Heald Green Social Club and Institute Ltd v Revenue & Customs [2013] UKFTT 209 (TC) (02 January 2013)
[2013] UKFTT 209 (TC)
TC02623
Appeal number: TC/2012/04689
VAT – Application for leave
to appeal out of time – application granted
FIRST-TIER TRIBUNAL
TAX CHAMBER
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HEALD GREEN
SOCIAL CLUB AND INSTITUTE LTD
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Appellant
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- and -
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THE COMMISSIONERS
FOR HER MAJESTY’S
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Respondents
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REVENUE &
CUSTOMS
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TRIBUNAL:
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JUDGE J. BLEWITT
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MISS S. STOTT
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Sitting in public at Manchester on 12 December 2012
Mr Tomlinson and Mr Podolanski
for the Appellant
Ms Ellwood, Officer of HM
Revenue and Customs, for the Respondents
© CROWN COPYRIGHT
2012
DECISION
1.
The Appellant is a VAT registered organisation with premises at 17a Finney Lane, Heald Green, Cheadle. It is run primarily by a volunteer committee.
2.
This is the Appellant’s application for an extension of time for
admission of its appeal lodged out of time.
3.
HMRC object to the application and seek the appeal to be struck out.
Undisputed Background Facts
4.
The Appellant made a claim by way of voluntary disclosure in a letter to
HMRC dated 15 December 2006. The claim, received by HMRC on 8 January 2007,
sought recovery of overpaid output tax in respect of income from gaming
machines in the sum of £4,208.00 for the periods 12/03 to 12/05.
5.
HMRC refused the claim by letter to the Appellant dated 15 January 2007.
6.
A letter dated 3 March 2011 was received by HMRC from the Appellant’s
representative Beever and Struthers. The letter stated:
“…A reply was sent by yourselves…the letter stated
that you considered the claim invalid but the client had the right of
appeal…our practice contacted Mark Crane, your Voluntary Disclosure Team
Manager, on 17 January 2007 to discuss the rejected claim. Mr Crane informed us
that providing the Rank Organisation was successful with their case, our
client’s claim would be valid and therefore no written appeal was necessary…”
7.
HMRC responded by letter 5 May 2011 in which it stated that as the
Appellant’s claim had previously been rejected and was not under appeal the
claim would not be considered. The letter advised that an application could be
made to the Tribunal to admit the late appeal.
8.
By Notice of Appeal dated 5 April 2012 the Appellant appealed to the
Tribunal. The grounds of appeal reiterated the contents of the letter to HMRC
dated 3 March 2011 and stated that the appeal should be admitted as the
Appellant was misinformed by an HMRC officer.
Legislation and Case Law
9.
There was no dispute between the parties as to the legislation
applicable in this case and we will not set out the same in any detail.
10.
The Value Added Tax Act 1994 (VATA 1994) S83 permits an appeal against revenue
decisions on VAT repayment claims. The VAT Tax Tribunal Rules S1 1986/590 (1986
Tribunal Rules) were in force at the time of the decision.
11.
The Transfer of Tribunal Functions and Revenue and Customs Appeals Order
SI 2009/56 Schedule 3, para 2, which provided that the application which is
made should be dealt with under the current Rules. With regard to this
application it was accepted by both
parties that the application would be dealt with under the now existing
tribunal legislation namely, 2009 Tribunal Procedure Rules, in terms of the
amendment to VATA 1994 contained in the Transfer of Tribunal Functions and
Revenue and Customs Appeal Order 2009.
12.
The power to extend time for lodging an appeal is contained in Rule
20(4) of the 2009 Tribunal Procedure Rules which states:
“(4) If the appellant
provides the notice of appeal to the Tribunal later than the time required by paragraph (1) or by an
extension of time allowed under rule 5(3)(a) (power to extend time)—
(a) the notice of appeal must
include a request for an extension of time and the reason why the notice of
appeal was not provided in time; and
(b) unless the Tribunal
extends time for the notice of appeal under rule 5(3)(a) (power to extend time)
the Tribunal must not admit the notice of appeal”.
The decision must take account
of Rule 2(1) of the 2009 Tribunal Procedure Rules which provides:-
“The overriding objective of
these Rules is to enable the Tribunal to deal with cases fairly and justly”.
