[2010] UKFTT 472 (TC)

TC00734

Appeal number: TC/2008/2377

 Value Added Tax -- repayment claim – s. 80 (1) Value Added Tax Act 1994 -- three year time limit – s. 80 (4) Value Added Tax Act 1994 -- whether valid claim for repayment of output tax was made pursuant to Regulation 37 Value Added Tax Regulations 1995/2518 -- held no

FIRST-TIER TRIBUNAL

TAX 

	NATHANIEL & CO SOLICITORS	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

		TRIBUNAL: 	GUY BRANNAN (TRIBUNAL JUDGE)							ANDREW PERRIN FCA (TRIBUNAL MEMBER)		

Sitting in public at 45 Bedford Square, London WC1 on 16 and 17 August 2010

Mr A B Alagoa, Solicitor, for the Appellant

Mr N Sheldon, Counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2010

DECISION

1.	This appeal concerns the denial by HM Revenue and Customs (" HMRC") of a claim in respect of an alleged overpayment of VAT in an amount of £32,048.11 made by the Appellant in respect of accounting periods ending prior to October 2003.
2.	The evidence admitted before the Tribunal consisted of a Joint Bundle of Documents, which was supplemented by a Supplementary Hearing Bundle produced by HMRC at the hearing and the Witness Statements of Mr Nathaniel Akindele Faniyi ("Mr Faniyi") dated 8 January and 30 July 2010. In addition, Mr Faniyi gave oral evidence under oath.
Background
3.	The Appellant is a firm of solicitors which is registered for VAT. It was franchised to the Legal Services Commission ("the LSC") by a franchise agreement subsisting between 1999 and 2007. The Appellant provided legal services in the field of immigration law, particularly to asylum seekers. The LSC funded the provision of these services by the Appellant during this period.
4.	At the outset of the hearing the appeal concerned two issues: the overpayment issue referred to in paragraph 1 above and an appeal against an assessment in the amount of £21,707 (plus interest) raised on 17 November 2006 in respect of accounting periods 1 January 2004 - 31 March 2004 and 1 January 2005 - 31 March 2005. On Friday 13 August 2010 the Appellant filed with the Tribunal a Skeleton Argument which had attached to it the Appellant's accounts for the year ended the 31 March 2004 and draft accounts for the year ended 31 March 2005. These accounts had previously been requested by HMRC on several occasions as far back as July 2006 but had not hitherto been supplied by the Appellant. Having had an opportunity to study these accounts, HMRC withdrew the assessment on the morning of the second day of the hearing, leaving the overpayment issue as the only issue still in contention between the parties. Had the Appellant produced these accounts at an earlier stage, as requested by HMRC, a considerable amount of time spent on the first day of the hearing considering the assessment issue could have been avoided. 
The overpayment issue
Legal framework
5.	At the material time, the relevant provisions of Section 80  Value Added Tax Act 1994 ("VATA 1994") were as follows:
(1) Where a person has (whether before or after the commencement of this Act) paid an (amount to the Commissioners by way of VAT which was not VAT due to them, they shall be liable to repay the amount to him.
(2) The Commissioners shall only be liable to repay an amount under this section on a claim being made for the purpose.
(3)….
(4) The Commissioners shall not be liable, on a claim made under this section, to repay any amount paid to them more than three years before the making of the claim."
6.	Regulation 37 of the VAT Regulations  SI 1995/2518 provides:
"Any claim under section 80 of the Act shall be made in writing to the Commissioners and shall, by reference to such documentary evidence as is in the possession of the claimant, state the amount of the claim and the method by which that amount is calculated."
7.	In short, this appeal concerns the question whether the Appellant made a valid claim in respect of the overpayment of VAT within Regulation 37 within the three year time limit imposed by s80(4).
The facts
8.	It was common ground that the provision of legal services by the Appellant was funded by the LSC pursuant to an arrangement whereby sums were advanced to the Appellant on a monthly basis ("standard monthly payments"). The Appellant then allocated those funds to the matters that it handled and billed the LSC for those parts of the funds so allocated. Where the funds advanced exceeded the funds allocated to the legal services provided, the LSC took steps to recover the overpayment.
9.	The Appellant stated that during the periods in question it had, incorrectly, accounted for VAT on the full amount of the standard monthly payments rather than on amounts billed. This, according to the Appellant, was the cause of the overpayment.
10.	We set out below, in some detail, the correspondence between the parties which is crucial to an understanding of the issues raised in this appeal.
11.	The relevant correspondence begins with the letter from the HM Customs and Excise VAT Officer responsible for dealing with the Appellant’s VAT affairs, Mr Alan Mckay, dated 28 June 2002, which reads:
"Dear Mr Oni
I am writing to you further to our meeting in May in respect of the VAT registration for Nathaniel & Co. I apologise for the considerable delay in writing to you.
Please be advised that I shall write to you in full concerning the matters discussed during our visit by Friday, 19 July 2002.
Yours sincerely
Mr Alan Mckay"
12.	Mr Mckay wrote a further letter on 29 July 2002 to the Appellant the material sections of which read as follows:
"I am writing to you further to my visit to Nathaniel & Co some months ago and wish to confirm the item discussed as follows:
During the visit we agreed that you would continue to examine the previous records and advise discrepancies identified by April 2003. When the reconciliation is completed please put this in writing to the VAT Enquiries team at this office.

