DECISION
Background
1. This is
our decision on an application by the Respondents dated 12 July 2012 to strike
out the appeal. We find the following facts which were not disputed.
2. At all
material times the appellant operated amusement arcades in Prestatyn, Bangor and Shotton. It accounted for VAT on takings from certain gaming machines. On 18
September 2006, following the decision of the ECJ in the case of Finanzampt Gladbeck v Linneweber c-453/02
the Appellant’s representative The Priory Partnership (“Priory”) wrote to HMRC
in the following terms:
“Following the Linneweber
case before the European Court of Justice, we understand that VAT may have been
wrongly charged prior to 5 December 2005. We therefore wish to lodge an appeal
against overpaid VAT for the preceding 3 years. ie, 1 July 2003 to 5 December
2005.
Please note your files
accordingly and advise us what action needs to be taken.”
3. HMRC
replied to Priory on 4 October 2006. The letter requested further information
in the following terms:
“The claim is apparently
based on the recent ECJ decision in the case of Linneweber, could you please
advise why you consider this supports your client’s claim?
I would also be grateful
if you could supply the following information in respect of the claim:
…
In order to quantify the
pending reclaims I am enclosing vat 652 forms and would request that you
complete and return them to myself at the above address.”
4. The reference
in this letter to VAT Form 652 was a reference to the standard form which HMRC
expects taxpayers to use to correct certain errors in previous returns. The
form anticipates a brief explanation of how the error arose and the amount of
the error for each accounting period for which a claim is being made.
5. Priory did
not reply to this letter. Mr O’Donnell of Priory who appears on behalf of the
appellant was unable to say why that was the case. He was not dealing with the
matter at that time.
6. On 9
November 2006 HMRC issued Business Brief 20/06 setting out their general
position in relation to claims following Linneweber. It stated that
claims for repayment should be supported by certain evidence and that claims
without that evidence would be rejected.
7. On 18
December 2006 HMRC wrote further to Priory. This appears to have been a
standard letter and did not specifically refer to the previous correspondence.
It set out HMRC’s view of the tax status of various types of gaming machines
and stated as follows:
“… Your letter claims that
your machines were similar to the machines considered to be exempt prior to 6
December 2005; however you have failed to produce evidence to support this
claim …
… If, after reading the
above information, you consider your business to still have a valid claim,
please contact us before the 31st January 2007, and we will
officially record your intention to further pursue your claim. However if we do
not hear from you by 31st January 2007, we will assume that you have
no wish to pursue your claim, and no further action will be taken in relation
to your voluntary disclosure … ”
8. The
appellant contends that Priory did not receive this letter. Mr O’Donnell said
that Priory has a system for recording all post received and there is no record
of receipt. Mr Haley did not challenge this and we find as a fact that whilst
the letter was properly addressed to Priory, for whatever reason it was not
received by that firm. In the circumstances the appellant did not indicate to
HMRC its intention to pursue the claim and HMRC considered the correspondence
closed.
9. There was
no further contact or correspondence until July 2010. However in the period up
to July 2010 there were developments affecting Linneweber claims. Rank Group
Plc appealed a number of decisions in relation to VAT on gaming machines
claiming that HMRC applied different tax liabilities to identical gaming
machines in breach of the principle of fiscal neutrality. The VAT Tribunal
released its decisions on those appeals in 2008. HMRC appealed unsuccessfully
to the High Court. In June 2010 the Court of Appeal referred the issue to the
ECJ.
10. Whilst the Rank litigation
was proceeding, in March 2010 HMRC issued Business Brief 11/10. It stated as
follows:
“ Claims that have previously been rejected (for whatever reason)
and which are not under appeal will not be considered. No new claims for the
repayment of VAT paid for the period between 1 November 1998 and 5 December
2005 can be made.
The aim is to process all existing claims, where satisfactory evidence
to support the claim has been provided, by 31 March 2011.”
