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Cite as: [2008] UKVAT V20672

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Warren Bradley Estates (a partnership) v Revenue & Customs [2008] UKVAT V20672 (08 May 2008)

20672

OVERPAID VAT – Claim for repayment – 3-year cap – Date of claim – Appeal allowed in part

LONDON TRIBUNAL CENTRE

WARREN BRADLEY ESTATES Appellants

(A PARTNERSHIP)

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

Tribunal: SIR STEPHEN OLIVER QC (Chairman)

ROSALIND YOUNG

Sitting in public in London on 30 April 2008

Mr Warren Tranis, partner, for the Appellants

Richard Smith, counsel, instructed by general counsel and solicitor for the Respondents

© CROWN COPYRIGHT 2008

DECISION

The Appellants, two partners, appeal against the decision of the Respondents ("the Customs") in a letter of 2 May 2007 not to repay the sum of £26,433 of overpaid tax.

The partners had failed to make VAT returns and had received central assessments for periods 06/01, 09/01, 12/01, 12/02, 03/03, 06/03 and 09/03. The central assessments were in each case made during the prescribed accounting period following the period to which they related. For example, the last of the central assessments, i.e. that for the period 09/03, was issued in the 12/03 period on 21 November 2003. The central assessments amounted in aggregate to £43,873 and the partners duly paid them.

It is not in dispute that the true amount of tax for those periods was £26,433 less than the aggregate of the assessed amounts.

Whether and for what extent the partners are entitled to repayment depends on how far the "three-year cap" in section 80(4) of VAT Act 1994 applies. And that in its term depends on when the partners made their claim.

The statutory provisions start with section 80(1A) which provides as follows:

"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 that person with that amount."

Section 80(4) provides:

"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) above, 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".

Section 80(4ZA) provides, so far as is relevant:

"The relevant date is

…

(c) in the case of a claim by virtue of subsection (1A) above in respect of an assessment on the basis of an erroneous voluntary disclosure, the end of the prescribed accounting period in which the disclosure was made;

(d) in the case of a claim by virtue of subsection (1A) above in any other case, the end of the prescribed accounting period in which the assessment was made."

The relevant dates in the present case are therefore the ends of the prescribed accounting periods in which the assessments were made, as they were not made as a result of an erroneous voluntary disclosure (section 80(4ZA)(b)). It follows, of course, that the earlier the claim was made, the more overpaid tax is recoverable.

The partners' case was based on two propositions. First, they said, the capping provisions set out above have no statutory force; they rely for this on the decision of the European Court of Justice in Marks & Spencer plc v Customs and Excise Commissioners (Case C-62/00) [2002] STC 1036 and on the decision of the House of Lords in Fleming v Revenue and Customs Commissioners [2008] STC 324. Second, say the partners, even if the capping provisions are legally effective, their claim was properly made on 28 February 2006. We infer that, if 28 February 2006 was the date of the claim (and the claim was properly made), then it will have been in-time as regards periods 12/02, 03/03, 06/03 and 09/03.

The contention based on the Fleming decision

Customs say, and we agree with them, that the Fleming decision (which applies the judgment of the European Court of Justice in Marks & Spencer) has no bearing on the present matter. The legal position has now been clarified by the House of Lords. That decision makes clear that the question whether to disapply time limits enacted without transitional periods contrary to EU law only relates to claims which existed prior to the enactment of those time limits. Here the claims (assuming they are good) were all made in relation to overpaid tax for prescribed accounting periods that occurred long after the introduction of the three-year cap. The accrued rights of the partners to repayment of the overpaid tax have remained exactly as they were since they accrued as the result of their overpayment. The three-year cap was then in existence and nothing has happened since the rights accrued to curtail them.

We are therefore against the partners on that point.

When was the claim made?

There are two competing dates, i.e. 28 February 2006 and 23 April 2007. Customs say that the claim was made on the latter of those two dates.

Although the background facts are complex, because in 2005 and 2006 the partnership was the subject of bankruptcy proceedings initiated by Customs, the Statement of Case states the position as follows:

"The appellant did submit VAT returns for periods 03/03, 06/03 and 09/03 on 28 February 2006 but this documentation was defective and in consequence was returned to the Appellant (the return details had been entered onto VAT returns which were relevant to other periods and for which the Appellant had manually amended the period dates). The amended returns were resubmitted again and completed on the correct period return and received by the Commissioners on 23 April 2007."

The documentation and the oral evidence of Mr W Tranis show that on 28 February 2006 Customs were provided with return forms for the period 06/02, 09/02, 12/02, 03/03, 06/03 and 09/03. (For completeness, return forms for 03/01, 06/01, 09/01 and 12/01 had been provided on 31 December 2005.)

The return forms were photocopies of the form (VAT 100) issued by Customs to the partners for the period 09/05. Each photocopy was amended in handwriting as follows:

(i) the "period" box was changed from 09/05 to the period to which the Return was said (by the parties) to relate.

(ii) the "Due date" was changed to the due date for the period to which the Return was said to relate.

The nine boxes showing the amounts were filled in.

The photocopied form as amended and filled in was signed and dated.

The "period" at the top left of the VAT 100 form for the periods 06/07 to 09/03 was not altered; it remains as printed, i.e. "For the period 01 07 05 to 30 09 05".

Customs say that the VAT 100 form for the periods 06/02-09/03 do not qualify as claims within the meaning of that term in section 80(4). Customs accept that had the claims been made on VAT Forms as issued by them for the particular periods, they would qualify as claims.

There is no statutory definition of "claim" or statutory prescription of the manner of making one. Where as here the taxpayer has not previously made a return for the period in question and is seeking to present the true amount of the VAT due, the appropriate course must be to submit a return for the period.

Regulation 25(1) of the Value Added Tax Regulations 1995 covers the making of returns. So far as is relevant it reads as follows:

"(1) Every person who is registered or was or is required to be registered shall, in respect of every period of a quarter or in the case of a person who is registered, every period of three months ending on the dates notified either in the certificate of registration issued to him or otherwise, not later than the last day of the month next following the end of the period to which it relates, make to the Controller a return on the form numbered 4 in Schedule 1 to these Regulations … showing the amount of VAT payable by or to him and containing full information in respect of the other matters specified in the form and a declaration, signed by him, that the return is true and complete."

Form 4 in Schedule 1 leaves blanks for dates, periods, due dates, amounts and the declaration. The forms, as amended in handwriting and submitted by the partners, are we think sufficient to comply with the terms of Regulation 25(1). The returns are in the form shown on the Form 4 in Schedule 1 to the Regulations. The period may initially be wrongly described, but it was corrected by the two subsequent handwritten entries for "Period" and "Due date". The amounts are clearly and comprehensively presented and each form contains a full declaration.

For those reasons we allow the appeal in relation to the uncapped periods.

SIR STEPHEN OLIVER QC

CHAIRMAN

RELEASED: 8 May 2008

LON 2007/0972