[2010] UKFTT 144 (TC)

TC00450

 

Appeal number LON/2008/2489

 

VAT – Three year cap – s 80 VATA – out of time on the facts – Appeal dismissed

 

 

FIRST-TIER TRIBUNAL

 

TAX

 

 

 

                                           MCGEE ASSOCIATES                          Appellant

 

 

                                                                      - and -

 

 

                           THE COMMISSIONERS FOR HER MAJESTY’S

                                     REVENUE AND CUSTOMS (VAT)                Respondents

 

 

 

 

                         TRIBUNAL:             TRIBUNAL JUDGE:       ADRIAN SHIPWRIGHT

                                                            TRIBUNAL MEMBER: GILL HUNTER

 

 

Sitting in public in London on 15 October 2009

 

The Appellant did not appear

 

Richard Smith instructed by the General Counsel and Solicitor to HM Revenue and Customs for the Respondents

 

© CROWN COPYRIGHT 2010

DECISION

 

Introduction

 

1.     This is an appeal by McGee Associates (“the Appellant”) against the

Respondents‘(“HMRC”) decision not to repay or give credit for sums paid by McGee Associates to HMRC to satisfy assessment to VAT.  These amounts were not reduced to for input tax as no returns have been made.

 

Procedure

 

2.     Rule 33 is headed “Hearings in a party's absence”. It provides:

 

“If a party fails to attend a hearing the Tribunal may proceed with the hearing if the Tribunal—

(a)       is satisfied that the party has been notified of the hearing or that reasonable steps have been taken to notify the party of the hearing; and

(b)       considers that it is in the interests of justice to proceed with the hearing”.

 

3.     Mr McGee requested the Tribunal to proceed in his absence as he was ill. He made this request by email timed at 08.58 on the day of the hearing. We are grateful to Mr McGee for this.

 

4.     The Tribunal decided to proceed in the Appellant’s absence. We are grateful for Mr Smith’s assistance with this.

 

The Issue

 

5.      The issue in this case is whether McGee Associates were entitled to repayment or credit for sums overpaid by reason of the non deduction of input tax.

 

The Law

 

6.     The legislation in so far as is relevant here is found in section 80 VAT Act.  The wording of subsection (4) changed on 26 May, 2005.

 

7.     Before 26 May, 2005 subsections (1) and (4) of section 80 read:

 

“(1) Where a person has (whether before or after the commencement of this Act) paid an amount to the Commissioners by way of VAT which was not VAT due to them, they shall be liable to repay that amount to him.…

 

(4)                    The Commissioners shall not be liable, on a claim made under this section, to repay any amount paid to them more than three years before the making of the claim…”

 

8.     After 26 May, 2005 subsection (4) read

 

“The Commissioners shall not be liable on a claim under this section –

 

(a)        To credit an amount to a person under subsection (1) or (1A)…, or

 

(b)       To repay an amount to a person under subsection (1B) above,

 

If the claim is made more than three years after the relevant date”.

 

9.     Section 80 (1A) read from 26 May, 2005:

 

“Where the Commissioners –

 

(a)        Have assessed a person to VAT for a prescribed accounting period (whenever ended), and

 

(b)       In doing so, have brought into account as output tax an amount that was not output tax due,

 

They shall be liable to credit the person with that amount.”

 

The Authorities

 

10.  We were provided with copies of the relevant legislation and Fleming t/a Bodycraft 2007 UKHL 2 which we have read and considered.

 

The Evidence

 

11.            We were provided with a volume of documentation.  This was an agreed bundle of documents. The documents were all admitted in evidence no objection having been taken to any of the documents.

 

Findings of Fact

 

12.            From the evidence we make the following findings of facts:

 

(1)            McGee Associates is a partnership.  It carries on business providing project management and surveying services.

 

(2)       It was registered for VAT from 1 February, 2000.

 

(3)            The Appellant submitted its first return for 01/01.  It failed to submit subsequent returns.  It paid at the “prime assessments”.

 

(4)            HMRC issued assessments for VAT periods 04/01, 04/02 and it 07/03.  McGee Associates paid these.

 

(5)            Returns for these periods were received in 2008.

