ON APPEAL FROM UPPER TRIBUNAL TAX AND CHANCERY CHAMBER
MR JUSTICE WARREN AND JUDGE COLIN BISHOPP
A3/2009/2483 AND A3/2009/2438
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE LONGMORE
LORD JUSTICE ETHERTON
| (1) John Wilkins (Motor Engineers ) Ltd
(2) Squire Furneaux Group
(3) Margaret Elizabeth Williams
as executrix for Robin Allan Williams (Deceased)
(4) John Pudney Limited t/a Horsham Car Centre
(5) Lookers Plc
|- and -
|Commissioners for Her Majesty's Revenue & Customs
WordWave International Limited
A Merrill Communications Company
190 Fleet Street, London EC4A 2AG
Tel No: 020 7404 1400, Fax No: 020 7831 8838
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Mr Kevin Prosser QC and Mr James Henderson (instructed by Reynolds Porter Chamberlain LLP) for the Fifth Appellant
Mr Jonathan Swift QC, Mr Peter Mantle and Mr Philip Woolfe (instructed by HMRC Solicitors Office) for the Respondents
Hearing dates : 22nd March 2011
Crown Copyright ©
Lord Justice Etherton :
The reference in Littlewoods (2)
Where a taxable person has overpaid VAT which was collected by the Member State contrary to the requirements of EU VAT legislation, does the remedy provided by a Member State accord with EU law if that remedy provides only for (a) reimbursement of the principal sums overpaid, and (b) simple interest on those sums in accordance with national legislation, such as section 78 of the Value Added Tax Act 1994?
If not, does EU law require that the remedy provided by a Member State should provide for (a) reimbursement of the principal sums overpaid, and (b) payment of compound interest as the measure of the use value of the sums overpaid in the hands of the Member State and/or the loss of the use value of the money in the hands of the taxpayer?
If the answer to both questions 1 and 2 is in the negative, what must the remedy that EU law requires the Member State to provide include, in addition to reimbursement of the principal sums overpaid, in respect of the use value of the overpayment and/or interest?
If the answer to question 1 is in the negative, does the EU law principle of effectiveness require a Member State to disapply national law restrictions (such as sections 78 and 80 of the Value Added Tax Act 1994) on any domestic claims or remedies that would otherwise be available to the taxable person to vindicate the EU law right established in the Court of Justice's answer to the first 3 questions, or can the principle of effectiveness be satisfied if the national court disapplies such restrictions only in respect of one of these domestic claims or remedies? What other principles should guide the national court in giving effect to this EU law right so as to accord with the EU law principle of effectiveness?"
The applications of the Wilkins appellants and Lookers
"1. Where a taxable person has overpaid VAT levied by the Member State in breach of EU law, does EU law entitle the taxable person not only to repayment of the principal sum but also to compound interest thereon as the measure either of the loss of the use value of the money in the hands of the taxable person or of the use value of the money in the hands of the Member State?
2. If the taxable person is entitled to compound interest, then in circumstances where the statutory regime established by the Member State for the charging, collection and administration of VAT provides that disputes between the Member State and taxable persons concerning VAT, including claims for the repayment of overpaid VAT together with interest, must be brought before a specialist tribunal within a prescribed limitation period and in accordance with other detailed procedural rules, must effect be given to the taxable person's entitlement to compound interest:
(a) by the national court interpreting the provisions for payment of interest so that they apply to compound interest, if this is possible in accordance with the principles established by the Court in Case C-106/89 Marleasing SA v. La Comercial Internacional de Alimentacion SA?; and
(b) even if this is not possible, by declaring that the specialist tribunal has jurisdiction to award compound interest, so that the taxable person is not required to enforce his entitlement by bringing a claim before a different court within a different prescribed limitation period and in accordance with different detailed procedural rules?
3. If the taxable person is entitled to compound interest, does that entitlement continue after the principal is repaid, until the interest is paid in full?
4. Does the reasoning of the CJEU in Case C-317/94 Elida Gibbs v CCE and Case C-45/95 EC Commission v. Italian Republic which applies for the purposes of the Sixth VAT Directive apply equally for the purposes of the First and Second Directives, so that EU law requires VAT levied contrary to that reasoning in respect of the period between 1st April 1973 and 1st January 1978 to be repaid?"
The Court's discretion
"I understand the correct approach in principle of a national court (other than a final court of appeal) to be quite clear: if the facts have been found and the Community law issue is critical to the court's final decision, the appropriate course is ordinarily to refer the issue to the Court of Justice unless the national court can with complete confidence resolve the issue itself. In considering whether it can with complete confidence resolve the issue itself the national court must be fully mindful of the differences between national and Community legislation, of the pitfalls which face a national court venturing into what may be an unfamiliar field, of the need for uniform interpretation throughout the Community and of the great advantages enjoyed by the Court of Justice in construing Community instruments. If the national court has any real doubt, it should ordinarily refer. "
"117…But it is, we think, important to have in mind, also, the observations of the Advocate General (Jacobs) in Wiener SI GmbH v Hauptzollamt Emmerich (Case C-338/95)  ECR I-6495. A measure of self-restraint is required on the part the national courts, if the Court of Justice is not to become overwhelmed. A passage of his opinion is of particular relevance in the present context (see  ECR I-6495 at 6515–6516, para 61)—
"... another development which is unquestionably significant is the emergence in recent years of a body of case-law developed by this Court to which national courts and tribunals can resort in resolving new questions of Community law. Experience has shown that, in particular in many technical fields, such as customs and value added tax, national courts and tribunals are able to extrapolate from the principles developed in this Court's case-law. Experience has shown that that case-law now provides sufficient guidance to enable national courts and tribunals—and in particular specialized courts and tribunals—to decide many cases for themselves without the need for a reference."
118. In our view this is not an appropriate case for a reference by this court. For the reasons which we have set out we are satisfied that there is ample guidance on the question of principle in the existing decisions of the Court of Justice. We feel confident that we can apply the principle to the particular facts of the appeals which we have to decide."
Proposed Questions 1 and 3
Proposed Question 2
Proposed Question 4
Lord Justice Longmore
Lord Neuberger MR