11. Priory wrote to HMRC on 28
July 2010 as follows:
“We refer to previous
correspondence and in particular our letter of the 18th September
2006 when, on behalf of our clients, we lodged an appeal against overpaid VAT.
We understand that
following the decision in the case of Rank, and as outlined in Revenue &
Customs Brief 11/10, that these claims are now being considered.
We therefore now wish to
pursue this claim…
Please advise us of what
further information you require to pursue the claim.”
12. HMRC responded on 18 August
2010 as follows:
“If you are satisfied that
your client is entitled to make a claim, as per the guidance in Revenue &
Customs Brief 10/11 (sic), then please make a claim in writing with details of
figures etc …”
13. Priory replied on 28
September 2010 enclosing a schedule setting out the claim for a refund of
overpaid VAT. The schedule covered the period November 1998 to December 2005
and identified an overpayment of £164,343. We note that this period is longer
than the 3 years identified in the September 2006 letter.
14. On 14 October 2010 HMRC
replied stating:
“… all claims are subject
to the normal time limits. Since the claim was not received until 29th
September 2010 it falls outside the time limits as detailed in Section 80(4) of
the VAT Act 1994. Consequently, the submitted claim for £164,343 in respect of
periods 11/98 – 12/05 is formally rejected.”
15. The letter went on to
outline the appellant’s rights to request a review of the decision or to appeal
to this Tribunal.
16. Priory wrote on 26 October
2010 stating:
“Our claim was originally
submitted on the 18th September 2006 … Our claim was not actively
pursued at that time due to ongoing developments in the case. However following
the outcome of the First Tier Tribunal Decision in Rank Leisure our client now
wishes to pursue the claim.”
17. Priory requested a review of
the decision and the outcome of the review was notified to the appellant on 21
January 2011. The review noted the previous correspondence in 2006 and stated:
“As no contact was
received the claim made in September 2006 is considered to be closed and
therefore any further claims made in relation to this are considered to be new
claims.”
18. On that basis the decision
on review was to confirm that Priory’s letter dated 28 September 2010 was
correctly treated as a new claim and was correctly rejected as being out of
time.
The Appeal
19. On 14 February 2011 the
appellant lodged its notice of appeal to the tribunal. The grounds of appeal
contend that a “protective claim” was made on 18 September 2006 within the
prescribed time limits. The appellant stated that it was not relying on a new
claim made in 2010.
20. The present proceedings were
then stayed for a period pending the ECJ reference in the Rank appeal.
Following expiry of the stay, HMRC made the present application to strike out
the appeal. The grounds of that application are as follows:
(1)
HMRC refused the original claim in its letter dated 18 December 2006.
There had been no appeal against that decision and HMRC would object to any
extension of time to appeal that decision.
(2)
The appellant’s appeal against the review decision dated 21 January 2011
had no reasonable prospect of success and ought to be struck out pursuant to
Rule 8(3)(c). The claim was made more than 3 years after the end of the
relevant accounting period.
21. In a letter to the Tribunal
dated 20 August 2012, Priory confirmed their position that they were not
seeking an extension of time to appeal any decision in the letter dated 18
December 2006. The appellant’s case was that no decision was made in relation
to that claim until it was rejected in October 2010 and that rejection was
confirmed on review in January 2011.
Outline of the Parties’ Submissions
22. At the hearing of the appeal
Mr Haley on behalf of the respondents put the case for a strike out on a rather
different basis to that set out in the application. He contended that the appellant’s
correspondence in 2006 could not amount to a claim at all because it did not
quantify the amount of tax said to have been overpaid. In the alternative he
argued that even if it did amount to a claim then it had been abandoned or
withdrawn and the only existing claim was that made in 2010 which was plainly
out of time.