Yours sincerely
Mr Alan Mckay"

13.	The next letter in the chain of correspondence is a letter dated 30 October 2003 which reads as follows:
“Dear Sirs,
RE: Nathaniel & Co Solicitors – Vat no. 726641921 Voluntary disclosure
Further to your visit of 9th May 2002 and our subsequent correspondences, I am writing to inform you of corrections that we  have made to our financial records and therefore needs to be reflected in your records by way of a voluntary disclosure.
Our preliminary examination has revealed an anticipated overpayment of £32,048.11.
Please make the necessary corrections and remit the amount overpaid, as soon as possible or alternatively we can deduct it from the quarter ending December 2003 Vat returns.
Please contact Mr Oni at our offices for any further queries you may have.
Thanking you for your cooperation.
Yours faithfully
Mr Oni
Finance Manager
NATHANIEL & CO. SOLICITORS”
14.	The letter was addressed to HM Customs and Excise’s office in Southend-On-Sea and was marked as having been sent by fax and was copied by fax to the Appellant's VAT Officer, Mr Alan Mckay, at HM Customs and Excise's City VAT Office. The letter made no reference to any enclosures.
15.	 It is important to understand at this point that Mr Alagoa  for the Appellant contended that the 30 October 2003 letter had attached to it a two-page table of figures headed: "NATHANIEL & CO SOLICITORS, VAT 100 Report, Reconciliation" ("the Table"). The full Table is set out in the Appendix to this Decision. The second page of the Table bears the date "14/11/03" which was evidently the date on which the table was prepared.  Mr Sheldon for HMRC argues that the Table was not sent with the letter of 30 October 2003.
16.	The letter of 30 October 2003 was acknowledged by Miss C S Limming, an officer of HM Customs and Excise in their Wembley office, on  20 November 2003. The letter reads as follows:
"Dear Mr Obi [sic]
I refer to your letter of 20 October 2003, which was received at Southend on 18 November 2003 and forwarded to the Voluntary Disclosure seat for attention.
In order to process your voluntary disclosure, we will need to have the enclosed VAT 652 completed, showing the relevant output VAT and input VAT per quarter. To assist you in completing this form, I am enclosing VAT Notice 700/45. See paragraph 2 on the back of Form VAT 652 on how to complete the form. This should then be sent to this offers processing with any payments due. You should not complete a second VAT return for a periods [sic] for which you have already sent in returns. This will only delay our being able to resolve the problem for you.
If you need any further advice on this matter, please do not hesitate to contact me."
17.	It was accepted by both parties that the reference to the Appellant's letter of   "20 October 2003" was a typographical error and the reference should have been to the Appellant's letter of 30 October 2003. 
18.	The Appellant wrote again to HM Customs and Excise, addressing the letter to the Southend-on-Sea office, on 30 April 2004:
"Dear Sirs,
Further to your visit of 9 May 2002 and our letter of 30 October 2003, we hereby request for a payment of £32,048.11.
Please make necessary corrections and kindly remit the amount overpaid.
Your cooperation in this matter will be highly appreciated.
Yours faithfully,
Nathaniel & Co Solicitors"
19.	Having apparently received no reply, the Appellant wrote again to HM Customs and Excise on 3 June 2006:
“Dear Sirs
Further to your visit of 9 May 2002 and our various letters on this matter, we hereby request for a payment of £32,048.11 plus interest. It would appear that this matter has been disproportionately delayed.
Please make necessary corrections and kindly remit the amount overpaid.
Your cooperation in this matter will be highly appreciated.
Yours faithfully,
Nathaniel & Co Solicitors"
20.	On 18 July 2006 Mr Makwana, a Higher Officer of HMRC, who apparently had taken over responsibility for the Appellant's VAT affairs, wrote to the Appellant following a visit he had made to the Appellant's premises on 22 June 2006. The letter deals with various points which arose during Mr Makwana's visit. The letter, inter alia, refers to a voluntary disclosure dated 8 June 2006 relating to periods ended 06/2003 to 03/2006 in the sum of £94, 611 which the letter states to be:
"… for the refund output tax paid on the supply is made to your clients which are considered to be outside the scope (ie to the non-resident/domicile asylum seekers). Please refer to VAT Information Sheet 07/05 the details (this was shown to you during the visit)."
