England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		31st January 2007

Mr Justice Lindsay :

A. Introduction

1. On 26^th August 2005 the appellant-taxpayer, Touchwood Services Limited ("Touchwood"), lodged with the respondents, HM Commissioners of Revenue and Customs ("the Commissioners"), a voluntary disclosure as to overpayment of VAT by it for the period to 31^st July 2005. That voluntary disclosure, above a statement that the information in it was true and complete, indicated that there was a net sum payable to Touchwood by the Commissioners of £715,198. Only part of that claim has since been paid; the Commissioners have said that no decision has yet been made as their enquiries are not yet complete. Frustrated by a lack of progress, Touchwood sought on the 23^rd January 2006 to appeal to the VAT and Duties Tribunal. However, the Commissioners responded to that attempted appeal by serving notice ("a Rule 6 notice") that no appealable decision had yet been made, a response which, upon its being referred to the Tribunal's London Centre – Mr Theodore Wallace – was upheld on the 12^th April 2006. Touchwood's appeal was thus struck out. On the 7^th June 2006 Touchwood appealed against that striking out and that appeal is now before me.
2. The only question properly before me is this: did the Tribunal err in law in holding that by the time of the Rule 6 notice, 23^rd February 2006 (and hence after an interval of some 6 months), or, perhaps, by the time of the hearing before Mr Wallace on 6^th April 2006 (after an interval of some 7½ months), no appealable decision had been made with respect to Touchwood's disclosure of 26^th August 2005?
3. I shall first set out the procedural provisions of the Value Added Tax Tribunal's Rules 1986, rule 6 and rule 18, then I shall go more widely to the law in this area and only then deal with the facts in greater detail. After reference to the Tribunal's decision I shall then turn to the arguments put in front of me by Mr McNicholas for Touchwood and Mr Sheldon for the Commissioners before arriving at a conclusion.

B. The Commissioners' Rule 6 Notice

4. Rule 6 of the 1986 Rules supra, under the heading "Notice that an appeal does not lie or cannot be entertained", provides as follows:

"(1) Where the Commissioners contend that an appeal does not lie to, or cannot be entertained by, a tribunal they shall serve a notice to that effect at the appropriate tribunal centre containing the grounds for such contention and applying for the appeal to be struck out or dismissed, as the case may be, as soon as practicable after receipt by them of the notice of appeal.

(2) Any notice served by the Commissioners under this rule shall be accompanied by a copy of the disputed decision unless a copy thereof has been served previously at the appropriate tribunal centre by either party to the appeal.

(3) In a reasonable excuse or a mitigation appeal the hearing of any application made by the Commissioners under the provisions of this rule may immediately precede the hearing of the substantive appeal.

(4) A proper officer shall send a copy of any notice or certificate served under this rule and of any document or documents accompanying the same to the appellant."

5. The express provision in 6(3) that (in general at least) only in the two cases of reasonable excuse or mitigation appeals may the substantive hearing take place immediately after any ruling under rule 6 underlines that the only question before Mr Wallace and before me was not any question, such as would be in issue at a substantive hearing, involving ultimate merits, but simply the issue as to whether there had been an appealable decision as I have described.
6. Rule 18 of the 1986 Rules provides, so far as relevant, as follows:-

"(1) A tribunal shall-

(a) strike out an appeal where no appeal against the disputed decision lies to a tribunal; and

(b) dismiss an appeal where the appeal cannot be entertained by a tribunal."

It is plain, if it were not otherwise so, that if the Commissioners' rule 6 notice is upheld then a strike out is mandatory.

7. The Rule 6 Notice itself, headed with the reference number given to it by the Tribunal and identifying Touchwood as appellant and the Commissioners as respondents, provided as follows:

"NOTICE

The Commissioners of HM Revenue and Customs hereby give notice that they make an application for the above appeal to be dismissed as no appealable matter stands to the Tribunal, as laid down in the VAT Act 1994 Section 83.

The grounds for this notice are that the Appellant has had an amount of VAT withheld from repayment pending enquiries with the relevant manufactures [sic] in order to validate the Voluntary Disclosure. Until the enquiries have been concluded, the Commissioners have made no decision in this matter. Therefore following the provisions of VAT Act section 83(c) the Tribunal has no jurisdiction in this appeal, as the Commissioners have made no final decision regarding the amount of VAT to be credited in this case. Should the pending enquiries validate the claim, the Commissioners will immediately fulfil their obligations to repay the VAT credit under discussion. However, at this stage the Commissioners have not made a decision regarding the withholding of this company's funds and contend the service of a Notice of Appeal is premature.

Dated this 23^rd February 2006

Acting General Counsel and Solicitor to Her Majesty's Revenue and Customs."

I will need to go further into the facts of the matter later but it will now be convenient to turn to the law more generally.