23. During the course of his
submissions Mr Haley conceded that if we were to find that the letter dated 18
September 2006 was a claim and it had been rejected by the letter dated 18
December 2006 then HMRC would not object to an application for permission to
appeal out of time. The basis for that concession was that the letter dated 18
December 2006 did not set out the appellant’s rights of appeal, and in the
letter dated 21 January 2011 the appellant had been given 30 days in which to
appeal. This was a shift in position from ground (1) of the application
identified above but we consider it was an appropriate concession to make.
24. Mr O’Donnell on behalf of
the appellant did not object to Mr Haley pursuing his additional ground of
strike out, namely that there had been no claim in 2006. He submitted that in
2006 there had been what he described as a “protective claim”. That claim had
not been rejected until at least 2010 which meant that the present appeal was
in time. He further submitted that HMRC could not unilaterally treat a claim as
withdrawn or abandoned. They must either accept a claim, or reject it giving
reasons for that rejection and thus engaging the rights of appeal.
25. We deal with the parties’ submissions
in more detail below, but we can summarise the issues before us as follows:
(1)
Did the appellant make a claim for repayment in September 2006?
(2)
If so, when if at all did HMRC reject that claim?
(3)
If HMRC did not reject the claim, did the appellant abandon or withdraw
the claim?
Consideration of the Law
26. There is no dispute that any
claim by the appellant, whenever made, was a claim under section 80 VAT Act
1994 and was subject to Regulation 37 VAT regulations 1995. Section
80 VAT Act 1994 in so far as relevant for present purposes provides as
follows:
“ (4) The Commissioners
shall not be liable on a claim under this section … if the claim is made more
than [4 years] after the relevant date.
…
(6) A claim under this section shall be made in such form and
manner and shall be supported by such documentary evidence as the Commissioners
prescribe by regulations; and regulations under this subsection may make
different provision for different cases. ”
27. Regulation 37 provides
as follows:
“Any claim under section
80 of the [VAT Act 1994] 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 was
calculated.”
28. To make a claim under
section 80 HMRC expects taxpayers to use Form 652 which, if properly completed
would comply with regulation 37. However this form is not prescribed by statute
or regulation.
29. In Reed Employment Ltd v
HMRC [2011] UKFTT 200 (TC) the FtT was concerned with various
repayment claims pursuant to section 80. In 2003 Reed made a claim for
repayment of output tax covering the period 1973 to 1990 (“the 2003 Claim”).
The claim was refused and Reed appealed. In 2009 Reed sought to make a further
demand for repayment (“the 2009 Demand”) which it contended was an amendment to
the 2003 Claim. The issues before the FtT in so far as relevant for present
purposes were as follows:
(1)
Does the FtT have jurisdiction to determine whether the 2009 Demand was
an amendment to the 2003 Claim, and
(2)
If the FtT does have such jurisdiction, was the 2009 Demand an amendment
to the 2003 Claim or a new claim.
30. We were not referred by the
parties to the decision in Reed Employment. However we have found the
discussion in that case to be helpful in considering the issues in the present
appeal.
31. The tribunal stated in Reed
Employment at [95] that the jurisdiction of the FtT in relation to claims
for repayment stems from the rejection of a claim. It derives from section
83(1)(t) VAT Act 1994 which provides as follows:
“ (1) … an appeal shall lie to the tribunal with
respect to any of the following matters:
…
(t) a claim for the crediting or repayment of an
amount under section 80 …”
32. In considering the question
of jurisdiction the FtT referred to the decision of the VAT Tribunal in University of Liverpool v HM Customs & Excise (Decision 16769). That appeal was also concerned with the issue of whether
there was a new claim or an amendment to an existing claim. The VAT Tribunal in
that case distinguished claims which had been completed and claims which were
outstanding. An outstanding claim could be amended but a completed claim could
not be amended. At [26] and [29] the tribunal stated:
“26. I find it helpful in dealing with the instant case to
distinguish between claims made under s. 80 which are outstanding, and those
which have been completed. By completed I mean a claim which:
a) has been met
in full by the Commissioners;
b) has been met
in part by the Commissioners and the time limit for appealing against the
rejection of the remainder prescribed by rule 4(1) of the VAT Tribunals Rules
1986, as amended, has expired;
c) has been met
in part by the Commissioners, the taxpayer has appealed against the rejection
of the remainder, his appeal has been determined either by the tribunal or a
court and the time limit prescribed for appealing against that determination
has expired or the appeal has been compromised;
d) has been
rejected in full by the Commissioners and the time limit for appealing against
that rejection prescribed by rule 4(1) of the VAT Tribunals Rules 1986, as
amended, has expired;
e) has been rejected in full by the
Commissioners, the taxpayer has appealed against that rejection, his appeal has
been determined either by the tribunal or a court and the time limit prescribed
for appealing against that determination has expired, or the appeal has been
compromised.