The 18 July 2006 letter appears to relate to periods subsequent to those concerned in the 30 October 2003 letter. Curiously, the letter makes no reference to the outstanding claim for repayment of £32,048.11.
21.	Subsequent correspondence between the Appellant and HMRC mainly concerned the assessment which was the second of the two issues referred to in paragraph 4 above and which has now been withdrawn by HMRC.
22.	On 14 July 2008 the Appellant wrote to HMRC's Debt Management in Liverpool as follows:
"Dear Sirs,
We act for Nathaniel & Co Solicitors (a Firm).
We are instructed that the Custom and Excise visited Nathaniel & Co Solicitors and it was discovered that there was an overdeclaration of £32,048.11. Voluntary disclosure was made on 30 October 2003. Payment was due on or before 30 October 2003 and is still outstanding. Also, the Customs and Excise visited Nathaniel & Co Solicitors on 22 June 2006 as a result of our voluntary disclosure of the period 06/2003 to 03/2006 for the refund of pounds 94,611.00 being the output tax on supply is made to our non-resident/domicile asylum seekers. The total money due to our clients from all sources from Customs & Excise is £126,659.11 plus interest. All payments were due on or before 22nd of June 2006.
Unless we receive payment of this sum in this office by no later than 28 July 2008, we are instructed to start court proceedings without further notice to recover the debt plus interest and our client’s legal costs.
Yours faithfully
Nathaniel & Co Solicitors”
23.	On 1 August 2008 the Appellant wrote a further letter to HMRC responding to a letter dated 22 July 2008 from Clarke Willmott Solicitors (which was not included in our bundle of papers, which apparently included the suggestion that the Appellant should complete Form 652) as follows:
"Further to the letter of Clarke Willmott Solicitors dated 22 July 2008 and our letter dated the 30 October 2003, we hereby submit the voluntary disclosure as advised. We earnestly entreat you to make immediate payment at this time because the matter has been disproportionately delayed.
We must remind you that the simple interest was calculated from the date the overpayment was deemed to have been received by us to the date of the Notice of Assessment was actually paid. The start date for charging simple interest was limited to a maximum of three years prior to the date interest is calculated.
Whilst we thank you in advance, we look forward to hearing from you.
Yours faithfully,
Nathaniel & Co Solicitors"
24.	HMRC's Wembley Voluntary Disclosure Unit replied on 6 August 2008. The relevant extract from the letter is as follows:
"Dear Sirs
I write in reply to your letters dated 14 July 2008 and 1 August 2008 regarding claims made for the amounts of £32,048.11 and £94,611.00. For ease of reference I shall respond to both items individually.
Claim for £32,048.11
Our records show that the visit was carried out at your business on 9 May 2002 by Mr McKay. On checking the records, Mr McKay noted that the VAT amount on period 05/01 was more than 17.5% of the net outputs. He asked Mr Oni to carry out a reconciliation of the records and advise of the reason for the discrepancy. I enclose a copy of Mr McKay's letter dated 29 July 2002 for your reference.
Our records also show that you wrote to Southend VAT Central Unit on 30 October 2003 stating "Our preliminary examination has revealed an anticipated overpayment of £32,048.11." This was the first time this amount was mentioned. The letter did not give any details of how or why the overpayment came about or what periods is it related to so could not be treated as a voluntary disclosure. A reply was sent on 20 November 2003 seeking further information. This information was received on 1 August 2008. This declaration still does not state the reason for the overstatement and also covers the periods 02/99 to 08/02 which are now out of time.”
The remainder of the letter dealt with the claim for £94,611.00.
25.	The Appellant wrote again to HMRC, this time to their Liverpool Office, on 11 September 2008 demanding payment of the "outstanding debt" of £126,659.11 but making no reference to HMRC's letter of 6 August 2008.
26.	The Appellant brought proceedings in the High Court of Justice in respect of the alleged overpayment of VAT in the sum of £126,659.11. The High Court struck out  these proceedings on 28 October 2008 as having been brought in the wrong forum. The appeal before this Tribunal effectively replaces those proceedings. As regards the alleged overpayment of VAT in the sum of £94,611.00 the relevant decision was withdrawn by HMRC on the terms set out in their letter of 15 December 2009 and accordingly this point is no longer in issue before the Tribunal. Therefore, the alleged overpayment of VAT of £32,048.11 is the only sum still in dispute in this appeal.