C. The law more generally

8. It is plain from Garage Molenheide BVBA & Ors v Belgium [1998] STC 126 ECJ that Member States are entitled to frame domestic provisions such that, where there are serious doubts as to the truthfulness or accuracy of VAT declarations that appear to require a credit or repayment to the taxpayer, enquiries can properly be made by the Member State and the credit or repayment can, in consequence, be delayed – see para 44 of the judgment. But it is equally plain that such ability to delay must not be by reference to some blanket provision not responding to the particular facts of the individual cases or one going beyond the Member States' legitimate need to protect its revenues – paras 45-47 and 64. To ensure that those requirements are met there has to be, within the domestic provisions, "effective" recourse to a judge or tribunal – para 64. For such recourse to be "effective" within that prescription, the judge or tribunal has, inter alia, to be able, upon suitable facts, to look into whether there truly is some urgency or necessity such that the Member State may continue to withhold the sum claimed by the taxpayer to be credited or repaid and to look also into whether or not, in some way less disadvantageous to the taxpayer, there can be at least an interim repayment or crediting of the whole or a part of the sum claimed, perhaps against some guarantee or other form of assured reimbursement to the Member State should that interim credit or repayment later transpire to be unjustified.
9. Do such remedies as, under our domestic provisions, are available to be dispensed by our tribunals and judges and as can be effectively sought by our taxpayers suffice to satisfy Molenheide? I must first ascertain what those remedies are.
10. Leaving aside consensual solutions, where a taxpayer is concerned at delay in his being credited or repaid he can either apply to the VAT and Duties Tribunal ("the Tribunal") or to the Administrative Court. If the Commissioners accept that they have come to a decision adverse to the taxpayer with respect to his claim to be credited or repaid then the taxpayer may appeal that decision to the Tribunal under section 83 VAT Act 1994, which I shall turn to in more detail below. What, though, if the Commissioners say that no decision has been reached, as they may, for example, if they maintain that proper enquiries into the taxpayer's claim are not yet concluded?
11. One option open to the taxpayer who believes he has material that may suggest that an appealable decision has indeed been reached by the Commissioners is for him to appeal to the Tribunal, asserting that the decision has indeed been made and that he appeals against it. If the Commissioners nonetheless remain of the view that no appealable decision has been made and hence that no ability to appeal has arisen they may, as has been seen, as soon as practicable serve a Rule 6 Notice to that effect and apply for the taxpayer's appeal to be struck out. That notice has to go to the Tribunal under Rule 6(1) supra and that was what was done in the case now before me. The Tribunal then either strikes out the taxpayer's appeal (as was done here) or the appeal later goes forward in the ordinary way in which substantive appeals are dealt with. The Tribunal's decision either as to the striking out or, as the case may be, on the substantive appeal, would be appealable by way of appeal to the High Court and, depending on the outcome in the High Court, the taxpayer's strike-out appeal could proceed further, in appropriate cases, on to the Court of Appeal, House of Lords and the European Court of Justice. Thus a taxpayer choosing to persist with an appeal despite a Rule 6 Notice from the Commissioners that no appealable decision had been reached may begin proceedings in which there is repeated judicial scrutiny at every stage; the Tribunal cannot be expected, any more than the High Court and the higher fora, to conclude that the taxpayer's appeal should be struck out simply on the say-so of the Commissioners that no appealable decision had been made by them. On such an issue, when it is before it, the Tribunal is able to use all the armoury which it usually uses when facts are disputed, including cross-examination of witnesses.
12. But that option is not the only one. There is no reason in principle, at least where the Commissioners represent to the taxpayer that they have as yet made no appealable decision and base that representation on an allegation that their enquiries are incomplete and continuing, why the taxpayer should not seek Judicial Review of such a representation. Excessive, unexplained or unnecessary delay by a public body in making a decision which is required of it is a classic and familiar area for Judicial Review. The remedies available by way of Judicial Review include the grant of a declaration of entitlement to be paid forthwith – see Judicial Review Handbook, 4^th Edition, 2004 by Michael Fordham, page 509, paragraph 25.1.5(B). The authorities there referred to include Reg v Customs and Excise Commissioners, ex parte Kay & Co Limited and Another and other applications [1996] STC 1500, in which the Commissioners, without having power to do so, had rejected or deferred claims for repayment of overpaid VAT. Keene J., as he then was, made a declaration that the applicants in that case were entitled to payment forthwith.
