United Kingdom VAT & Duties Tribunals Decisions

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Hickey v Customs and Excise [2004] UKVAT V18711 (23 July 2004)

18711

PROCEDURE – Strike out application – Jurisdiction of the Tribunal – Dispute over amounts set out in Statement of Account – Whether an appeal against an assessment – No – Commissioners' strike out application allowed

LONDON TRIBUNAL CENTRE

K G HICKEY Appellant

and –

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: STEPHEN OLIVER QC (Chairman)

Sitting in private in London on 8 July 2004

Kevin Hickey in person

Philip Webb for the Respondents

© CROWN COPYRIGHT 2004

DECISION

In this application the Commissioners seek to strike out an appeal by Mr Kevin Hickey on the grounds that his notice does not disclose an appealable matter falling within the jurisdiction of this Tribunal.

Mr Hickey's Grounds of Appeal refer to the issue by the VAT office of "an assessment on 13 January 2004 in relation to the period ending 3/00". The rendering of that assessment of 13 January 2004 was, so it is argued, incorrect and invalid. It was invalid because the Commissioners had used it, so the argument ran, to correct their own errors after a period of more than three years had elapsed. It was pointed out that errors and overpayments are subject to three year time limits. The consequence was that the Commissioners had wrongly withheld input tax due to Mr Hickey of £3,836.14; moreover no money remained due from Mr Hickey to the Commissioners.

The "assessment" relied upon by Mr Hickey as the foundation for this appeal is a "Statement of Account" dated 13 January 2004. This is set out on form VAT 667. For reasons that will appear later, I have to decide that there is no appealable matter. The Statement of Account relied upon by Mr Hickey is not an assessment. It does not give rise to an appealable matter that can be dealt with by these Tribunals. I will now deal with the slightly complicated background to the present application.

At the start of 2000 Mr Hickey was (and had for many years been) registered for VAT. His next quarterly return for the 3/00 period was due by the end of April 2000.

On 21 February 2000 Mr Hickey signed a VAT 7 form applying to be deregistered. In the form Mr Hickey explained that his taxable turnover in the next twelve months was not expected to exceed £35,000.

The East Anglian VAT Registration and Deregistration Unit responded on 28 February 2000 stating that Mr Hickey's "VAT registration is cancelled from close of business on 25 February 2000". That response, on a VAT 35 Form included the following instructions:

"You must: … fill in the enclosed brown final return form for the period 01 Feb. 2000 to 25 Feb. 2000 even if no VAT is due (and) … account for VAT for any period ending before 01 Feb. 2000 on the usual green VAT return form(s)."

On 8 May 2000 the usual green return form was received by Southend VCU showing tax of £7,356.81 as payable to the Commissioners for the period 1 Jan. 2000 to 31 March 2000. Full payment was enclosed with the return.

The receipt of the usual green return and the payment on 8 May 2000 presented a technical problem to the VCU. What to do with the money when the trader was entered on the computer as deregistered? Apart from the note on the internal office enquiry sheet (referred to below) nothing more was known of the circumstances of the deregistration, apart from the fact that the trader, Mr Hickey, had been notified of his deregistration with effect from 25 February 2000. The action taken by the VCU was explained in a letter to Mr Hickey of 20 October 2003:

"Your return for VAT period 03/00 was received at VAT Central Unit on 8 May 2000 together with payment of £7,356.81, which was cashed. However it was not possible to process the form, as you had been deregistered (in error) from 2 March 2000. Instead, a final period liability of £100 was processed, and the balance of £7,256.81 was repaid to you by bank giro on 1 September 2000."

I do not know the significance of the date 2 March 2000 referred to in that letter.

Pausing at this point of time (8 May 2000) the position was that a return had been submitted by Mr Hickey for the 3/00 period. This showed from the entries of his sales and purchases that he was liable to pay the Commissioners the sum of £7,356.81 forthwith.

On 8 August 2000 Mr Hickey wrote a letter to the Registration and Deregistration Unit explaining his position. In that letter he explains that he had been deregistered in error. I quote from the letter:

"I am writing to have my VAT registration reinstated as it appears to have been cancelled in error. I have previously applied for my registration to be cancelled, due to my two shop outlets being closed and my projected turnover for my remaining business activities to be less than the threshold.

On receipt of my application I received from Mr Hines a notice of cancellation of registration indicating my registration would end on 25 February 2000. Also a notice cancelling your registration.

Upon reading "cancelling your registration" and a discussion with Mr Hines it was agreed that 25 February 2000 was far too early for a projected end to my registration as my shops were not due to close until early April and that given I was still going to be trading, albeit in another form, beyond April that it would serve no purpose to proceed with cancellation at this time.

I was requested to not fill in the final brown return and to continue completing further green returns until a definite case for deregistration was presented, should it arise. This I have continued to do, completing a return for example on 28 April 2000.