…
29. Any claim that has not been
completed is an outstanding claim, i.e. one which in my judgment is a claim for
the purposes of s. 80 of the 1994 Act.”
33. The FtT in Reed Employment
also referred to a decision of the VAT Tribunal in John Martin Group v HM
Revenue & Customs (Decision 19257). The tribunal in that case agreed
with the distinction drawn in University of Liverpool between
completed claims and outstanding claims. The question for the tribunal was
whether on the facts a claim under s.80 had been completed. It held that the
claim was outstanding and relied in particular on the absence of any reference
to appeal rights in the document purporting to be a decision.
34. In determining the
jurisdiction point, which was not a point argued before us, the FtT in Reed
Employment stated at [102]:
“ The
jurisdiction of the Tribunal is conferred by s 83(1)(t) and encompasses the
claim made under s 80. It is in our view inherent in that jurisdiction
that the Tribunal must be able to determine, in case of dispute, the nature,
scope and extent of the claim or claims before it, and the time at which a
relevant claim has been made. That, in our judgment, must include whether
claims that are made at different times are separate claims or whether they are
a single claim which is made at the time of the earlier one. That is a
question of fact and law that the Tribunal must concern itself with in the
exercise of its jurisdiction under s 83(1)(t).”
35. The FtT in Reed
Employment went on to consider the nature of the claims in that case.
Before considering the particular facts it stated at [106]:
“ Whilst
it is accepted that if an original claim has ceased to have currency then no
purported amendment can revive that claim and become part of it, the converse
does not hold true. Where an original claim is uncompleted, it is not the
case that every subsequent claim expressed to be an amendment is such.
That depends on the nature of both the original claim, and the later purported
amendment.”
36. Then at [110] the FtT
stated:
“ 110.
There is no definition of “claim” in VATA, nor any provision for amendment of a
claim. The starting point, therefore, we think is that any assertion of a
right to repayment must be regarded as an individual, discrete claim, separate
from any other, unless it is shown to be in essence as one with an earlier
claim.”
37. The FtT’s description of “any
assertion of a right to repayment” echoes the VAT Tribunal in University
of Liverpool at [25] where it stated:
“ The various
references to “claim” in s. 80 of the 1994 Act provide nothing to indicate that
the word is to be given anything other than its ordinary meaning. Applying that
meaning, a claim is a demand for something as due.”
38. The decision of the FtT in Reed
Employment was recently upheld by Roth J in the Upper Tribunal (Reed
Employment v HMRC [2013] UKUT 109 (TCC)). Roth J referred at [29] to
section 80(6) and regulation 37 as the “formal requirements for submission
of a claim”. In considering the distinction between a new claim and an
amended claim he stated:
“31. … I consider that
‘claim’ should here be given its ordinary meaning. In this context it means a
demand for repayment of overpaid tax …
33. … Further, if the taxpayer making a claim says that he
is not yet able to calculate the full figures and gather all the documentation
as required by reg 37, but is in the course of doing so and will provide such
further details as soon as possible, such further submission would not
constitute a new claim but fall within the scope of the existing claim. Thus I
consider that what is an amendment is very much a question of fact and degree,
judged by the particular circumstances.”
39. In all the decisions
referred to above it appears that the original claims satisfied regulation 37.
