[2009] UKFTT 361 (TC)

								TC00299

Appeal number LON/2008/2039

VALUE ADDED TAX – Repayment – Claim submitted 29 days late – VAT Regulations 1995 – Appeal dismissed

FIRST-TIER TRIBUNAL
TAX CHAMBER

	OCEANTEAM POWER & UMBILICAL ASA	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS (Value Added Tax)	Respondents

				TRIBUNAL: 	MISS J C GORT (Judge)

Sitting in public in London on 16October 2009

Peter Mackintosh, finance manager, for the Appellant

Alex Ruck-Keene of counsel, instructed by the Solicitor’s Office, for the Respondents

© CROWN COPYRIGHT 2009

DECISION

1.	This is an appeal against a decision of HMRC contained in a letter dated 18 August 2008 refusing to repay an amount of value added tax in the sum of £201,250 under the provisions of the Value Added Tax Regulations 1995 [S.I. 1995/2518].  
2.	The reason for HMRC refusing the claim was that it was made after the statutory date for such claim.
3.	The Appellant carries on business as an administration business providing offshore/shipping and other services from premises in Bergen, Norway.  It is not registered for VAT in the United Kingdom.
4.	Seven supplies were made to the Appellant by Perry Slingsby Systems Ltd, of York, North Yorkshire on invoices dated between 15/06/07 and 31/10/07.  Those invoices were addressed to “Oceanteam Power & Umbilical ASA”.  The invoice dated 10 August 2007, alone of the seven invoices, contained an instruction that the item was to be delivered to the address of “Oceanteam Power & Umbilical Ltd, Dundee Harbour, Shed 3A, Dundee, Scotland, DD1 3LW”.  That company was registered for VAT in the United Kingdom with effect from 10 August 2005.  Perry Slingsby Systems Ltd are registered for VAT in the United Kingdom with effect from 1 July 1988.
5.	All seven invoices relate to the manufacture of two Workclass Remote Operated Vehicles which were assembled for Oceanteam by Perry Slingsby.  The vehicles were from the beginning intended for export, although the Dundee address was given for delivery purposes only.  The Appellant had no credit rating from Perry Slingsby and therefore the first invoice, dated 15 June 2007 which is the subject of this appeal was paid upon receipt by the Appellant on 20 June 2007.
6.	On 29 January 2008 the Appellant completed form VAT 65 and submitted it with copy invoices to the Overseas Repayment Unit office of HMRC seeking the repayment of the VAT paid in respect of all the invoices.  This was the first and only claim the Appellant had submitted at that time and was in the total sum of £805,000.  
The legislation
7.	The Value Added Tax Regulations 1995 [1995/2518]
Regulation 185
(1)	“In this Part “claimant” means a person making a claim under this part or a person on whose behalf such a claim is made and any agent acting on his behalf as his VAT representative;
“third country means a country other than those comprising the member States of the European Community;
“trader” means a person carrying on a business who is established in a third country and who is not a taxable person in the United Kingdom.

(2)	For the purpose of this part, a person is treated as being established in a country if – 

(a)	he has there a business establishment, or
(b)	he has no such establishment (there or elsewhere) but his permanent address or usual place of residence is there.

(3)	For the purpose of this Part -  

(a)	a person carrying on business through a branch or agency in any country is treated as being established there, and
(b)	where the person is a body corporate its usual place of residence shall be the place where it is legally constituted.

Regulation 192

(1)	A claim shall be made not later than 6 months after the end of the prescribed year in which the VAT claimed was charged and shall be in respect of VAT charged on supplies or on importations made during a period of not less than 3 months and not more than 12 months, provided that a claim may be made in respect of VAT charged on supplies or on importations made during a period of  less than 3 months where that period represents the final part of the prescribed year.

Thirteenth Council Directive of 17 November 1986

86/560/EEC
Article 2

(1)	Without prejudice to Article 3 and 4 each Member State shall refund to any taxable person not established in the territory of the Community, subject to the conditions set out below, any value added tax charged in respect of services rendered or movable property supplied to him in the territory or the country by other taxable persons or charged in respect of the importation of goods into the country, in so far as such goods and services are used for the purposes of the transactions referred to in Article 17(3)(a) and (b) of Directive 77/388/EEC or of the provision of services referred to in point 1(b) of Article 1 of this Directive.

(2)	Member States may make the refunds referred to in paragraph 1 conditional upon the granting by third States of comparable advantages regarding turnover taxes.
(3)	Member States may require the appointment of a tax representative.

Article 3

1.	The refunds referred to in Article 2(1) shall be granted upon application by the taxable person.  Member States shall determine the arrangements for submitting applications, including the time limits for doing so, the period which applications should cover, the authority competent to receive them and the minimum amounts in respect of which applications may be submitted.  They shall also determine the arrangements for making refunds, including the time limits for doing so.  They shall impose on the applicant such obligations as are necessary to determine whether the application is justified and to prevent fraud, in particular the obligation to provide proof that he is engaged in an economic activity in accordance with Article 4(1) of Directive 77/388/EEC. The applicant must certify, in a written declaration, that, during the period prescribed, he has not carried out any transaction which does not fulfil the conditions laid down in point 1 of Article 1 of this Directive.