Evidence of Mr Faniyi
27.	Mr Faniyi is a Solicitor and a partner in the firm of Nathaniel & Co and has been a partner since its inception in 1998.
28.	As a preliminary matter, Mr Alagoa asked Mr Faniyi to clarify the date on which Mr Faniyi considered that a voluntary disclosure had been made, drawing attention to the date of June 2006 in paragraph 10 of the Appellant's Grounds of Appeal. Mr Faniyi accepted that this was an incorrect date and that the voluntary disclosure which is the subject matter of this appeal was made in 2003. He thought the 2006 date may have been a confusion with another repayment claim which was no longer in issue in this appeal.
29.	Mr Faniyi said that, Mr Mckay, had visited the Appellant's office in 2002. He said that Mr Mckay had pointed out that the Appellant appeared to be paying too much VAT. According to Mr Faniyi, the mistake was that the Appellant was accounting for VAT in respect of the standard monthly payment from the LSC rather than in respect of its billings. Mr Mckay was aware of the problem and gave the Appellant time to do a reconciliation which would be carried out in April 2003. Mr Mckay asked for the written reconciliation to be forwarded to the VAT Enquiries Team. The method used in the Table was specified by Mr Mckay.
30.	Mr Faniyi pointed out that Mr Mckay had confirmed this advice in his letter of 29 July 2002. He further advised that the Appellant should account for VAT on the Appellant's billings rather than on the standard monthly payments in order to avoid further overpayments.
31.	Mr Faniyi said that the Appellant's accountant, Mr Oni, dealt with Mr Mckay. He said that Mr Oni had cleared the Table with Mr Mckay. Mr Mckay was fully aware of what the Table was seeking to demonstrate. Mr Faniyi said that he had "cleared" the letter of 30 October 2003 which was sent by Mr Oni. 
32.	The letter of 30 October 2003 together with the Table was, according to Mr Faniyi, likely to have been sent on approximately 15 or 16 November 2003. 
33.	Under cross-examination, Mr Faniyi acknowledged that the letter of 30 October 2003 did not refer to the fact that the Table was enclosed. However, he thought that the substance of the letter was in fact the Table.
34.	In cross-examination, Mr Sheldon drew Mr Faniyi's attention to the fact that the figure of £32,048.11 in the letter of 30 October 2003 did not reconcile with any of the figures in the Table. In the Table the cumulative overpayment appears to be £26,442.78. Mr Sheldon also pointed out that when the Appellant completed a Form 652 on 1 August 2008 in respect of the alleged overpayment, the overpayment was alleged to be £33,613. Furthermore, Mr Sheldon pointed to the table of figures in paragraph 28 of the Appellant's Reply to Respondents' Consolidated Statement of Case ("the Reply") where the overpaid VAT was stated to be £32,532 less VAT due to be paid to the period of £6232 resulting in a net overpayment of £26,300. When asked which figure the Appellant in respect of which was claiming repayment, Mr Faniyi confirmed that the Appellant was claiming repayment of the net figure of £26,300, calculated and set out in the Reply.
35.	Mr Sheldon also cross-examined Mr Faniyi on the periods contained in the Table some of which went back to 1999. Mr Sheldon suggested to Mr Faniyi that any period before October 2000 would be out of time even if it was accepted, which HMRC did not, that a valid claim for the purposes of Regulation 37 had been made in October 2003. Mr Faniyi said that they had simply followed the guidance from Mr Mckay and the figure in the letter of 30 October 2003 was an approximation. It was for Mr Mckay to make the appropriate adjustment on the basis of the reconciliation contained in the Table. Mr Faniyi said that Mr Mckay had told the Appellant not to make an adjustment itself.
36.	Mr Sheldon questioned Mr Faniyi on the different dates set out in paragraph 7 and paragraph 10 of the Grounds of Appeal where it was claimed a voluntary disclosure on Form 652 had been made on respectively 30 June 2003 and June 2006. Mr Faniyi accepted that there had been a "mix-up" in respect of the dates and that the only voluntary disclosure was a letter of 30 October 2003.