13. As a very recent example of the availability of Judicial Review in cases such as the one before me, I was shown Megantic Services Ltd v HM Revenue & Customs [2006] EWHC 3232 (Admin), a decision of Charles J. of the 30^th November 2006. In that case there had been an allegation of participation by the taxpayer in a missing trader or carousel VAT fraud – see para 7. It was accepted that relevant investigations in such cases could be complicated and lengthy – see para 8. It was accepted, too, (as Mr McNicholas accepts before me) that the Commissioners had a duty to investigate and had to have a reasonable opportunity to do so – para 13. The Commissioners there, on their own evidence, had, it seems, acted diligently "in the sense that they have been doing something nearly every working day, so far as this case is concerned" – para 15. It was therefore the result of the Commissioners' argument, if it was upheld, that the taxpayer would have to wait for an indeterminate period for a decision by the Commissioners as to input tax without which decision there would be nothing to trigger the availability of substantive proceedings before the Tribunal – para 17. One option, held the Judge, would have been to send the decision back to the Commissioners to decide within a very short time whether to pay or credit the taxpayer or to refuse to do so – para 18. However, the Judge gave permission for Judicial Review on the basis that it was arguable that there should already have been a decision by the Commissioners – para 29. That was a case where the relevant delay in coming to a decision by the Commissioners was of the order of 6 months – para 34. In that case the Commissioners had refused to make an interim payment to the taxpayer and the Judge gave permission for that decision also to be challenged by way of Judicial Review – para 45. He did not order an interim payment there and then, at the permission stage of Judicial Review, but declined that not on any principle but because the application for such payment "failed on its evidential base" – para 51.
14. Nor is it to be thought that the use of Judicial Review could not include a full and proper examination into assertions by the Commissioners that there had been, for example, no excessive delay in their enquiries or that potentially relevant and fruitful enquiries were still in progress. Whilst, in Judicial Review, disclosure is not automatic, the Court has power to order it – see the Judicial Review Handbook supra at page 344, para 17.4.1 and CPR 54 PD 12.1. Equally, cross-examination, although undoubtedly rare in Judicial Review, can be ordered where it is appropriate – CPR 8.6(2)-(3) and see the Judicial Review Handbook supra at page 349, para 17.4.9 (which includes examples of disclosure of internal Revenue papers and cross-examination of Revenue officers) and see also page 353, para 17.4.17(A).
15. There may be much room to doubt the jurisdiction within Judicial Review for the Court to make a declaration for immediate payment by the Commissioners to the taxpayer at the permission stage of Judicial Review. Such doubts would exist if only because such a requirement laid on the Commissioners, unless assured and full recompense was seen to be immediately available to them should they successfully resist Judicial Review at the substantive stage, would, in practical terms, amount to a final decision being made at the interim stage. But the Court, at the permission stage, would be anxious to procure a situation in which, as far as possible, permanent damage to either side would not be caused ahead of the substantive hearing. It is thus possible to see there being made interim declarations for payment to the taxpayer even at the interim stage on terms such that assured and full recompense to the Commissioners would be readily available should they later succeed. I would expect that some such machinery was in the mind of the ECJ when, in Molenheide at para 64, they spoke of "another guarantee sufficient to protect the interests of the Treasury but less onerous for the taxable person". If I am right in this explanation of what is possible under Judicial Review then it cannot be regarded as inadequate, toothless, slow or needlessly expensive but, rather it offers taxpayers practical remedies with which to counter unreasonable delay by the Commissioners in coming to an appealable decision or dissimulation on their part as to whether such a decision had indeed been made – see also Tradecorp infra at para 25 per Lightman J. and v Parades Commission for Northern Ireland [2007] 2 WLR 1 HL(NI), reported after the hearing before me.
16. I would expect that, taken together, section 83(c) of the VATA 1994 (which I shall come on to) and Judicial Review would satisfy the requirements of Molenheide supra but the more immediate relevance of the conclusions I have come to as to the availability of practical relief by way of Judicial Review is this: it affects the Court's approach to the true construction of section 83(c) of the VATA 1994. Where an appeal under section 83 is struck out by way of a Rule 6 notice upheld on the basis that the Commissioners had successfully asserted that their enquiries were both material and continuing then there could be a real danger that the taxpayer would be denied his credit or repayment for an indeterminate period, perhaps punctuated, at intervals, by fresh attempts to use section 83 being met by repeated Rule 6 Notices on the basis of enquiries even then still not complete. But Judicial Review provides a salutary mechanism by which the Commissioners could be told that enough was enough: that the Commissioners had had time enough for reasonable enquiry, that if their enquiries were incomplete that was not further to prejudice the taxpayer and that, accordingly, immediate or early repayment or credit in favour of the taxpayer would be appropriate to be declared. The existence of such a useful alternative to repeated attempts to appeal under section 83 enables one to take a stricter approach to the true construction of section 83, a construction which, had it stood alone without the availability of Judicial Review, might not have satisfied Molenheide. I can thus approach section 83 on the basis that a relatively strict construction of it is not precluded.
17. Section 83 VAT 1994, so far as immediately material, provides as follows:

