[2009] UKFTT 183 (TC)

TC00138

Appeal Number: LON/2008/1341 

FIRST TIER TRIBUNAL TAX

 VAT – EIGHTH DIRECTIVE REFUND CLAIM – did the Appellant make the claim by the deadline – No – Appeal Dismissed

DECISION NOTICE (FULL REASONS)
Rule 35(2) The Tribunal Procedure (First Tier Tribunal) (Tax Chamber) Rules 2009 

	DIGI SYSTEMS (IRELAND) LIMITED	Appellant

	- and -

         THE COMMISSIONERS FOR
	HER MAJESTY’S REVENUE and CUSTOMS	Respondents

			Tribunal: MICHAEL TILDESLEY OBE	 (Chairman)
				      KAMAL HOSSAIN FCA FCIB
	
Sitting in public at London on 6 July 2009

Oliver Conolly counsel instructed by PKF (Ireland) for the Appellant  

Alexander Ruck Keene counsel instructed by the Solicitor of HM Revenue & Customs, for the Respondents

© CROWN COPYRIGHT 2009

DECISION
The Appeal
1.	The Appeal concerned the Appellant’s entitlement to repayment of VAT in the sum of £123,896.24 under the Eighth Directive (79/1072/EEC) in respect of supplies made in 2006.
2.	The issue in dispute was whether the Appellant submitted its repayment claim within the requisite deadline.  HMRC accepted that the Appellant met the other conditions for repayment under the Eighth Directive.
3.	HMRC refused the Applicant’s repayment claim because they did not receive it until 20 July 2007 which was after the deadline of 30 June 2007.   The Appellant contended that it despatched the claim form together with supporting documents by regular post on 30 June 2007, which was sufficient to meet the legislative requirement of making a claim.
4.	 The issue involved a factual dispute, which if decided in favour of the Appellant would generate a dispute on the construction of the legislation dealing with repayment claims.
5.	The factual dispute was whether the Appellant despatched the claim form on 30 June 2007, with the onus of proof on the Appellant on the balance of probabilities. 
6.	The legal dispute concerned the construction of when a claim is made, which according to the Appellant was when the claim was despatched not when received by HMRC.
Legislative Background
7.	The Eighth Directive sets out the conditions for VAT refunds by a Member State to a taxable person who is established in another Member State. In this Appeal the Appellant was established in the Republic of Ireland and seeking to recover VAT incurred on supplies in the United Kingdom.
8.	Article 7(1) of the Eighth Directive provides
“applications shall be submitted to the competent authority …….. within six months of the end of the calendar year in which the tax became chargeable”.
9.	The provisions of the Eighth Directive have been incorporated in domestic law by section 39 of the VAT Act 1994 under which HMRC may provide for VAT repayment to persons carrying on business in another Member Staff on supplies to them in the United Kingdom.  The scheme for repayment is set out in Regulations made under the provisions of section 39 of the VAT Act 1994.
10.	The relevant regulations are regulations 173 to 184 of the VAT Regulations 1995. Regulation 179 contains the time limit within which a claim must be made. Regulation 179(1) in so far as is relevant provides:
“A claim shall be made not later than six months after the end of the calendar year in which the VAT claimed was charged”.
The Factual Dispute
11.	It was accepted by the parties that the Appellant’s disputed claim had to be made no later than 30 June 2007 in respect of the VAT incurred on its supplies made to it in 2006.
12.	The Appellant’s evidence for its proposition that the claim form was completed and posted by regular post on 30 June 2007 consisted solely of a copy of the claim form which was signed by a Peter Moore and dated 30 June 2007. Peter Moore was not called to give evidence. The Appellant had terminated the employment of Mr Moore who was the Appellant’s financial controller. The Appellant advised the Tribunal that the termination of Mr Moore’s contract of employment was not connected with the circumstances of the Appeal.
13.	Appellant’s counsel suggested at paragraph 10 of his skeleton that the factual dispute was not in issue. He considered that the statement at paragraph 18.2 of HMRC’s skeleton: “it  appears that the documents took over three weeks to arrive at the Commissioners’ offices, being received on 20 July 2007”, implied that HMRC were not disputing that the Appellant’s claim was sent by regular post on 30 June 2007.