13.
We were referred to the following cases:
·
Medical House v HMRC (2006)
·
Black Pearl Entertainments Ltd
v HMRC (TC/2010/07835)
·
Former North Wiltshire District Council (now abolished and
replaced by Wiltshire Council) [2010] UKFTT 449 (TC)
·
Pen Associates Europe Ltd [2011] UKFTT 554 (TC)
·
Eltham Hill Club and Institute [2012] UKFTT 487 (TC)
·
JEM Leisure v HMRC (TC/2011/05627)
·
Bathgate Leisure Ltd (TC/2010/09091)
·
Kirkern Ltd (TC/2011/02821)
·
Data Select Ltd v Revenue and Customs [2012] STC 2195
·
John and Elaine Graham T/A Xs & Os Amusements (formerly
T/A Satellite Amusements) TC/2011/02821
14.
Many of the cases to which were referred were First Tier (Tax Chamber)
decisions which are not binding upon us, however provided useful guidance as to
the approach adopted by the Tribunal in this type of case.
15.
Recently, the Upper Tier held, in Data Select Ltd, that the
correct approach to adopt was consideration of the overriding objective and all
the circumstances of the case, including matters listed in CPR r3.9. Those matter
include:
(1)
the interests of the administration of justice;
(2)
whether the application for relief had been made properly;
(3)
whether the failure to comply was intentional;
(4)
whether there was good explanation for the failure;
(5)
compliance with other rules, practice directions etc;
(6)
whether the failure was caused by the party or his legal representative;
(7)
whether any fixed date could still be met;
(8)
the effect which the failure to comply had had on each party;
(9)
the effect which the granting of relief would have on each party
Submissions and Evidence
16.
It was submitted by Ms Elwood on behalf of HMRC that in balancing the
matters set out above the Tribunal should not grant the Appellant’s
application.
17.
Ms Elwood submitted that it is not in the interests of justice to permit
appeals after undue delay and that there is a public interest in the finality
of decisions of HMRC. The inordinate delay in this case weighs against the
granting of the Appellant’s application.
18.
The Appellant made its claim in 2006 and was aware that its claim had
been rejected by January 2007. The Appellant did not query the progress of its
claim until 2011.
19.
It was submitted by Ms Ellwood that the Appellant made a deliberate
decision not to appeal but rather decided to await the outcome of the Rank
appeal. The Appellant’s accountants should have been aware that HMRC did not
have the power to stay cases behind existing appeals.
20.
HMRC contended that the Appellant has provided no reasonable explanation
for the failure and it was not accepted that HMRC had misinformed the
Appellant. Ms Ellwood stated that HMRC had not been put on notice that the
Appellant would provide evidence regarding the information purportedly given by
Officer Crane would be presented to the Tribunal and consequently the Officer
was not in attendance. However, Officer Crane had been asked about the
telephone call made by the Appellant’s representative to him in January 2007
and stated he could not recall the conversation.
21.
It was submitted that the Appellant should be treated in the same way as
other similar applications in which permission to appeal out of time has been
refused.
22.
Ms Elwood submitted that the delay in contacting the Tribunal was the
failure of the Appellant; another factor which should weigh against the
granting of this application. Furthermore, HMRC would suffer prejudice if the
application is granted after such a lengthy delay.
23.
It was submitted by Mr Tomlinson on behalf of the Appellant, that when
HMRC’s rejection letter dated 15 January 2007 was received, he had telephone Mr
Crane on 17th January 2007. Mr Tomlinson stated that he had
specifically asked Mr Crane whether an appeal in writing was required and that
Mr Crane had stated it was not. Mr Tomlinson had made a note of the telephone
call on the letter dated 15 January 2007. He stated that his action of seeking
advice from HMRC, from the Officer with conduct of the case, so soon after the
letter dated 15 January 2007 had arrived supported the fact that had he been
made aware that a written appeal was necessary, he would have submitted one.
24.
As a result of the information provided by Mr Crane, the Appellant
believed that its appeal was valid and on-going until such time as the Rank
case was finalised.
25.