"Subject to section 84, an appeal shall lie to a tribunal with respect to any of the following matters—

 (a) ….

 (b) …

 (c)  the amount of any input tax which may be credited to a person;

 (d) …

…………………………………………………………………

 (p)  an assessment—

  (i)  under section 73(1) or (2) in respect of a period for which the appellant has made a return under this Act; or

 (ii) under subsection (7)(a) or (b)] of that section; or

 (iii) under section 75;

or the amount of such an assessment;"

18. Sub paragraphs (c) and (p) are material as it is only with respect to those paragraphs that Touchwood claims that an appealable decision has been made. In point of true construction of section 83 (c) and (p) it is notable that the word "appeal" is not defined but, in its context, one of law, the word assumes that there shall have been a prior decision or resolution, here by the Commissioners, which is wholly or in part adverse to the putative appellant in the sense of its rejection or failure to accept some claim advanced by him. In context, too, that prior adverse decision or resolution has to be sufficiently related to that which is specified in para (c) or para (p) respectively to be describable as being "with respect to" the material referred to in those paragraphs.
19. It can be seen, too, that the earlier decision to be appealed must, if it is section 83(c) which is invoked, be with respect not to some issue as to whether the Commissioners are in some general way or merely in principle liable to credit or repay the taxpayer but as to "the amount of any input tax which may be credited to a person". That a mere general liability of the Commissioners to repay or credit does not suffice under section 83(c) is bolstered by a comparison of section 83(c) with section 83(p) or (s) where appeal is allowed as to liability or its amount (see also (sa), (t) and (ta)). The argument would be that when the draftsman intends to allow appeal against liability generally as well as to specific amounts he knows how to do so and that, as he does not prescribe for both general liability and amount in section 83(c), he must be taken not to have intended that that should be permitted. The definitive article before the word "amount" in section 83(c) suggests that the earlier decision has to have been such that it was adverse to the taxpayer as to some ascertained or ascertainable sum.
20. Such is the law that I must have in mind when I turn to the facts, which is what I now do.

D. The Facts

21. By its letter to the Commissioners of 26^th August 2005 Touchwood claimed that, by way of sales and purchases omitted from its 07/05 VAT return, £715,198 was payable or repayable to it. It supplied a table showing (this being merely an example) that, in relation to input tax, there were four supplies made to it on 19^th July 2005 by "The Working Group" under invoices Nos. 1140-1143 inclusive in respect of which, Touchwood said, some £562,782.50 should have been declared by Touchwood but had not been. The goods within those invoices were memory cards described as "My Flash MMC" or "My Flash SDC", the quantity in all, in that example, being 168,000 items. Much later Touchwood supplied the Commissioners with further documents as to those and other goods from which it appeared that The Working Group asserted that those goods had existed as at 28^th July 2005 and that they had no reason to believe that VAT had not been paid by their supplier. The documents produced by Touchwood also showed that on 28^th July Touchwood had instructed MSG Freight Ltd "to carry out a 100% Inspection Report on the goods". Later, on 3^rd March 2006, The Working Group Ltd, on a paper headed "To whom it may concern", confirmed its supply of such goods on 28^th July and 29^th July 2005 to Touchwood and that it had declared the VAT thereon in its returns to the Commissioners. There had been no evidence produced by Touchwood that verified that the goods were seen to exist on 28^th-29^th July 2005 and nothing from MSG Freight on the point is within the papers laid before me. There will, doubtless, be many occasions on which a trader relies, as Touchwood's advisers later suggested it had done, upon a third party inspection and report as to the existence of goods at some particular time, but nothing of the kind was produced to me and Mr Wallace does not mention anything such as having been put to him.
22. On 20^th September 2005 the Commissioners indicated that further information was required as to invoices 1142-1144 inclusive, presumably being satisfied as to 1140. Six heads of the further information they required were set out. By 26^th September 2005 the Commissioners and Touchwood had met. Still information was required by the Commissioners under six (but different) headings. The Commissioners' letter of that day included this:

"I have noted your concerns. It is up to you to make commercial decisions about the level of checks which you undertake. However you should be able to demonstrate, by obtaining all relevant information, regarding any product that the transaction is bona fide."

If you are buying and selling any goods, you should be able to provide details regarding the goods you are trading, such as serial numbers, part number, batch number, product details, quantity, price per unit, what market research you carried out, name of the manufacturer, website address, contact name, name of the authorised distributor etc. This is just a guideline and not an exhaustive list.

As you may know the investigation of Missing Trader intra-Community (MTIC) fraud continues to be Customs' top VAT fraud priority, and the Department will continue to tackle the criminals behind this type of fraud. It is not a victimless crime; it is robbing the honest taxpayer of monies that could [be] used to fund essential public services.

As part of the anti fraud measures introduced in the April 2003 Budget to combat MTIC fraud, traders are expected to make reasonable commercial checks in respect of their customers and suppliers."

The letter ended by saying:

"Please could you forward the requested documentation as soon as possible so that I can progress the claim further".

23. There had been errors in the voluntary disclosure which Touchwood's accountants sought to explain by letter of 27^th September 2005.
24. On 6^th October 2005, the Commissioners by then, it seems, having received the further documentation to which I have referred, raised requests for information under five headings. They had a concern that no serial numbers had been given for the flash cards supplied and asked Touchwood for their replies. However, the Commissioners added:

"As discussed yesterday morning, I will release on a without prejudice basis the VAT in relation to sales to Talkount and Well Com. If you require any further clarification please do not hesitate to contact me."

The letter was signed "Y. Sanger". On 10^th October 2005 the Commissioners asked for further information but added:

"Furthermore, I have authorised part of the Voluntary Disclosure without prejudice to any further action which might be taken by Her Majesty's Revenue and Customs."

I am aware of the urgency of this claim and I will endeavour to conclude the enquiries as quickly as possible."