Hence the original claims being considered stated an amount and provided a
calculation. The issues concerned whether and in what circumstances those
original claims could be amended. The question we have to decide on this appeal
is whether the assertion of the right to a refund in Priory’s letter dated 18
September 2006 amounted to a claim for the purposes of section 80.
Decision
40. We consider the three issues
we have identified above in the light of the considerations of law just set out.
(1) Did the Appellant make a Claim for
Repayment in September 2006?
41. It is clear that the letter
dated 18 September 2006 did not comply with the requirements of regulation 37.
Whilst it was in writing, it did not state the amount of the claim or the
method by which the amount was calculated. Nor did it suggest that such details
would be provided. There was no response by the appellant to the letter dated 4
October 2006 which requested those details. The appellant’s letter can however
be described as asserting a right to repayment.
42. It is plainly important to
be able to identify a claim for the purposes of section 80. In particular the
date on which a claim is made must be identifiable and certain in order to
apply the time limit in section 80(4). A claim made more than 4 years after the
“relevant date” as defined in section 80 cannot be repaid. We consider that the
importance of identifying when a claim is made is one reason why regulation 37
lays down formalities for making such a claim. Regulation 37 is not concerned
with the substantive validity of a claim. It is concerned with the formality of
making a claim. For example a claim cannot be made orally. Otherwise there
would be considerable scope for disagreement as to what was said, when and by
whom.
43. Similarly it is important to
know precisely what the claim relates to. It is for that reason that regulation
37 requires a claim to state the amount of the claim and the method of
calculation. Those matters will help to define the scope of any claim under
section 80.
44. The Upper Tribunal in Reed
Employment noted at [30] that there was no definition of “claim” in the VAT
Act 1994. However that appeal was not concerned with the question of whether a
claim had been made and we do not consider that it intended to lay down a
general rule that any assertion of a right to repayment would amount to a
claim. It was more concerned with the scope of what both parties agreed was a
claim. It is implicit from what it said at [33] that some attempt must be made
to quantify the claim and/or state the method of calculation even if full
figures and further documentation are to be provided later.
45. Similarly the VAT Tribunal
in University of Liverpool was concerned with whether what was
accepted to have been a claim had been completed or was still outstanding. We
do not consider that at [25] the VAT Tribunal intended to lay down a general
rule that any demand for overpaid output tax should be treated as a claim under
section 80.
46. Mr Haley on behalf of HMRC
referred us to the decision of the FtT in Bartholomew Corvi t/a Seaview Café
v HM Revenue and Customs [2011] UKFTT 758. In that case it was clear that
the claim was out of time. It also did not specify the amount of the claim or
the method by which it had been calculated. The tribunal struck out the appeal.
In doing so the tribunal noted that the claim was “unspecified and unquantified”
although it is not clear whether this in itself would have caused it to strike
out the appeal. The tribunal also accepted HMRC’s submission that the VAT
legislation did not recognise protective claims.
47. As noted above, the
appellant contends that the letter was a “protective claim”. We do not accept
that submission. Neither the VAT Act 1994 not the 1995 Regulations make
provision for a protective claim. Indeed there appeared to be some confusion as
to precisely what the term “protective claim” means. Mr O’Donnell described the
letter of 18 January 2006 as a protective claim in the sense that it was an
incomplete claim conditional on the outcome of the litigation following Linneweber.
He relied upon an extract from HMRC guidance in the context of claims for
repayment of customs duties. The guidance stated “protective claims can be
accepted as full or incomplete claims”. We do not consider that the
guidance produced by Mr O’Donnell in the context of claims to repayment of
customs duties is of general application. In particular it is not authority for
the proposition that in the context of VAT claims under s.80 VAT Act 1994
traders are entitled to rely on incomplete protective claims.
