19634

VAT – Repayment claim – 3 year rule – Appeal dismissed

LONDON TRIBUNAL CENTRE

	B G PATEL	           Appellant

-	and –

	THE COMMISSIONERS FOR HER MAJESTY’S REVENUE & CUSTOMS 	 Respondents

				Tribunal:	THEODORE WALLACE (Chairman)
						MRS R S JOHNSON

Sitting in public in London on 9 June 2006

The Appellant appeared in person

Philip Webb, senior officer advocate, for the Respondents

© CROWN COPYRIGHT 2006

DECISION

1.	This was an appeal against a decision on 8 March 2005 refusing repayment claims totalling £39,820 for monthly periods 06/00 and 08/00 to 04/01.  The decision to refuse repayment was based on section 80(4) of the VAT Act 1994 which provides that Customs are not liable to repay any amount paid more than 3 years before the claim.

2.	The appeal was originally listed on 17 March 2006 when it was adjourned to allow the Appellant’s accountant to attend. The date for today’s hearing was fixed on that day, the clerk having telephoned the accountant. Yesterday afternoon the Tribunal received a telephone call from the secretary of the Appellant’s accountant, Patel and Patel, saying that the accountant, Mr S M Patel, was not attending but that Mr B Patel, the Appellant, was. The Appellant told the Tribunal that he did not know that the accountant was not coming until he arrived at the Tribunal. The Appellant’s daughter told us that the accountant spoke to her mother last week but that there was no mention of the Tribunal hearing.

3.	The basic facts are as follows.

4.	The Appellant is the sole proprietor of a business at Upper Hale, Farnham, Surrey, retailing newspapers, tobacco and general goods. The business was visited in 1992, 1998, 1999 and 2002.  Between July 1995 and June 1997 the Appellant paid centrally issued assessments having failed to make returns. He again failed to make returns for June 2000 and for August 2000 to April 2001 and paid central assessments totalling £44,502 together with default surcharges. For reasons which were not apparent he was making monthly returns. Customs pressed for the returns in 2002 without success.

5.	The returns for those periods were submitted on 7 December 2004 and showed £4,680.52 as due up to March 2001 and £188.84 as repayment due for April 2001.  If those returns were correct £39,821.48 was overpaid and £118.84 input tax was repayable in addition for April 2001.  The Appellant asked for a refund.

6.	Customs replied on 8 January 2005 stating that the central assessments had been withdrawn but that the VAT paid by the Appellant would not be repaid because of the 3 year rule. Although the letter did not say so Mr Webb informed the Tribunal that the default surcharges based on the central assessments were reduced and repaid.

7.	It is clear that a substantial proportion of the Appellant’s sales were zero-rated being newspapers and food.  The central  assessments were surprisingly high.

8.	Section 80(4) of the VAT Act 1994 provides as follows,

“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.”

That provision clearly applies to the circumstances of this case.

9.	Although aspects of the three year capping are subject to appeals before the higher courts those problems concern the retrospective effect of the Finance Act 1997.  There is no question of retrospection here since the overpayments were in 2000 and 2001.

10.	While by reason of section 80(4) the Commissioners are not liable to make the repayment claimed it is clear that they can in the circumstances of a particular case  make a repayment under the powers of care and management under Schedule 11, paragraph 1(1) of the VAT Act 1994. A decision as to whether to exercise those discretionary powers is not within the jurisdiction of the Tribunal.

11.	Mr Webb informed the Tribunal that Mrs Patel has written to the Commissioners asking for a repayment, although presumably not in terms of their discretionary powers. He said that the correspondence had been overtaken by the appeal but that if the Appellant wrote again asking for a discretionary repayment this would be considered. That would not be a matter for him and he could not say what the response would be.  He said that no visit had taken place to verify the returns.

12.	It seems to us that it is most unlikely that Customs would consider a repayment without verifying the returns.

13.	In view of the history of this trader we would recommend an early assurance visit to verify his returns, to consider whether monthly returns are in fact appropriate and to consider whether the Appellant may be entitled to deregister.

14.	In the result however the Tribunal must dismiss the appeal under section 80.

15.	Mr Webb stated that Customs were not applying for costs.

THEODORE WALLACE
CHAIRMAN

RELEASED: 28 June 2006

LON/05/397
££B G Patel v  Revenue & Customs [2006] UKVAT V19634 (28 June 2006)