I have since continued trading without my shops and still have the brown form in my possession."

For the record I mention the contents of an internal VAT office "enquiry action sheet". A phone enquiry is recorded as having been received on 1 March. The responsible officer, Mr Hines, is recorded as having received a query asking "Is it possible to stop deregistration as still trading as computer-graphic designer?" The Sheet contains an entry dated 6 March which reads – "Unable to contact trader. Will write".

A "Deregistration Action Sheet" dated 6 June 2000 states "deregistration amended to 31 March 2000".

From Mr Hickey's standpoint the position in mid 2000 was clear. He was still registered. He had submitted his 3/00 return showing that he was liable to pay £7,356.81. From the Commissioners stand point the position was in suspense. They had acted on the VAT 7 Form by which Mr Hickey had sought deregistration, but had not realized that Mr Hickey's request had been prospective rather than immediate. For that reason the VCU had been programmed not to accept Mr Hickey's usual green return form for 3/00 and not to accept the payment. But the procedural problems encountered by Customs and Excise cannot, I think, have displaced a liability on Mr Hickey's part to account to the Commissioners for VAT of £7,356.81.

On 8 August 2000, Mr Hickey wrote to the Commissioners. The letter (an extract from which has already been quoted) concludes as follows:

"Somewhere somehow my registration has been cancelled despite signals and confirmations from yourselves it had not. I would therefore request this error to be corrected and my registration to be reinstated and for yourselves to clear the matter up."

The first response from the Commissioners to Mr Hickey's 8 August 2000 letter is a communication from N Crickmore of Norwich VAT Office dated 20 October 2003. This letter states that a final period liability of £100 had, following receipt of the return on 8 May, been processed and the balance of £7,256.81 repaid to Mr Hickey by bank giro on 1 September 2000. A "ledger entry" dated 1 September 2000 notes that the "Final Tax Due" of £100 is an "error". The letter goes on to say that following reinstatement of Mr Hickey's VAT registration, the final period liability has been cancelled and a further £100 paid to him by bank giro on 20 September 2000. (An internal record of the Commissioners dated 19 September 2000 on VAT 134 contains the word "Cancellation of Advice of Deregistration" and a registration number appears on it.)

I cannot find anything from the events recited so far that could operate as an assessment so as to create any liability to VAT on Mr Hickey's part. Liability for the amount shown due from him to the Customs for £7,356.81 is nonetheless shown in his 3/00 return form. Mr Hickey was under a liability to make a return as a person who was registered as "required to be registered" (see regulation 25(1) of the VAT Regulations 1995); and he was liable to pay the tax entered on the return by the due date, i.e. 30 April 2000 (see regulation 40).

The letter from N Crickmore of 20 October 2003 goes on to state that:

"The next return issued to you was for a nine month period 1 January 2000 to 30 September 2000. This had never been completed."

Mr Hickey denies every having received such a return. The Commissioners accept that this was possible. Their enquiries have shown that the return was sent but had gone to Mr Hickey's old address because no change of his address had been amended on the records held by the Customs until Mr Hickey had completed a VAT 484 Form in November 2000. At all events no completed return for 9/00 was received by the Commissioners and no liability has arisen by virtue of such a return.

What is certain is that a return, on the return form for the three month period to 31 December 2000, was completed and received by the Commissioners on 1 February 2001. This (a repayment return) showed £2,529.59 due from the Commissioners to Mr Hickey. The return, so an internal Memorandum records, covered the nine month period from 1 April 2000 until the end of the year. Mr Hickey, as I understand his explanations, does not suggest otherwise.

The Commissioners did not repay the £2,529.59 to Mr Hickey as a "VAT Credit" (see VAT Act 1994 section 25(3)). Instead they withheld payment of the credit because Mr Hickey had, as the Commissioners' records showed, failed to submit the return for 9/00. Withholding in these circumstances is permitted by section 25(5).

.From 1 January 2001 onwards, Mr Hickey's returns show a further aggregate amount due to him of £1,306.55. Customs have not repaid these VAT credits.

Mr Hickey's claim and the Commissioners' counter-claim

Mr Hickey claims repayment of £3,838.14 plus interest. That amount is the aggregate of the VAT credit of £2,529.59 arising from his 12/00 return, and the VAT credit of £1,306.55 arising from the 2001 return.

The Commissioners asked that the appeal be struck out. Their grounds are that Mr Hickey "is disputing the reinstatement of his return liability for the period March 2000 after the cancellation of the deregistration in 2000; and this reinstatement of declared return figure is not an appealable matter and jurisdiction does not lie with the Tribunals."