25. By a Notice of Voluntary Disclosure of 12^th October it was stated by the Commissioners that £152,415 was the total amount due from the Commissioners to Touchwood in respect of the 07/05 period and then or thereabouts a VAT statement of account to the same effect was sent to Touchwood. Taken out of context such acceptance of only £152,415 as the total allowance out of the voluntarily declared £715,198 might have been naturally understood to have been a decision on the Commissioners' part, adverse to Touchwood, in relation to the balance of £562,783 but that would be to ignore the passages I have cited from, and the general drift of, the Commissioners' letters of 6^th and 10^th October. I shall return below to this but, in context, the authorisation on a "without prejudice" or provisional basis of part only of the Voluntary disclosure cannot be fairly understood to be an adverse decision already made as to the amount of the rest. The sum provisionally allowed was promptly paid by the Commissioners on 10^th October.
26. On 14^th October 2005 the Commissioners wrote to Touchwood saying they were waiting for information and that a request had been sent out to Hong Kong on the basis, as it would seem, that that was where the goods in doubt had been understood to have been said to have been manufactured. The Commissioners added:-

"We have had previous experience of counterfeit and non existence [sic] product(s), stolen goods, and obsolete stock, and hence we need to try and establish the bone [sic] fides of these products."

27. By late October 2005 Touchwood had engaged a consultant as to its voluntary disclosure and, in answer to an (unseen) letter of his, the Commissioners on 26^th October wrote, inter alia, as follows:-

"It appeared that that your client bought and sold memory flash cards. Any new product your client is to buy or sell we would wish to verify those details with the manufacturer. Mr Sanger has discussed this with you over the telephone and requested your client to obtain and provide him with details of this new product."

I would reasonably expect that if your client is buying and selling any goods they should be able to provide details regarding the goods they are trading such as serial numbers, part number, batch number, product details, quantity, price per unit, what market research they carried out, name of the manufacturer, website address, contact name, name of the authorised distributor etc.

Even if your client is buying or selling OEM goods the above listed information is required so that we can still contact the manufacturer wherever they are situated. OEM product has to be made by somebody before it can be sold to an individual customer.

HMRC is entitled, as part of its responsibility for care and management of VAT, to make all reasonable enquiries into VAT repayment claims and this includes testing further the information given in support of a repayment claim. You will appreciate that the veracity of a repayment claim of some £562,782.00 must be established before repayment is authorised and this is the purpose of our enquiries."

The letter concluded:

"I regret that at this stage I am still unable to either release the amounts claimed on a without prejudice basis or make a final decision to deny repayment. I am aware of the financial strain this places on your clients and can assure you that our enquiries are being actively pursued and I hope to have them concluded shortly."

28. In answer to Touchwood's (unseen) letter of 5^th December 2005 the Commissioners on 12^th December wrote of their concerns under nine headings, four of which are of particular relevance, as follows:

"5. Our enquiries are to establish whether the goods as described by your client do in fact exist. Your client has confirmed that he has never sighted these products and has been reliant on the inspection reports done by the Freight Forwarder. Mr Khanna has further stated that he has checked the Internet as market research. Could you confirm that the products which were seen on the Internet are those products which Touchwood Services traded in. If they were, how would this have been confirmed? Would the Freight Forwarder be able to confirm that the products were indeed genuine? Were any of the products tested?"

………..

7. We have not yet decided whether your client is legally entitled to a repayment or not and the scope of our enquiries, as he already knows, are not limited to just the immediate supplier and customer.

8. Repayment supplement is not due at this time in any event as it is not yet clear whether any repayment will be made or whether any potential disallowance of input tax will exceed 5% of the net tax on the claim. In addition we would maintain that our enquiries are proportionate and being actively pursued and as such no repayment supplement is due. The claim has been noted and we will respond at the appropriate time.

9. As no appealable decision has yet been then there is nothing to appeal to a VAT and Duties Tribunal. The Commissioners have not yet made any decision to refuse the claim we are continuing to make enquiries. It is up to your client to decide as to whether to apply for a judicial review, but we would expect a pre-action protocol letter setting out the reasons and giving adequate notice for our response."

29. On 6^th January Touchwood's advisers answered, inter alia, that:

"On behalf of my client, I am responding to your letter of 12^th December which I have now had an opportunity to review with Yash Khanna.

We make the following points:

1. He has confirmed full payments to the supplier and was made to you over 2 months ago.

2. The description of the goods on the invoices fully meets the requirements of Regulation 14(1). We see nothing on these invoices to discredit them particularly as HMRC have accepted them as good when issued by The Working Group who have accounted for and paid the output tax to HMRC.

3. Your comments on the accuracy on the sales invoice and the shipping documents are not accepted. I have reviewed all the paperwork and can find one minor amendment to a shipping document where the letters SDC have been amended by hand to MMC. This is clearly a clerical error and should be viewed as such. All other documentation and due diligence is quite clear as to the description of the goods invoiced. A refusal to repay the claim on these grounds is unreasonable.

4. Your comments in Para 5 regarding inspection reports and other due diligence are also unreasonable. It is perfectly reasonable to rely on third party inspection reports and there is no requirement to test them or investigate if they are genuine The sale of counterfeit goods is still a taxable supply so again I would consider your refusal to repay the claim on these grounds as unreasonable.

5. I note your comments about making enquiries of the manufacturer but you were still awaiting information from them in your letter of 14^th October some 11 weeks ago. Delays on their part should not disadvantage my client and again I consider the time taken to be unreasonable."