37.	Mr Sheldon pointed out that Mr Faniyi had also stated in paragraph 11 of his Witness Statement dated 11 September 2008, which was supported by a Statement of Truth, that:
"By a letter dated 6 August 2008 ... the Defendant has suggested that the Claimant's letter dated the 30 October 2003 was the first time the overpayment amount of £32,048.11 was mentioned and that the Claimant's said letter did not give any details of how the overpayments came about. This is inaccurate since the Claimant had previously in June 2003 completed and submitted to the defendant VAT Disclosure Errors form (VAT 652) which set out the details of the overpayment."
Mr Faniyi accepted that the only disclosure on Form 652 had been made in 2006 and that the reference to the submission of that form in June 2003 was an error.
38.	Mr Sheldon referred Mr Faniyi to HMRC's letter of 20 November 2003. He asked why, if the Table had been enclosed with a letter of 30 October 2003 as Mr Faniyi asserted, the Appellant did not reply and indicate that the information had already been provided in the Table? Mr Faniyi replied that the Form 652 would not have answered the questions Mr Mckay wanted to have answered and which he wanted to have answered by means of a reconciliation.
39.	Mr Sheldon asked Mr Faniyi why, if the Table had been included with the letter of 30 October 2003, no reference was made to it in any of the correspondence until the Appellant's letter of 14 July 2008 and even in that letter there was no reference to that information having been supplied in the Table allegedly enclosed with the letter of 30 October 2003? Mr Faniyi replied that the information contained in the Form 652 enclosed with the Appellant's letter of the 1 August 2008 was simply for clarification and just restated what had already been submitted. In response to Mr Sheldon's question as to why the Appellant had waited five years before claiming to have provided the relevant information on the cover of the letter of 30 October 2003, Mr Faniyi replied that The Appellant had never been asked that question.
Appellant's arguments
40.	Mr Alagoa for the Appellant argued that a valid claim for repayment had been made. The claim had been made by the letter from the Appellant to HM Customs and Excise dated 30 October 2003 which, Mr Alagoa argued, enclosed the Table which showed how the error arose, the VAT accounting periods, and the VAT over or under declared in each VAT period. Taken together, the letter and the Table constituted a valid claim for the purposes of Regulation 37.
41.	Mr Alagoa pointed out that although the Appellant's letter was dated 30 October 2003 it was obviously sent later since HM Customs & Excise's letter of 20 November 2003 refers to the letter having been received by HM Customs and Excise 's Southend office on 18 November 2003. The dates were significant because Mr Alagoa submitted that the Table which was dated 14/11/03 was enclosed with the letter dated 30 October -- the letter had been held up and was not faxed, according to Mr Alagoa, until the Table had been finalised. Mr Alagoa argued that it was more likely than not that the letter and the Table had been sent together and this was the only explanation why the letter dated 30 October 2003 was not received until 18 November 2003.
42.	Mr Alagoa pointed out and Mr Sheldon on behalf of HMRC accepted that the completion of Form 652 was not necessary for a valid voluntary disclosure to comply with Regulation 37.
43.	In Mr Alagoa's submission the Table was clear in stating what method was used. The table stated what VAT was paid and what should have been paid. The Table and the method contained in the table had been prepared in consultation with Mr Mckay. The reference in the letter of 30 October 2003 to the figure of £32,048.11 was only an estimate and was clearly written before the Table was appended to the letter. Mr Alagoa conceded that some of the periods covered by the table may have been out of time. 
44.	Therefore, Mr Alagoa submitted that the requirements of Regulation 37 had been complied with and that a valid claim under s. 80(4) VATA 1994 had been made within the three-year time limit.
HMRC's arguments
45.	Mr Sheldon drew attention to the requirements of Regulation 37 and in particular the requirement that the claim must state the amount claimed and the method by which the amount is calculated. These requirements were mandatory as indicated by the use of the word "shall". 
46.	The statutory scheme was supplemented by Public Notice 700/45, although Mr Sheldon accepted that the guidance in that Notice did not have statutory effect. As already noted above, Mr Sheldon also accepted that the completion of Form 652 (Voluntary Disclosure of Errors on VAT Returns) was not required in order for a claim to comply with the requirements of Regulation 37.