 

(6)       The position may be summarised in tabular form as follows’

VAT Period	Date of Assessment	A mount assessed £	Date Paid	Date return received	More than three years from payment to return?
04/01	15 /06/01	2,595	02/07/01	09/09/08	Yes more than seven
04/02	14/06/02	1,406	08/07/02	05/08/08	Yes more than six
07/03	12/09/03	2, 804	23/09/03	05/08/08	Yes more than five

 

(7)       The Appellant requested duplicate returns for all outstanding periods by letter dated 22 July, 2004.  It was stated in the letter that the returns will be dealt with upon the writer’s return from two weeks’ holiday.  Duplicate returns including those for the periods in dispute were issued to the Appellant on 27 July 2004.

 

            (8)    HMRC wrote to remind the Appellant that nine duplicate returns were still outstanding on 26 May, 2005.

(8)        

(9)       In July 2005 the Appellant was listed as a missing trader.  This would have stopped further returns being sent to the Appellant.  It seems that the Appellant was listed as a missing trader in error.

 

(10)         In January 2006 the Appellant was informed that there would be a visit by an officer of  HMRC.  Duplicate returns were sent to the Appellant on 9 January, 2006.

 

(11)         On 27 February, 2006 an HMRC officer visited the Appellant’s premises to collect the outstanding returns but was informed that they had not been completed as invoices from the Appellant’s subcontractors could not be found.

 

(12)         The Appellant was informed by letter dated

 

(13)         6 March, 2006 that an assessment would be raised for periods 04/03 and 07/03 for output tax due of £8666.23 and £3625.00, respectively. 

 

(14)         A demand for immediate payment was sent to the Appellant on 23 April, 2008.  The Appellant expressed surprise and again requested copies of VAT return forms for the missing accounting periods so as to complete these returns.

 

(15)         Further duplicate returns were issued for periods including those under dispute.  The returns were submitted by the Appellant in batches on 5 August, 2008, 20 August, 2008 and 9 September, 2008.  This is set out in the table above.

 

(16)         HMRC informed the Appellant by letters dated 15 October, 2008 and 4 November, 2008 that the amounts of £4000.00 for the period 04/01 and 04/02 and £774. 90 for the period 07/03 would not be repaid or credited in the Appellant’s account as the VAT returns were rendered more than three years after the end of the prescribed accounting period in which the assessments were made.

 

(17)            The Appellant appealed on 24 November, 2008

 

(18)            The respondents treated the returns for the periods in dispute as claims for a refund of tax overpaid on the prime assessments for those periods under section 80(1B) VAT Act.

 

The Submissions of the Parties

 

The Appellant’s Submissions in outline

 

11.  In essence, the Appellant submitted that it was not fair to exclude input tax recovery by the Appellant.

 

12.  HMRC had listed McGee as a missing trader and did not send out forms for a return despite the Appellant’s request.

 

HMRC’s Submissions in outline

 

13.  In essence, HMRC submitted…

 

(a)             the claims for allegedly overpaid VAT were made by either

 

i.            For the period 04/01.  This would be three years after the payment of the sum assessed as due for the period; or

 

ii.          For the periods 04/02 and 07/03.  This would be more than three years after the payment and of the end of the periods in which those amounts had been assessed to be due

 

(b)            it is clear and settled law that a time limit may be imposed or reduced for claims for repayment of overpaid VAT (see Marks and Spencer PLC Case C – 62/00).

 

(c)             The Appellant’s argument that the failure to submit claims for credit for repayment within the statutory time limit was in some way the Respondents’ fault cannot affect the outcome of the appeal one way or the other.  There is no reasonable excuse type of argument available nor is there any discretion in the tribunal to extend time limits on the basis of such an argument.

 

(d)            The Appellant has therefore not advanced any argument of substance which could lead to the appeal being alive and the Tribunal should therefore dismiss the appeal.

 

Discussion

 

14.       We have found above that the returns and so the claims were made more than three years after the date of payment and so more than three years from the relevant date.

15.       There is no discretion in the Tribunal to deviate from this.

Conclusion

21.    We have found that the claims are out of time. Accordingly, the appeal must be dismissed. Our decision is that the appeal is dismissed.

The Appellant has a right to apply for permission to appeal against this decision pursuant to Rule 39 of the Rules.   The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

 

 

 

ADRIAN SHIPWRIGHT

TRIBUNAL JUDGE

RELEASE DATE: 1 April 2010