Their letter continues:

"In summary, we believe the Commissioners have been unreasonable in their requests for further information. My client has always promptly responded to those requests only to discover there are further requests for information which could have been dealt with earlier. Enquiries of the manufacturer have no bearing on our client's claim, a point that we believe will be endorsed in the ECJ in the Bond House decision which is expected in early January."

30. Touchwood sent emails to the Commissioners in January 2006 and, as to the enquiries which the Commissioners claimed to be making, on 19^th January 2006 the Commissioners, by their officer Y Sanger, said that they were enquiries:

"….into whether the products described on the invoices that support the claim for input tax deduction were what was actually traded and therefore whether the purchase invoices are valid. As you will appreciate your client only has a right to deduct input tax if his claim is supported by a valid invoice, which accurately describes what he bought.

As stated in my letter of 12^th December 2005, we are making active enquiries with the manufacture[r]s. We are still waiting for confirmation, and as such are not in a position to make a decision with regards to your clients repayment.

We anticipate having the information from the manufacture[r]s shortly and will keep you informed of our progress."

31. On 23^rd January 2006 Touchwood lodged a Notice of Appeal with the Tribunal on the basis that it wished to dispute a decision of 19^th January, which can only have been some decision, if any, to have been found within the Commissioners' letter of that date to which I have referred. Indeed, Touchwood's letter to the Tribunal of 23^rd January makes that point by saying:

"Our grounds for appeal are that we consider that the letter of 19^th January 2006 is a refusal by the Commissioners to make the repayment in connection with the Return for July 2005."

The Tribunal should note that there has been protracted correspondence since the submission of the Return between our client and H.M. Revenue & Customs, who have consistently refused to make the repayment even though the tax charge by the previous supplier has been paid over to H.M. Revenue & Customs."

32. On 16^th February 2006 the Commissioners' Review Officer wrote to Touchwood's adviser that:-

"Further to your letter dated the 23rd January 2006 I can confirm that Officer Sanger has yet to make any decision regarding your client's input tax. I note that his letter stated that 'We are still waiting for confirmation, and as such are not in a position to make a decision with regards to your client's repayment'.

I can confirm that the Commissioners of HM Revenue and Customs have to date, not refused to make the repayment but the matter is undecided pending further enquiries.

Under the VAT Act 1994, Section 83, the above matter fails to meet the criteria for an appealable matter. Therefore, I have requested that the appeal is 'Struck out' at the hearing.

I have notified Officer Sanger of the appeal application and my action. I note from our records and your enclosures that he is still making active enquiries with the manufacturers and will keep you informed of his progress".

33. On 23^rd February 2006 the Commissioners served a Rule 6 Notice in the terms set out in para 7 above.
34. On 28^th February 2006 Touchwood's advisers made it plain that they would object to any striking out of Touchwood's appeal; they were of the view that the Commissioners had already made a decision. They added:-

"Thus we consider the failure to respond substantively to a letter may itself constitute a refusal of the claim that would found jurisdiction in the Tribunal without the need to seek a judicial review.""

And, a little later:

"These enquiries have been going on at least since 26 September 2005 and we consider that the time taken is unreasonable and constitutes a decision on which we feel there is a matter that can be appealed."

35. On 6^th March 2006 the Commissioners' letter repeated the view they had earlier taken that:

"As yet, no decision has been made as to whether your client has a valid claim for input tax under the VAT Act 1994, Section 26. I can confirm that Officer Sanger has outstanding enquiries with regards to your client's repayment and cannot make an accurately informed decision at this time."

36. Touchwood's advisers, correspondingly, remained of the view that a strike out would be resisted and began to argue the case in correspondence, adding:-

"I would also point out that I believe that the enquiries made by Mr Sanger of the manufacturer have been going on for far too long and that the verification process could have and should have been completed a lot earlier. They were initiated in September 2005."

and:-

"You state in your letter that Officer Sanger has confirmed on several occasions he is still waiting for confirmation from the manufacturers with regard to the volume of goods made and distributed. I do not see the relevance of this, on the basis that a supply of goods has taken place and that all other documentation shows that an intra-Community supply of goods, supported by third party evidence, has already been satisfactorily completed."

37. On 14^th March 2006 the Commissioners, writing of Mr Sanger's "ongoing verification", again stated that no decision had been made in relation to Touchwood's voluntary disclosure and on 17^th March Touchwood's advisers wrote:-

"I reiterate my major complaint, that the time taken to complete the enquiries are wholly and totally unacceptable and that if there were legitimate enquiries being made of Hong Kong then the responses could have been received a lot sooner than they have been".

38. On 31^st March 2006 the Commissioners' letter gave a description of the enquiries being made, in the following terms:-

"Firstly let me confirm that the enquiries which are being conducted with regards to the Voluntary Disclosure are in relation to the validity of the input tax claimed by your client. The Commissioners are actively verifying if the products which have been stated on the invoices are those which have been produce[d] by the manufacturer."

And, in the same letter:-

"The Commissioners enquiries into your clients claims are not in relation to "Circularity" or "Non Economic Activity" but are into whether the products described in the invoices that support the claim for input tax deduction were actually traded and therefore whether the purchase invoices are valid."

The letter again asserted that no decision had by then been made.