48. We note Revenue &
Customs Business Brief 75/09 issued in connection with claims for repayment of
VAT in relation to mechanised cash bingo machines. The Brief referred to the
ongoing litigation by Rank and stated that any repayments made in reliance on a
High Court decision in that litigation would need to be repaid if HMRC were
successful in a higher court. It then said:
“Businesses may therefore
prefer to wait until the final outcome of the litigation is known although
protective claims can be lodged.”
[emphasis added]
49. Mr Haley submitted that the
term protective claim in this context was used to indicate a claim which
satisfied regulation 37 but where the maker was unsure whether it would succeed
or not, for example because of outstanding litigation. The claim was made in
anticipation that it would not be accepted or rejected by HMRC until the
outstanding litigation was concluded.
50. We also note that the FtT
and the Upper Tribunal in Reed Employment were dealing with what the FtT
described at [7] as a “protective claim”. However it seems to us that all these
references to protective claims in the context of section 80 are used in the
sense described by Mr Haley. There is no statutory provision or regulation
which gives effect to a claim which does not satisfy regulation 37. As stated
above some attempt must be made to quantify the claim and state the method of
calculation.
51. It is true that the
correspondence from HMRC in October 2006 and December 2006 does refer to “the
claim”. We do not think that this terminology was used with the present
issue in mind. It was simply shorthand for the appellant’s assertion of a right
to repayment made in the September letter. By using such a description we do
not consider that HMRC were accepting that it was a valid claim, subject only
to verification. They were inviting a valid claim to be made on Form 652.
However there was no reply to the October letter and therefore no valid claim
was made.
52. For the reasons of certainty
given above we consider that it is only where a demand for payment or the
assertion of a right to repayment satisfies regulation 37 that it is to be
treated as a claim pursuant to section 80. Priory’s letter dated 18 September
2006 did not satisfy those requirements and therefore did not amount to a claim
under section 80.
53. Our findings on issue (1)
lead us to the conclusion that there was no claim in September 2006 and therefore
there was no appealable decision arising out of the correspondence in 2006. HMRC
might be said to have made a decision not to accept or reject the demand made
in the September 2006 letter. In other words not to treat it as a claim. That
may be an appealable decision within section 83(1)(t) VAT Act 1994 however
for the reasons given above there was no claim to be accepted or rejected and
an appeal against such a decision would stand no reasonable prospect of
success. In all the circumstances it is appropriate to strike out the appeal
either pursuant to Rule 8(2)(a) (we have no jurisdiction because there was no
decision) or Rule 8(3)(c) (the appellant’s case has no reasonable prospect of
success).
54. For the sake of completeness
we will however consider issues (2) and (3).
(2) If a Claim was made, have HMRC
Rejected that Claim?
55. If we are wrong on the first
issue and the September letter was a claim, HMRC would have been entitled to
reject it on the basis that it did not comply with regulation 37. However they
did not reject it in terms. Rather they wrote seeking further information,
including information as to the quantum of the claim.
56. Mr O’Donnell referred us to
the HMRC VAT Refunds Manual at VR 9200 where HMRC gives guidance to officers
dealing with claims in the light of the VAT Tribunal decision in University
of Liverpool. It states as follows:
“ Whenever
a claim is refused, either in whole or in part, you must ensure that
·
the claimant is told in writing that the claim has been
refused;
·
the letter explains why the claim is being refused;
·
the claimant is told of his right to ask for a review of the
decision and of his right to appeal to the Tax Tribunal (under section 83(c) or
(t)); and
·
the claimant is told that he has 30 days from the date of the
letter in which to lodge his appeal.”
57. We accept this is how HMRC
must deal with a claim which has been validly made. They are also of course
entitled to seek further information before accepting or refusing a claim. They
requested further information in the letter dated 4 October 2006. In their
letter dated 18 December 2006 they identify that evidence to support the claim
is required. The letter also gives information to the appellant setting out how
HMRC would deal with claims so that the appellant could consider what course of
action to take.
