the reasons set out in my decision released on 6 December 2013; [2014] TC 03141, I decided that Value Added Tax Act 1994...
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Revenue and Customs Commissioners v Iveco Ltd
...C Commrs v British Telecommunications plc VAT[2014] BVC 24 (“BT”). On 13 May 2014, Judge Berner issued the second part of the decision, [2014] TC 03578, (“the Second Decision”). Having set out the relevant passage of the Court of Appeal's judgment in BT, which he noted was binding on him, J......