39. A hearing of the Rule 6 strike out application had been fixed for 6^th April and it took place on that day. It would seem that only the correspondence to which I have referred was put before the Tribunal as evidence: there were no witness statements and no oral evidence. Thus nothing beyond the correspondence either explained the enquiries the Commissioners were making, why they were thought desirable, or by when they might be expected to be concluded. There was no evidence that enquiries were, in truth, not being made or were other than as the correspondence described them or that delay was being deliberately induced. There was no evidence that countered the Commissioners' assertion that no material decision had been reached or which alleged there was deliberate delay in making one.

E. The hearing at the Tribunal

40. At the hearing before him Mr Wallace gave leave to the taxpayer, unopposed by the Commissioners, to amend to assert that "a decision" had been made on or before the 19^th January 2006 or on or before the 10^th October 2005. He set out the facts in a manner that excites no criticism from either side before me. He indicated that correspondence provided to him by the taxpayer stating that The Working Group had declared VAT on the relevant invoices had only been lately produced and had no relevance to the question before him; I have not understood that Mr McNicholas challenges that before me. He set out the taxpayer's argument that in October 2005 there had been a conscious decision to accept the voluntary disclosure in part but to reject it as to its balance. Reg v Customs and Excise Commissioners, ex parte Kay & Co Limited and Another supra was relied on by the taxpayer and Garage Molenheide supra was cited. It was relied upon as indicating that for the Commissioners to deny a right of appeal by putting off a decision was contrary to EU law. There was, said the taxpayer, a duty to give a decision.
41. Mr Wallace, having in mind a dictum of Lightman J. in R (UK Tradecorp Ltd) v Customs & Excise Commissioners [2005] STC 138 at para 18 that the Commissioners were entitled to have a reasonable time to investigate claims, continued on the facts, as follows:-

"I am satisfied from the correspondence that Mr Sanger did not intend to reach any conclusion on the repayment claim for £562,782.50 either in October or January. In October he was still asking for evidence and awaiting further information. In January he wrote in terms that the Customs were not in a position to make a decision".

42. Mr Wallace rejected the taxpayer's argument that a decision to defer a decision is itself an appealable decision and he was plainly right so to do; that would not fall within section 83(c) or (p), the only candidates for relevant description of an appealable decision in the case before him. Mr Wallace continued:

"In my judgment the decision to pay part of the claim in October was not also a decision to refuse to pay the balance. Mr Sanger was entirely correct to pay the part of the claim which he accepted without delay."

I respectfully agree that first sentence although I am less sure of the second, at any rate if it was meant to indicate that Mr Sanger had unconditionally and finally accepted any part of the voluntary disclosure. The notice of 12^th October when read together with the correspondence's references to "a without prejudice basis" and "without prejudice to any further action which might be taken by" the Commissioners [my emphasis] in the letters of the 6^th and 10^th October 2005 indicate that what was being done was that the Commissioners were only provisionally willing to pay £152,415 of the voluntary disclosure claim, presumably on the footing that, on the facts by then sufficiently investigated and upon an evaluation of the extent to which they were prepared to risk not being adequately reimbursed should the voluntary disclosure not wholly stand up once the enquiries had been completed, that was a sum which could be paid "without prejudice" to the taxpayer.

43. Garage Molenheide contemplates and even perhaps encourages interim crediting of taxpayers and it would hardly be helpful to taxpayers generally if decisions to assist taxpayers by way of interim and provisional credits were to be regarded as appealable decisions adverse to the taxpayers with respect to the difference between the amount so provisionally credited and the amount which the taxpayer had claimed. That would be likely only to lead to the withdrawal of temporary or provisional assistance to taxpayers. In its context in the correspondence, I, like the Tribunal, do not see the notice of 12^th October and the associated payment to Touchwood as importing any decision with respect to the amount of any input tax which may be credited to a person. There was thus not, in my view, any decision which was appealable by way of section 83(c).
44. Mr Wallace then turned to section 83(p) and considered what was an assessment within section 73 or section 75 of the Act, the only classes of assessment relevant to section 83(p). Section 75 is, for immediate purposes, accurately summarised by its heading which is "Assessments in cases of acquisitions of certain goods by non-taxable persons". As there is no suggestion that Touchwood was a non-taxable person, section 75 assessments plainly needed no further consideration.
45. As for section 73, it is concerned with assessments where there has been a failure to make returns or to make complete and correct returns and with cases where there had previously been some overpayment or over-crediting by the Commissioners to the taxpayer. None of such situations was shown to exist on the facts in the Touchwood matter so I would not have seen section 73 as being at all applicable but in any event Mr Wallace, adopting the view expressed by the Tribunal (Mr  Colin Bishopp) in Tricell United Kingdom Ltd v Commissioners of Customs & Excise, Decision 18127, at para 47, reached the same conclusion by reference to the last words in section 73(1), namely that the Commissioners "may assess the amount of VAT due from [the taxpayer] to the best of their judgment and notify it to him". Mr Wallace held:

"A statement that a greater sum is due from Customs than is due to Customs is not in my judgment an assessment within section 73(1)".

I respectfully agree. Having thus satisfied himself that neither 83(c) or (p) was applicable, in the sense that no decision with respect to those matters had, in his view, been made, Mr Wallace allowed the application by the Commissioners and struck out Touchwood's appeal under rule 18(1)(a).