14.	At the hearing the Tribunal sought clarification from HMRC counsel about their position. Counsel explained that HMRC were not in a position to assert positively that the claim form was not sent on 30 June 2007 in the sense that they did not have direct evidence to prove the positive assertion. Counsel, however, stated that HMRC were putting the Appellant to proof on the date when the claim form was sent. In counsel’s opinion the Tribunal had to be satisfied on the balance of probabilities that the Appellant despatched its claim on 30 June 2007.
15.	The Tribunal weighed the Appellant’s evidence against the following facts:
(1)	HMRC received the claim form on 20 July 2007 as evidenced by the date stamp of receipt of HMRC’s VAT Overseas and Repayments section endorsed on the form.
(2)	The date of receipt was 20 days after the deadline date of 30 June 2007.
(3)	The claim form was despatched from Dublin in the Republic of Ireland to HMRC’s VAT Overseas and Repayments section located in Londonderry, Northern Ireland.  In the Tribunal’s view the sending of correspondence across the Irish border would be relatively straightforward involving established postal delivery systems   
(4)	The Appellant had made previous applications under the Eighth Directive. The Appellant was, therefore, familiar with the requirements for making claims. The Appellant should have been aware of the importance of keeping adequate records evidencing the date when the claims were sent.
(5)	The Appellant admitted in correspondence with HMRC that it was experiencing major difficulties with Mr Moore around the deadline of 30 June 2007. Although the Appellant denied Mr Moore’s departure had any connection with the Appeal, the fact remains that he was responsible for submission of the claims form, and that at the relevant time the Appellant had problems with Mr Moore. 
(6)	The 30 June 2007 was a Saturday. The fact that a Saturday is normally a non-working day raised a doubt in the absence of contrary evidence whether Mr Moore actually signed and completed the form on 30 June 2007.
16.	The Tribunal considers that the Appellant’s evidential basis for its proposition that the claim form was despatched by regular post on 30 June 2007 even when taken in isolation was weak. The date and signature on the claim form related to the declaration on the services supplied to the Appellant.  The Appellant adduced no persuasive evidence connecting the date of declaration with the date of despatch.
17.	The probative value of the Appellant’s evidence, however, was totally undermined when assessed against the factual matrix set out in paragraph 15. The Tribunal concludes that the most probable explanation from the assessment of the facts found was that the Appellant despatched the claim form by regular post sometime after 30 June 2007, on a date close to the 20 July 2007.
Legal Dispute
18.	The determination of the legal dispute was academic in view of the Tribunal’s decision on the factual dispute. The Tribunal was not in a position to express a view on the proper construction of the words of Regulation 179(1).  At the hearing counsel for HMRC adopted a new line of legal argument which would have necessitated an adjournment for further submissions from Appellant’s counsel.
Decision
19.	The Tribunal decides that the Appellant has not proved on the balance of probabilities that it despatched the disputed claim on or before the 30 June 2007. The Tribunal, holds that the Appellant has not met the time limit for making the disputed claim in accordance with regulation 179(1) of the VAT Regulations 1995. The Appellant is, therefore, not entitled to a VAT repayment in the sum of £123,896.24 under the Eighth Directive (79/1072/EEC) in respect of supplies made in 2006. The Tribunal dismisses the Appeal and makes no order for costs.

                                

                                 MICHAEL TILDESLEY OBE
CHAIRMAN
RELEASE DATE: 24 July 2009

LON/

Notes

20.	The Tribunal directed that the costs regime which operated prior to 1 April 2009 applied to this Appeal. 
21.	A party wishing to Appeal this decision to the Upper Tribunal must seek permission by making   an application in writing to the Tribunal within 56 days of being provided with full written reasons for the decision. An application for permission must identify the alleged error(s) in the decision and state the result the party making the application is seeking.