The statement of account

Mr Hickey has, as noted in paragraph 3 above, lodged with the Tribunal as "the disputed assessment" a Statement of Account dated 13 January 2004. This shows £3,520.67 due from Mr Hickey to the Commissioners. In essence this covers the £7,356.81 (said to be due to the Commissioners for the 3/00 period) less the VAT credits claimed by Mr Hickey in the 12/00 and subsequent returns.

The Issue

Can the Commissioners refuse to repay to Mr Hickey the VAT credits amounting to £3,838.14? One ground for refusing to do so is, quite simply, because Mr Hickey has not submitted a return for the 9/00 period: this is based on section 25(5). The other ground is because Mr Hickey owes the Commissioners a greater amount, namely the £7,356.81 shown as the amount due from Mr Hickey to the Commissioners in the 3/00 return; it is implicit that this amount was repaid to Mr Hickey in error in September 2000. Mr Hickey's is a money claim made by him which the Commissioners resist on either of those two grounds.

Has the Tribunal the jurisdiction to deal with Mr Hickey's claim? The "jurisdiction", or authority, of this Tribunal depends entirely upon the statute. Without any such authority, I have no power. What is now the VAT Act 1994 has created the Tribunal and defines its function and authority. The Tribunal has no further "jurisdiction" other than what has been conferred on it by the words of that Act. The heads of the Tribunal's jurisdiction, so far as VAT is concerned, are found in section 83 which states that "an appeal shall lie to a Tribunal with respect to the following matters -".

Heading (a) of section 83 refers to "the registration or cancellation of registration of any person". Mr Hickey's case is not, as I understand it, founded on the correctness or otherwise of the Commissioners' response to his VAT 7 application of 21 February 2000. Once the Commissioners learnt that Mr Hickey had never wanted immediate registration, they reinstated the return mechanism and Mr Hickey was treated as if he had not applied for deregistration. Any issue between Mr Hickey and the Commissioners might otherwise have come within heading (a) of section 83 will therefore have disappeared.

Heading (b) refers to "the VAT chargeable on the supply of any goods or services". Here there is no dispute. But it is no part of Mr Hickey's or the Commissioners' case that the wrong amount of VAT has been charged on Mr Hickey's supplies to his own customers or claimed as input tax on supplies to him from his own suppliers.

Heading (c) refers to "the amount of any input tax which may be credited to a person". As just noted, there is no dispute about the claims for input tax made in Mr Hickey's returns.

Headings (d)-(o) can have no possible application here. Heading (p)(i) refers to "an assessment under section 73(1) or (2) in respect of a period for which the Appellant has made a return under this Act … or the amount of such an assessment". There is no such assessment here that relates to the VAT liability of Mr Hickey for 2000, and the assessments for 2001 are not under appeal. In this connection it is relevant to quote section 73(1) which reads as follows:

"Where a person has failed to make any returns required under this Act (or under any provision repealed by this Act) or to keep any documents and afford the facilities necessary to verify such returns or where it appears to the Commissioners that such returns are incomplete or incorrect, they may assess the amount of VAT due from him to the best of their judgment and notified to him."

The Commissioners have not assessed Mr Hickey. They could have, because he rendered no return for the 9/00 period and because the 12/00 period was wrong (in that it wrongly covered the nine month period from 1 April 2000 to the end of the year). Instead the Commissioners have relied upon Mr Hickey's statement of his own liability to pay £7,356.81 contained in the 3/00 return; they have proceeded on the basis that the amounts claimed by Mr Hickey as repayable in the 12/00 return are correct and they have issued assessments for the 2001 periods in which they accept that some £1,306 is due to Mr Hickey. The Statements of Account are not assessments within section 73. The particular statement of account date 13 January 2004 contains a tally of the amounts due each way with a netting off to show the balance due from Mr Hickey to the Commissioners.

Nor do headings (p)(ii) and (iii) apply here. These refer to – "(a) an assessment under subsections (7), (7A) or (7B) of section 73 or under section 75". Subsection (7) covers "imported" goods and subsections (7A) and (7B) refer to fiscal warehouse keepers. Section 75 covers new cars imported from other Member States. Nor do headings (q)-(z) have any application here.

The correct analysis of Mr Hickey's position is that he is trying to assert a money claim against the Commissioners. The Commissioners have countered this by claiming either that nothing is payable until Mr Hickey has made his 9/00 return and/or that the 3/00 return shows an enforceable debt due to them of £7,356.81. The VAT and Duties Tribunals have no jurisdiction over such money claims (save where they raise issues specifically covered by one or other of the heads in section 73). The right venue for such a claim may be the civil courts, e.g. the "county court".

For the reasons given above I allow the Commissioners' application and direct that Mr Hickey's appeal be struck out on the grounds that it discloses no appealable matter within the jurisdiction of the Tribunals.

STEPHEN OLIVER QC

CHAIRMAN

RELEASED:

LON/04/815