F. Further argument

46. Thus far I have been able to detect no error of law in the Tribunal's decision but before me, and going beyond arguments I have already dealt with, Mr McNicholas drew attention to a number of conflicting decisions at the tribunal level. He relied on a tribunal decision of 6^th October 2006 in Mobilx Ltd v Commissioners (Man/2006/0534 and 0617) for the proposition which it set out at its paragraph 15, namely:

"What founds the jurisdiction of the tribunal is that an issue exists between the parties as to the amount of any input tax that can be reclaimed".

47. I cannot accept that. Whilst the conclusions in the authorities as to appeal from the High Court to the Court of Appeal have a statutory basis as to appeals only being available as to judgments or orders, a basis not identical to the case of an appeal to the Commissioners under section 83, I would expect a corresponding conclusion, namely that a disappointed party cannot appeal as to an "issue" as to the amount which stops short of being a decision by the Commissioners. One can lose any number of "issues" and yet, overall, win and hence be unable to appeal; it is generally the final decision not the reasons for it that is appealable – see e.g. Lake v Lake [1955] P 336 CA at 343-4; 346-347 – though, aliter, perhaps where the Court of Appeal remits to the original tribunal – see Curtis v London Rent Assessment Committee [1999] QB 92 CA.
48. Mr McNicholas next drew my attention to the Commissioners of the EC v Italian Republic [2001] ECR-1-8195 which speaks, in its paragraph 36, of the provisions of Italian domestic law, not being provisions providing for payment to the taxpayer "within a reasonable time", being, on that account, clearly incompatible with the system for the refund of excess VAT required by the Sixth Directive. But, for the reasons I have given, I have regarded our domestic system, one providing both for appeals to VAT tribunals and for Judicial Review, as, taken together, not incompatible with the system required by the Sixth Directive as explained in Garage Molenheide. And, as for whether "a reasonable time" had here been exceeded, that is not a question for me, although it may well have been a question had Judicial Review been sought.
49. Mr McNicholas referred me to the Commissioners' Notice 700/45/02 headed "How to correct VAT errors and make adjustments or claims". Paragraph 7.1 shows that voluntary disclosures may be subjected to checks and that in a minority of cases the Commissioners might need to contact the taxpayer to clarify details of the disclosure before it was processed. Paragraph 7.2 says:

"Once we have processed your voluntary disclosure, we will send you a notice of Voluntary Disclosure confirming the amount of your correction and any interest calculated on it. You will also get a statement of account showing the current balance payable to us (including any interest) or repayable to you."

I have already referred to the notice of voluntary disclosure of the 12^th October 2005; there was also, as I have mentioned, a statement of account as to a total balance in Touchwood's favour of £152,564 at or about the same time. Touchwood's argument, I take it, was that the sending of a notice of voluntary disclosure and a statement of account indicated, within the provisions of the Commissioners' note at para 7.2, that the claim had, indeed, been "processed". I am unsure that to speak of a claim as "processed" is the same as indicating it had been decided upon but, in any case, there is no requirement that only when a claim had been fully processed and hence decided upon can either a notice of voluntary disclosure or a statement of account be sent out and, for reasons I have indicated, in the context of the references to matters being left "without prejudice", it would not be fair to the Commissioners to treat their provisional payment, one likely to make life easier for Touchwood, as being the fully-processed decision which it was plainly not intended to be.

G. Conclusion

50. I have now dealt with all of Touchwood's substantial arguments; I am still unable to espy any error of law on Mr Wallace's part.
51. Such a view is not to be taken to be any judgment that the Commissioners' conduct or lack of it has been satisfactory; it is a judgment only upon the very limited question which I have described in paragraph 2 as before me. I am far from convinced that all requests for information made by the Commissioners were justified precursors to a sufficiently informed decision on their part as to the voluntary disclosure; can all the trader's market research, for example, be properly required? Nor, within the spirit of Garage Molenheide, did the Commissioners explore whether a larger provisional allowance than was made could be made upon satisfactory arrangements for guaranteed or assured repayment to the Commissioners should it ultimately prove to have been too generous. On the other hand, neither Touchwood nor its advisers seem ever to have suggested some such arrangement. Whether the Commissioners would have been vulnerable to Judicial Review (with or without disclosure or cross examination) had that been sought and what result would have been achieved had it been sought are not questions for me. Megantic supra suggests that Judicial Review may have afforded assistance to Touchwood, certainly if one had regard only to the length of time between the making of the voluntary disclosure and the latest point at which it was said that no decision upon it had been made. Not only are such questions not for me but, in any event, I do not have material on which to express any informed view although, if, as I am told, the Commissioners, even now, claim not yet to have come to an appealable decision under section 83 with respect to the voluntary disclosure of 26^th August 2003, it would be hard not to share a business-person's likely reaction that, at least unless compelling evidence to the contrary were to be produced, a reasonable time for enquiries would surely have to be taken by now to have expired. That, though, is not a matter for me, as I hope I have made plain.
52. Reverting to what is for me, for the reasons I have given, I dismiss Touchwood's appeal.