58. The appellant was being given
the opportunity to confirm to HMRC that it still considered it had a valid
claim. We do not consider that the December letter could reasonably amount to the
rejection of a claim. In reaching that conclusion we are not so much concerned
with the absence of any reference to rights of appeal, which the VAT Tribunal
in John Martin Group considered to be significant. That fact would be more
relevant to an application to appeal out of time if one were made. Rather it is
the absence of any final determination of the claim following a consideration
of its merits.
59. In the circumstances, if the
September letter was a claim then in our view it would have remained an
outstanding claim, subject to HMRC’s argument that it was implicitly withdrawn
or abandoned. If it remained an outstanding claim then on the basis of the
reasoning contained in the previous tribunal decisions referred to above it
remained open to the appellant to amend the claim by including details of the
amount of the repayment claimed and the method of calculation. That information
was provided by Priory, although not until their letter dated 28 September
2010.
60. We do not need to address
for present purposes whether the appellant was entitled to amend the claim to
extend the period to which it related.
(3) Was the Claim Withdrawn or Abandoned
61. The only basis on which Mr
Haley suggests that the claim was withdrawn or abandoned is because the appellant
failed to respond to the opportunity given in the letter dated 18 December 2006
to confirm to HMRC that it intended to pursue the claim. It is not suggested by
Mr Haley that there was any express withdrawal or abandonment of the claim.
62. We have found as a fact that
the appellant did not receive that letter. It cannot be said therefore that the
appellant consciously decided not to avail itself of the opportunity to
indicate its intention to pursue a claim. The highest that HMRC could put their
case on withdrawal or abandonment is that the failure of the appellant to
respond to the letter dated 4 October 2006 together with the passage of time
amounted to withdrawal or abandonment of the claim.
63. We were not referred to any
authority as to what circumstances might give rise to the implied withdrawal or
abandonment of a claim. Mr O’Donnell referred us to a number of cases where
discussions between a taxpayer and HMRC had “gone to sleep” (Schuldenfrei v
Hilton (Inspector of Taxes) [1999] STC 821; Delbourgo v Field [1978] STC
234 and Former North Wiltshire District Council v HMRC [2010] UKFTT 229 (TC)).
64. In Delbourgo and Schuldenfrei
the Court of Appeal was concerned with whether the taxpayer and the Inland
Revenue had reached a “section 54 agreement”. In both cases it held that there
had been no sufficient meeting of minds. In the present case, withdrawal and
abandonment do not require a meeting of minds. We agree with Mr O’Donnell that
they are, if anything, unilateral acts on the part of an appellant and cannot,
without more, arise from unilateral acts on the part of HMRC. Former North
Wiltshire District Council is concerned with extending the time for a late
appeal and does not help in the present context.
65. In the absence of any
authority directly in point it seems us that withdrawal requires a conscious decision
on the part of an appellant to withdraw the claim and some act of withdrawal. In
contrast a claim might be abandoned where by his conduct an appellant induces
HMRC to reasonably consider that he no longer wishes to pursue the claim. The
question of abandonment might be tested by reference to whether a reasonable
observer, fully appraised of the facts, would consider that the claim had been
abandoned.
66. There is no evidence from
which it might be inferred that the appellant had withdrawn the claim. We can
see why HMRC might reasonably have considered that the claim had been abandoned
given the absence of any response to the October and December letters. However
with knowledge that the December letter had not been received by the appellant
and knowing that there was ongoing litigation in relation to the VAT liability
of gaming machines, in our view a reasonable observer would not reach the
conclusion that the appellant had abandoned its claim.
67. In the circumstances, if
there had been a claim in September 2006 we would find that it had not been
withdrawn or abandoned by the appellant.
Generally
68. For the reasons given above
we find that Priory’s letter dated 18 September 2006 did not amount to a claim
for the purposes of section 80 VAT Act 1994 and we therefore strike out the
appeal.
69. 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.
JONATHAN CANNAN
TRIBUNAL JUDGE
RELEASE DATE: 16 April 2013