47.	Mr Sheldon noted that there was no jurisprudence on the meaning of Regulation 37 but submitted that its meaning was clear.
48.	Mr Sheldon submitted that there were three questions which arose in relation to this appeal:
(1)	was the Table sent with the letter dated the 30 October 2003?
(2)	If it was not sent with that letter, was the letter itself sufficient to satisfy the requirements of Regulation 37?
(3)	If the Table was sent with the letter, did it together with the letter satisfy the requirements of Regulation 37?
49.	On the first question, HMRC had no record of the Table being received with the letter of 30 October 2003 and deny that the Table was received with that letter. Mr Sheldon submitted that the only evidence that the Table was enclosed with the letter was Mr Faniyi's word. The letter was written and the Table was prepared by Mr Oni, but Mr Oni had not been called to give evidence. Mr Faniyi said that the letter had been "cleared" with him by Mr Oni. It was not clear what was meant by this. In any event, Mr Sheldon submitted that Mr Faniyi's recollection was unreliable. He pointed out that in relation to other proceedings Mr Faniyi had asserted that a Form 652 had been submitted, which was plainly wrong. Also, Mr Faniyi had made errors in respect of the date on which the voluntary disclosure had been made.
50.	Mr Sheldon noted that there was no reference in the letter of 30 October 2003 to any enclosure. There was no notation on the letter indicating an enclosure such as the commonly used notation "encl". There was no reference to the Table in HMRC's letter of 20 November 2003 which acknowledged receipt of the Appellant's letter dated 30 October 2003. There was no reference to the Table in the subsequent correspondence between the Appellant and HMRC. Mr Sheldon also contended that no sensible explanation had been given as to why the Appellant did not mention in subsequent correspondence that it had, or believed it had, already provided the information contained in the Table.
51.	Mr Sheldon pointed out that the figures in the 30 October 2003 letter and the figures in the Table did not match. It might be said that the figures in the Table and the figures in the Form 652 submitted in 2008 matched, but there was no match between the figures in the letter and those in the Table.
52.	Mr Sheldon also submitted that it would have been a simple matter for the Appellants to have produced a fax transmission report showing how many pages had been sent when the letter of 30 October 2003 was faxed to HM Customs and Excise.
53.	Mr Sheldon submitted that on the balance of probabilities the Table had not been sent with a letter of 30 October 2003.
54.	On the second question Mr Sheldon submitted that the letter of 30 October 2003 plainly did not meet the requirements of Regulation 37. In his view the letter did not state the amount being claimed but rather stated an anticipated figure which was a preliminary estimate. Mr Sheldon noted that the figure was revised by the Appellant at various subsequent stages. Mr Sheldon also observed that the letter contained no explanation of the method used to calculate the claim.
55.	On the third question, Mr Sheldon submitted that, even if the Table had been sent with the letter of 30 October 2003, the letter and the Table together would not have satisfied Regulation 37. The amount of the claim was not stated. There were three possible sums identified as the amount being claimed: £32,048.11 contained in the body of the letter, £26,442.78 (or possibly £24,535.07) the adjusted figures in the final column on the second page of the Table and, possibly, the sum of the overpayments identified in the line marked "SURPLUS" in the final row on the Table. Mr Sheldon commented that in evidence Mr Faniyi had indicated that a different figure (viz £26,300 or the gross amount £32,532 contained in paragraph 28 of the Reply was the correct amount of the claim. This figure was first identified in July 2009. In Mr Sheldon's submission, Mr Faniyi's evidence showed that he was unclear on the amount of the claim and it was therefore doubtful whether he could have identified the amount which was claimed within the three-year time limit.
56.	As regards the Appellant's contention that the Table represented a calculation agreed upon by Mr Oni and Mr Mackay, Mr Sheldon submitted that this could not override the clear requirements of Regulation 37.
