United Kingdom VAT & Duties Tribunals Decisions

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Cite as: [2005] UKVAT V19374

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W R Davies Motor Group v Revenue and Customs [2005] UKVAT V19374 (08 December 2005)

19374

VAT – VAT TRIBUNAL – Jurisdiction – three year cap – has the appellant an arguable case for an appeal under section83(t) of the VAT Act – yes – strike out refused.

MANCHESTER TRIBUNAL CENTRE

W R DAVIES MOTOR GROUP Appellant

and –

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Tribunal: Richard Barlow (Chairman)

Sitting in private in Birmingham on 27 September 2005

For the Appellant: Mr Raymond Hill of counsel instructed by Messrs Baker Tilly.

For the Respondents: Mr James Puzey of counsel instructed by the acting General Counsel and Solicitor to HM Commissioners of Revenue and Customs.

DECISION

This Decision is the tribunal's decision concerning an application by the respondents to strike out the appellant's appeal. It is not a decision dealing with the substance of the appeal.

Mr Raymond Hill represented the appellant and Mr James Puzey represented the respondents and, as always, both presented their arguments with clarity and conciseness.

On 16 September 2004 the respondents notified the appellant that they would not repay to the appellant output tax that it claimed to have overpaid in the period from 1973 to 1997. The appellant sought a review of that decision and upon the respondents notifying the appellant, by a letter dated 27 October 2004, that they would not review the decision the appellant submitted a notice of appeal.

The basis of the appeal is that tax had been overpaid on "demonstrator cars" and that it had come to the appellant's notice that there had been an overpayment following the judgement of the Court of Justice of the European Communities (the ECJ) in the case of Commission –v- Italian Republic (Case C-45/95) [1997] STC 1062. Following the ECJ's judgement in Marks and Spencer –v- Customs and Excise Commissioners (Case C-62/00) [2000] STC 1036 the appellant became aware that it might still have a claim for a long period despite the legislation limiting claims and despite the limits placed or purported to be placed upon such claims by the respondents' Business Briefs

By a notice dated 6 January 2005 the respondents applied to strike out the appellant's appeal on the following ground:

"The ground for this application is that the decision against which the appellant appeals is not a decision falling within the provisions of section 83 of the Value Added Tax Act 1994".

Mr Puzey argued that the respondents' decision was to refuse to make a repayment outside the period covered by the provisions of Business Brief 27/02. That Business Brief was introduced to take account of Grundig Italia SpA –v- Minstero delle Finanze (Case C-255/00) [2003] All ER (EC) 176 in which the ECJ had ruled that it was not incompatible with EU law for a Member State to limit recovery of overpaid taxes to a three year period but to do so retrospectively without introducing a transitional period would be incompatible with the principle of effectiveness and that a transitional period of 90 days would be insufficient. Mr Puzey argued that the respondents' decision was that they would not allow the appellant to make a claim outside the extended period provided for in Business Brief 27/02 and that that was the exercise of a discretion conferred on the respondents by their care and management functions in respect of the tax; ultimately therefore by section 58 and paragraph 1 of Schedule 11 to the VAT Act 1994. He argued that the decision to allow an extension would be analogous to an extra statutory concession and that a decision to refuse to allow an extension would be subject to Judicial Review in the Administrative Court but does not fall within section 83 of the VAT Act.

He acknowledged that the provision which came closest to giving a ground of appeal is section 83(t) which reads:

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

…

(t) a claim for the repayment of an amount under section 80, an assessment under section 4A of that section or the amount of such an assessment" [A subsequent amendment is here omitted].

But, he argued, the refusal to extend the period in the exercise of the respondents' discretion was not the same thing as refusing the claim itself.

Mr Hill argued that whatever may be the language used in the Business Briefs dealing with the transitional arrangements introduced as a result of Marks and Spencer (BB 22/02) and extended as a result of Grundig Italia (BB 27/02); their effect is to introduce transitional arrangements intended to make the time limit imposed retrospectively by the amendments to section 84 that took effect from 18 July 1996 compliant with community law. He argued that it is well established that such provisions only comply with European Union legal requirements if they are "finally remedied only by means of national provisions of a binding nature which have the same legal force as those which must be amended" citing from paragraph 25 of the judgement of the ECJ in Commission of the European Communities –v- United Kingdom of Great Britain and Northern Ireland (case C-33/03).

Mr Hill argued that therefore the time limit provisions must be ignored because they are in breach of the principles of equivalence and effectiveness and because the Business Briefs do not take the necessary form to remedy the defects in the legislation from the point of view of community law.

The case of Coleman and others –v- Commissioners of Customs and Excise [1999] V&DR 133 is authority for the proposition that where a statutory provision can be challenged on the ground that it is non-compliant with community law the tribunal has jurisdiction to decide that issue provided that it has jurisdiction over the subject matter with which that argument is concerned. In this case the subject matter of the appeal is the overpayment of tax which falls within the tribunal's jurisdiction by reason of section 83(t) and so it follows that the tribunal has jurisdiction even if the ground upon which the appellant's challenge rests is that the legislation introducing the time limit was non-compliant with community law. That case also decided that the possibility of a Judicial Review did not oust the tribunal's jurisdiction or satisfy the requirements of community law.

The fact that the respondents purported to exercise a discretion not to extend the time limit is not the issue because, upon the appellant's case, that discretion would become irrelevant as the time limit itself can be ignored.

I emphasise that I have not decided that the time limit provisions can be ignored as contended for by the appellant. That will be a matter for argument at the substantive hearing; as will any issues of quantum and unjust enrichment and possibly others.

I hold that the tribunal does have jurisdiction and that the application to strike out the appeal fails.

Counsel agreed that if that were to be my decision on this issue the costs of and related to the strike out application and of this hearing should be awarded to the appellant and I direct that the respondents should pay those costs in any event. If the parties cannot agree the amount of those costs the question is to be determined by a chairman sitting alone.

CHAIRMAN RICHARD BARLOW

RELEASED: 8 December 2005

MAN/04/0728