The Commissioners for Her Majesty's Revenue and Customs v Iveco Limited
| Jurisdiction | UK Non-devolved |
| Judge | The Hon Mr Justice Warren , |
| Judgment Date | 13 June 2016 |
| Neutral Citation | [2016] UKUT 0263 (TCC) |
| Respondent | IVECO LIMITED |
| Appellant | HER MAJESTY’S REVENUE AND CUSTOMS |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Appeal Number | UT/2014/0037 |
[2016] UKUT 0263 (TCC)
Appeal number UT/2014/0037
VALUE ADDED TAX – whether section 80 VAT Act 1994 applies to claim to
enforce directly effective right under article 11C(1) Sixth Directive to reduce
taxable amounts to reflect rebates paid in periods before it was implemented in UK
legislation – if so, whether claim made within time limit in section 80(4) – whether
regulation 38 VAT Regulations 1995 can be adapted or moulded to allow
adjustment to reflect reduction in taxable amounts at any time – whether FTT has
jurisdiction to determine claim - appeal allowed
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
THE COMMISSIONERS FOR
HER MAJESTY’S REVENUE AND CUSTOMS Appellants
- and –
IVECO LIMITED Respondent
Tribunal:
The Hon Mr Justice Warren
Judge Greg Sinfield
Sitting in public at The Royal Courts of Justice, Rolls Building, Fetter Lane,
London EC4 on 25 and 26 November 2015
Eleni Mitrophanous, counsel, instructed by the General Counsel and Solicitor to
HM Revenue and Customs, for the Appellants
Andrew Hitchmough QC and Barbara Belgrano, counsel, instructed by
PricewaterhouseCoopers Legal LLP, for the Respondents
© CROWN COPYRIGHT 2016
DECISION
Background
1. This is another case about time limits for the recovery of overpaid VAT. The
Respondent (‘Iveco’) is the representative member of a VAT group that includes
companies engaged in the distribution and sale of commercial vehicles. Iveco charged
and accounted for VAT on its sales of the vehicles. Between 1 January 1978 and 31
December 1989 (‘the claim period’), Iveco paid rebates to purchasers of the vehicles.
Article 11C(1) of the Sixth VAT Directive (“article 11C(1)”), which was in force
throughout the claim period, provided that where the price of a supply is reduced after
the supply has taken place, the value of the supply must be reduced accordingly under
conditions laid down by the Member State. Article 11C(1) was not implemented in UK
domestic law until 1 January 1990 when regulation 7 of the VAT (Accounting and
Records) Regulations 1989 (‘the 1989 Regulations’) came into force. Regulation 7 of
the 1989 Regulations was subsequently replaced by regulation 38 of the Value Added
Tax Regulations 1995 (‘the 1995 Regulations’) which was in identical terms.
References to regulation 38 of the 1995 Regulations below should be taken to include
regulation 7 of the 1989 Regulations. It is common ground that article 11C(1) had
direct effect, that is to say that Iveco could rely on it to reduce the value of its supplies
notwithstanding the absence of implementing legislation before 1 January 1990. It is
also common ground that, as drafted, regulation 38 of the 1995 Regulations only
allowed adjustments in relation to rebates paid after 1 January 1990.
2. Section 24 of the Finance Act 1989 (‘FA 1989’) also came into force on 1 January
1990. Section 24 provided that persons who had overpaid VAT could claim a
repayment subject to a time limit of six years from the date of overpayment or, in the
case of mistake, six years from the date on which the claimant discovered, or with
reasonable diligence could have discovered, the mistake. Section 24 FA 1989 became
section 80 of the Value Added Tax Act 1994 (‘VATA’) on consolidation which, when it
was enacted, contained the same time limit. The time limit was reduced to three years
from the date of payment, with no extension for a mistake based claim, by section 47(1)
of the Finance Act 1997 with effect from 18 July 1996. In 2008, following the decision
of the House of Lords in Fleming (trading as Bodycraft) v HMRC [2008] STC 324,
HMRC accepted that the three-year cap could not operate retrospectively but only from
the date on which it had been authorised by Parliament, that is to say 4 December 1996.
A new transitional period was introduced by section 121 Finance Act 2008, with effect
from 19 March 2008, which provided that the three year time limit did not apply to
claims for amounts overpaid in VAT accounting periods that ended before 4 December
1996 provided that the claim was made before 1 April 2009 (‘the Fleming window’).
With effect from 1 April 2009, the three year time limit in section 80(4) was extended to
four years. Section 24 FA 1989 is set out at [10] below and section 80 (as it stood at the
time of the claim by Iveco mentioned in the next paragraph below) is set out in [11]
below. References to section 80 include, save where the context otherwise requires,
references to section 24 FA 1989 and references to EU law are to be read as including
Community law. We will use the acronym CJEU for the court now called the Court of
Justice, previously known as the European Court of Justice or ECJ.
3. In a letter dated 9 November 2011, Iveco submitted a claim to the Appellants
(‘HMRC’) for a repayment of £78,680,107, subsequently reduced to £73,361,865, VAT
charged on vehicles sold to reflect the rebates given during the claim period. In a letter
dated 23 January 2012 and upheld on review on 19 April 2012, HMRC, without
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