Mr Podolanski explained that the delay between contact with HMRC in May
2011 and the submission of the Notice of Appeal was caused by a change in the
Committee members running the organisation. As soon as the new members were
aware of the situation, the appeal was submitted. Mr Podolanski clarified that
the members are voluntary and the Appellant should be distinguished from large
corporate businesses in order to deal with the case fairly and justly.
Decision
26.
We considered the submissions of both parties carefully, together with
the authorities to which we were referred.
27.
We accepted that it is often not in the interests of justice to allow
appeals where there has been significant delay. That said, each case must be
decided on its own merits and the reasons for delay will often differ. There
was clearly a lengthy delay in this case and we went on to assess the reasons
given for that delay.
28.
We found Mr Tomlinson and Mr Podolanski to be credible and honest
witnesses. We had no hesitation in accepting Mr Tomlinson’s evidence that he
spoke to Mr Crane on 17 January 2007 following receipt of HMRC’s letter
rejecting the Appellant’s claim; we found as a fact that his evidence was
corroborated by his handwritten note on HMRC’s letter. We rejected Ms Ellwood’s
objection that HMRC had not been put on notice that such evidence was to be given;
the Appellant had reiterated this aspect of its case on a number occasions,
including the grounds of appeal set out in its Notice of Appeal to the
Tribunal. We found as a fact that it can have come as no surprise to HMRC.
Furthermore, Ms Ellwood had spoken to the Officer in question who could not
recall the telephone call. In those circumstances we did not see how HMRC would
have been assisted by having the Officer present; the fact that he could not
recall the telephone call does not mean it take not take place even if HMRC had
no record of it. Having heard and assessed the evidence of Mr Tomlinson we were
satisfied that the call did take place and that Mr Tomlinson had been advised
that no written appeal was necessary. Our findings of fact on the advice given
by HMRC to the Appellant, which the latter acted on led us to distinguish a
number of cases referred to us by HMRC on their facts.
29.
As regards the merits of the proposed appeal, we were unable to
independently evaluate the strength of the Appellant’s case; the area of law
involved is complex and there was no clear explanation of the details of the
case. We therefore made no findings of fact in this regard.
30.
We accepted that there is a public interest in finality, however in our view
this matter is not decisive of the issue and must be balanced against each of
the factors to which we had regard.
31.
We considered the submission by Ms Ellwood that the Appellant made a
deliberate decision not to appeal but rather decided to await the outcome of
the Rank appeal and that the Appellant’s accountants should have been
aware that HMRC did not have the power to stay cases behind existing appeals.
We found as a fact that the Appellant’s decision was made in reliance on the
advice given by Mr Crane and therefore cannot be counted against the Appellant.
Irrespective of whether the Appellant’s representative was aware that HMRC have
no power to stay cases, the fact remains that as a result of the information
provided by Mr Crane, the Appellant understood that its appeal had been
recognised by HMRC as valid and would remain so until the Rank case was
finalised.
32.
As regards the submission that the Appellant should be treated in the
same way as other similar applications in which permission to appeal out of
time has been refused, we found as a fact that a blanket policy of treatment
would be wholly inappropriate. We accepted that consistency in the treatment of
taxpayers is important, but each case must be decided on its own facts.
33.
HMRC could not specify any particular prejudice it would suffer if the
application is allowed. We accepted that there may be a general prejudice in
having to reopen its examination of the Appellant’s claim, but we found as a
fact that the prejudice was not, on its own, so significant as to determine
this application in favour of HMRC.
34.
Having considered each of the factors set out in CPR r3.9, the
overriding objective and all the circumstances in this case, we were satisfied
that the factors weighing against the Appellant, such as the length of delay,
did not outweigh those in its favour, principally the fact that the Appellant
had acted on information provided by the Officer with conduct of the case which
indicated that a valid appeal had been made and that no written document was
necessary.
35.
The application is allowed.
36.
This document contains full findings of fact and reasons for the
decision. Any party dissatisfied with this decision has a right to apply for
permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure
(First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be
received by this Tribunal not later than 56 days after this decision is sent to
that party. 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.
J
BLEWITT
TRIBUNAL JUDGE
RELEASE DATE: 2 January 2013