57.	Finally, Mr Sheldon submitted that even if the Tribunal rejected his submissions it was plain that part of the claim related to periods that were out of time ie periods which were more than three years before 14 November 2003.
58.	We asked Mr Sheldon whether he could confirm that the files of Mr Mckay had been examined to see whether they shed any light on whether the Table had been included with the 30 October 2003 letter, since that letter had been copied by fax to Mr Mckay. Mr Sheldon was unable to confirm whether Mr Mckay's files had been examined, but he understood that HMRC had no record of the Table being received in 2003.
Our decision
59.	We accept Mr Sheldon's formulation of the three issues that arise in relation to this appeal:
(1)	was the Table sent with a letter dated the 30 October 2003?
(2)	If  it was not sent with that letter, was the letter itself sufficient to satisfy the requirements of Regulation 37?
(3)	If the Table was sent with the letter, did it together with the letter satisfy the requirements of Regulation 37?
60.	On the first question, it is important to remember that the burden of proof lies on the Appellant. In our view, the Appellant has failed to show that it was more likely than not that the Table was included with the letter dated the 30 October 2003. Although the date of receipt of the letter by HM Customs and Excise (18 November 2003) gives rise to an inference that the letter was sent after the Table had been prepared, there seems to us to be no documentary evidence that the Table was actually included with the letter of 30 October 2003. There is no reference in that letter to any attachment or to any reconciliation statement being included with the letter. Moreover, there is no reference to the Table in the subsequent correspondence. It seems odd that this correspondence is entirely silent as regards the Table. If the Table had been sent in October 2003 it would have been natural for it to have been referred to in the subsequent correspondence. 
61.	Moreover, we did not find Mr Faniyi's evidence on this point clear. Although he stated that he had "cleared" the letter of 30 October 2003, the letter having been prepared by Mr Oni, it was not clear to us that he was in a position to know or did know whether the Table had actually been sent with the letter. 
62.	For these reasons, we did not consider that the Appellant had established that on the balance of probabilities the Table had been included with the letter of 30 October 2003.
63.	On the second question, it is clear that the letter of 30 October 2003 does not satisfy the requirements of Regulation 37. We agree with Mr Sheldon's submission that the requirements of Regulation 37 are mandatory. On this basis, even if it is accepted that the amount of £ 32,048.11 was a statement of the amount claimed, the letter itself contains no indication of the method used to calculate that amount.
64.	Our conclusions in the above paragraphs are enough to determine this appeal. However, since the third question was argued by both parties we think it appropriate to express our conclusion on this point as well.
65.	Mr Sheldon indicated that there was no direct authority on the requirements of Regulation 37. However, we consider that, when Regulation 37 provides that the claim must state the method by which the amount claimed was calculated, the test should be an objective one, viz did the claim contain sufficient information as to the method used to derive the amount claimed as to enable a reasonably competent VAT officer to understand the way in which the amount claimed had been calculated? We consider that the necessary information must be contained in the document or documents comprising the claim, or in other documents which are incorporated by reference where those other documents are already in the possession of HMRC. 
66.	In our view, the Table fails this test. It is not apparent from the Table or the letter that the Table is seeking to compare output tax paid on standard monthly payments with output tax on billings. Accordingly, even if the Appellant had persuaded us that the Table had been sent with the letter of 30 October 2003, we would have decided that the Table and the letter did not together satisfy Regulation 37.
67.	Our decision therefore is that the Appellant's claim was made out of time for the purposes of s. 80(4) VATA 1994 and this appeal must be dismissed.
68.	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.

    

 	

GUY BRANNAN

TRIBUNAL JUDGE
RELEASE DATE: 6 October 2010