United Kingdom VAT & Duties Tribunals Decisions

Evolink Ltd v Customs and Excise [2003] UKVAT V18207 (04 July 2003)

STRIKE-OUT APPLICATION – whether appeal possible in a carousel fraud case before the Commissioners have investigated the facts and made a decision – no – accordingly no jurisdiction to consider issue of set-off of assessment for one period which is under appeal without requiring payment of tax against a without prejudice repayment for another period pending the Commissioners' completion of their investigation

LONDON TRIBUNAL CENTRE

EVOLINK LIMITED Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: DR JOHN F AVERY JONES CBE (Chairman)

Sitting in public in London on 3 July 2003

Andrew Thornhill QC and Richard Vallatt, instructed by Numerica Business Services Limited, for the Appellant

Ms Rebecca Haynes, instructed by the Solicitor for the Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2003


 


DECISION

1. This is an application by the Commissioners to strike out this appeal. By agreement of the parties it was heard in public. The Appellant was represented by Mr Andrew Thornhill QC and Mr Richard Vallatt, and the Commissioners by Ms Rebecca Haynes.
2. The Commissioners suspect that some of the transactions carried out by the Appellant in the period 01/03 are part of a carousel fraud in which the Appellant is an innocent party. The Commissioners decided not to repay the input tax claimed for that period of £1,578,791.32 until they have enquired into the facts. The Appellant has appealed against that refusal; the Commissioners deny that they have refused the repayment yet. At 28 March 2003 the position was that the Appellant have claimed repayments of £1,725,899 which the Commissioners were prepared to repay in full on a without prejudice basis pending their investigations, and the Commissioners have made an assessment of £1,455,475 for the period 05/01 which they have agreed can be appealed without payment of the tax. The Commissioners have set off the amount assessed against the without-prejudice repayment, leaving a balance of £270,424 which has been repaid on a without prejudice basis. Mr Thornhill QC wants to dispute the Commissioners' right to make this set-off.
3. Ms Haynes applies to strike out the appeal on the grounds that there is no appealable decision yet, with the consequence that I do not have jurisdiction to consider the set-off, which in any even she contends is outside my jurisdiction.
4. Mr Thornhill QC relies on the Tribunal's decision in Tricell UK Limited v Customs and Excise Comrs (2003) VAT Decision No.18,127. The facts in that case were extremely similar to this one. The Commissioners suspected that there was a carousel fraud and had not repaid input tax claimed, but they had not fully investigated the facts.
5. At the time of Tricell no decision of the Tribunal had been given on carousel frauds and so both the facts and the law were undetermined. The Commissioners had applied to strike out the appeal. The Chairman, Mr Bishopp, said:

"20 If the only question were the issue of fact the appellant would, I think, be in some difficulty. The Commissioners have made it clear that they are making enquiries into the factual background of the claim; on that point there seems to me to be little difference of substance between this case and ex parte Strangewood Ltd. [[1987] STC 502]….

21. However, it is in my view clear that the Commissioners have come to a concluded view about the law. They are not proposing to ascertain the facts, and then consider the law; if the transactions are as they suspect, the input tax will be disallowed, and if not, it will be allowed. The question is therefore whether that is a sufficient decision for the purposes of section 83….

23 …It is for that reason that I think it is necessary to look more closely at section 83. Since it is the section by which jurisdiction is conferred on the tribunal, it seems to me that the essential characteristic of a decision which comes within the section must be that it identifies an issue on which the tribunal can adjudicate. That may seem a statement of the obvious, but it explains the distinction between this case and ex parte Strangewood. There, no-one doubted what the law was and the tribunal would not have been asked to adjudicate on any issue of law; what mattered was whether the Commissioners were satisfied, on reasonable enquiry, that the factual basis for the making of the claim was established. Although the factual issue in this case is unresolved (or, at least, was unresolved at the time of the hearing) that is not the case so far as the Commissioners' view of the law is concerned. That view is susceptible of review by the tribunal, if necessary as a preliminary issue, and I am therefore satisfied that the decision not to pay immediately, analysed as I have done, amounts to a sufficient decision to afford jurisdiction to the tribunal. Accordingly I dismiss the respondents' application that the appeals be struck out.

(The issue in Strangewood concerned exports and so the only possible point of law was that exports are zero-rated, about which there was obviously no dispute.) Mr Bishopp accordingly decided in Tricell that there was a sufficient decision for there to be an appealable matter on the law before the facts had been determined.

6. It seems to me that we are no longer in the position the tribunal was in when it decided Tricell. There the appellant wanted to contest first the legal effect of a transaction involving an innocent party which was part of a whole consisting of a carousel fraud, and secondly whether on the facts there was a carousel fraud. It may be that he tribunal would have decided the point of law as a preliminary issue on the basis that at least some of the transactions were assumed to be carousel frauds; that is essentially what the tribunal did in Optigen v Customs and Excise Comrs (2003) VAT Tribunal decision No.18,113. We are no longer in that position. There are now two decisions of the Tribunal on carousel frauds: Bond House v Customs and Excise Comrs (2003) VAT Tribunal decision No.18,100, and Optigen, of which I have received notice that the latter is under appeal in the course of which a reference to the ECJ is being requested, and I believe that the former is also under appeal. The Appellant does not wish to dispute the law on carousel frauds in this appeal; Mr Thornhill QC is also content for the appeal against he assessment for period 05/01 to be stood over pending those appeals. The sole issue here is whether on the facts there is a carousel fraud, which the Commissioners are still investigating. I do not therefore feel that I should follow Tricell and decide that this matter can be appealed in advance of a decision on the facts, when the matter is only an issue of fact. Until the Commissioners finish their investigations of the facts there is no decision that can be appealed. Accordingly I am bound to strike out the appeal.
7. I should add that I am sympathetic to the Appellant's wish to have a decision on whether the Commissioners are entitled to set-off an assessment under appeal which they agreed need not be paid pending the determination of the appeal, and a repayment that they have agreed to make on a without prejudice basis. The issue is extremely material to the Appellant commercially and raises a point of law, which needs to be decided. Unfortunately, having struck out the appeal, I cannot deal with it. I express the hope that the Commissioners will assist the Appellant in having the point decided in another forum.

J F AVERY JONES

CHAIRMAN

LON/03/419