2.	Refunds may not be granted under conditions more favourable than those applied to Community taxable persons.

Article 4

1.	For the purpose of the Directive eligibility for refunds shall be determined in accordance with Article 17 of Directive 77/388/EEC as applied in Member States where the refund is paid.

2.	Member States may, however, provide for the exclusion of certain expenditure or make refunds subject to additional conditions.

3.	This Directive shall not apply to supplies of goods which are or may be exempted under point 2 of Article 15 of Directive 77/388/EEC.

Sixth Council Directive of 17 May 1977

77/388/EEC
Article 10

1(a)	“Chargeable event” shall mean the occurrence by virtue of which the legal conditions necessary for tax to become chargeable are fulfilled.
(b)	The tax become “chargeable” when the tax authority becomes entitled under the law at a given moment to claim the tax from the person liable to pay, notwithstanding that the time of payment may be deferred.

2.	The chargeable event shall occur and the tax shall become chargeable when the goods are delivered or the services are performed.  Deliveries of goods other than those referred to in Article 5(4)(b) and supplies of services which give rise to successive statements of account or statements of account or payments shall be regarded as being completed at the time when the periods to which such statements of account or payments pertain expire [Member States may in certain cases provide that continuous supplies of goods and services which take place over a period of time shall be regarded as being completed at least at intervals of one year].

Article 17

Origin and scope of the right to deduct

1.	The right to deduct shall arise at the time when the deductible tax becomes chargeable …

3.	Member States shall also grant every taxable person the right to the deduction or refund of the value added tax referred to in paragraph 2 in so far as the goods and services are used for the purposes of …

(4)	The refund of value added tax referred to in paragraph 3 shall be effected:
-	to taxable persons who are not established within the territory of the country but who are established in another member State in accordance with the detailed implementing rules laid down in Directive 79/1072/EEC.
-	to taxable persons who are not established within the territory of the Community in accordance with the detailed implementing rules laid down in Directive 86/560/EEC. 

Notice 723 is the non-statutory guidance issued by the Commissioners and reflects the provisions of Regulation 192 above as follows:

“6.6	Is there a time limit for making a claim?
You must make any claim no later than six months after the end of the “prescribed year” in which you incurred the VAT.  The prescribed year is the twelve months from 1 July to 30 June of the following calendar year, so you must make your claim no later than 31 December.  Please note that, to ensure fair treatment for all claimants, claims are dealt with on a “first come, first served” basis and that the time limit is applied strictly.
8.	We heard evidence from Mr Torbjorn Skulstad, the chief accountant of the Appellant.  In Norway it is very unusual for VAT to be charged prior to delivery of an item, as had been the case here.  At the time of the first invoice the company had not been in business very long.  The vehicles were being built for a subsidiary company, Oceanteam Sub-Sea Services, a non-UK company.  The Appellant had not understood why VAT was charged on the invoices at all.  The invoice in question was just headed ‘Invoice’, whereas the other six invoices were all headed ‘Export Invoice’.  In Norway as in the United Kingdom, VAT was charged on both goods and services, but was not charged on items for export.  
9.	Mr Mackintosh, who is the finance manager, had only joined the company in December 2007, Mr Skulstad, had joined on 1 November 2007.  The company’s year end was 31 December.  Because the business was only starting up there was nobody on hand to deal with this particular matter at the relevant time.  It was accepted by Mr Skulstad that the claim had been sent in late.
10.	It is apparent from Notice 723 that “prescribed year” means the period of twelve months beginning on the first day of July in any year and the time limit is strictly applied.  It is unfortunate for the Appellant that the invoice was dated 15 June 2007, and thus the relevant period was six months from the first day of July 2007.  The claim ought to have been made by 31 December 2007.  
11.	The Appellant’s case was that value added tax should not have been charged in the first place by Perry Slingsby Systems Ltd, and that the impact upon the working capital of the Appellant, which was a new company, of their refusal to meet the claim is very severe.
12.	It appears to us that Perry Slingsby ought not in the circumstances to have issued a VAT invoice in respect of any of these purchases.  Whilst the appeal is only against the first of them, VAT has been paid and reclaimed successfully by the Appellant in respect of the remaining six.  The Commissioners apparently took no point on the receipt by Perry Slingsby of VAT in respect of the other six invoices which are clearly headed “Export”.  Nonetheless this is not a matter for this Tribunal, we do not have power to allow the appeal on the basis that the VAT ought not to have been charged in the first place.  This is a matter which the Appellant will have to take up with Perry Slingsby.  The fact that the Commissioners appeared to have been unjustly enriched in respect of this particular invoice, again is not a matter for this Tribunal at this stage.  It was suggested by Mr Ruck-Keene that the Commissioners had a discretion to extend the time in which the Appellant could submit the reclaim, but such a discretion arises only under the Commissioners’ general power, there is no specific discretion contained in the Regulation which appear mandatory.  There is no evidence that the Commissioners did consider exercising their discretion, but again this is not a matter which this Tribunal can adjudicate upon. 
13.	Whilst it is unfortunate for the Appellant that the invoice in question is for twice the amount of the other invoices, and does represent a considerable sum of money, the VAT Regulations properly reflect the 13th Directive, and, because the Appellant did not make a claim within time the Commissioners were entitled to refuse the application for a refund and therefore this appeal is dismissed.

MISS J C GORT
TRIBUNAL JUDGE
RELEASE DATE: 11 December 2009