[2013] UKFTT 784 (TC)
TC02435
Appeal number:
TC/2012/00190
VAT - Application by the Appellant
for an extension of time to appeal – balancing of the various factors – Application
dismissed
FIRST-TIER TRIBUNAL
TAX CHAMBER
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WILBY WORKING
MENS CLUB
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Appellant
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- and -
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THE
COMMISSIONERS FOR HER MAJESTY’S
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Respondents
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REVENUE &
CUSTOMS
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TRIBUNAL:
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JUDGE LADY JUDITH MITTING
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MR MICHAEL ATKINSON
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Sitting in public in Northampton on Tuesday 13 November 2012
Mr R J Vann, Accountant for
the Appellant
Mr Ridley, officer of HMRC,
for the Respondents
© CROWN COPYRIGHT
2012
DECISION
1.
In its Notice of Appeal dated 28 November 2011, the Wilby Working Mens
Club (“the Club”) applied for an extension of time in which to lodge the Appeal,
the decision appealed against being dated 14 January 2008. By Notice dated 4
September 2012, the Respondents opposed this application and themselves applied
for the appeal to be struck out. Both applications were before us on 13
November 2012.
2.
We heard no oral evidence, the Club’s case being put by its Chartered
Accountant, Mr RJ Vann, who had acted for the Club throughout. Mr Ridley represented
the Respondents. The facts were not in dispute and we find them to be as
follows:
The Facts
3.
The Club is a not for profit, non commercial members’ club, owned and
run by its members. Financially, its aim is to break even at the end of each
accounting year. Occasional years, it runs into a revenue deficit and equally,
in occasional years, it shows a small revenue profit, unlikely to be more than
£4,000. This surplus would be applied to maintaining the fabric of its
building.
4.
Following the ECJ decision in Finanzamtgladbeck v Linneweber
(c-453/02), the Club believed it had over paid output tax on gaming machine
income which it maintained should properly have been treated as exempt. It
sought to recover the overpaid output tax by way of a Voluntary Disclosure
dated 21 August 2006, covering periods 1 July 2003 to 30 November 2005 and in
the sum of £9,474.
5.
By letter dated 5 September 2006, the Respondents sought further
information for the claim, raising a number of questions. The Club responded
in an extremely detailed five page letter dated 6 November 2006. We
specifically raised with Mr Ridley whether this letter answered all the queries
which had been raised or whether there was anything still outstanding from the
Club in support of its claim. Mr Ridley answered that he was not the case
officer and had not been briefed on this point but was not aware of anything
further being needed. We take from this, and for the purposes of this decision
we find, that the Club had been totally cooperative in providing the evidence
in support of its claim and had done all that was asked of it to verify it.
6.
By letter dated 13 February 2007, the Respondents rejected the claim and
advised that the Club could apply for a reconsideration. By letter dated 16
August 2007, the Club did apply for a reconsideration asking if, additionally,
it could be taken into account that the Club was small, had only two gaming
machines on the income of which a great deal of tax had been paid which could
have been put to better use by the Club.
7.
By letter dated 14 January 2008, the claim was again rejected. The
Respondents reiterated their view that the income from the machines had been
rightly treated by the Club as standard rated and it was a misconception that
it should have been exempt. The letter concluded by advising the Club that
the Respondents had made a similar decision in regard to a claim by the Rank
Group PLC, and that this decision had been appealed to the VAT & Duties
Tribunal. The letter went on to advise the Club of its right to appeal to the
Tribunal and advised that an appeal should be made within 21 days and should be
accompanied by an application that the appeal be stood over behind the Rank
Group appeal.
8.
The Club did not lodge an appeal with the Tribunal and in fact did
nothing in response to the letter of 14 January 2008. Mr Vann told us that the
Club had made a deliberate decision not to appeal, the decision being based on
the assumption and belief (which he now accepted had been wrong) that to appeal
would have incurred a vast amount of funds, considerably beyond the means of
the Club. Mr Vann accepted that he had misunderstood the system of merely
lodging an appeal to be stood over behind the Rank case and had assumed, and so
advised his client, that the Club would have to instruct lawyers of the same
level as those in the Rank case to argue the Club’s case, including all its
European dimensions.
9.
By letter dated 13 October 2010, the Club, by this time aware that Rank
had succeeded in its appeal before the Tribunal, enclosed a copy of its
original Voluntary Disclosure, asking again for repayment. Mr Vann explained
to us that this was not a fresh claim (which would by now have been out of time
by virtue of the capping provisions) but a reinstatement of the original.
10.
By letter dated 4 November 2010, the Respondents advised that this claim
had already been rejected and had not been appealed and was therefore
considered to be closed. Reference was made to Business Brief 11/10 which had
been issued on 16 March 2010. The Brief contained the Respondents’ reaction to
the Rank litigation and stated that
“claims that had 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 ….. by 31 March 2011”.
11.
By letter dated 5 August 2011, the Club replied to this letter pointing
out that the effect of the Tribunal decision in Rank was to support the
voluntary disclosure as representing the correct tax treatment of the supply and
it was therefore unnecessary to appeal. Secondly, it was pointed out that the
Business Brief post dated the claim and was not therefore applicable. The
Respondents replied on 3 November, repeating that the claim had already been
rejected, was not under appeal and was therefore closed and would not be
reconsidered.
12.
The Notice of Appeal was received on 3 December 2011.
The Club’s case
13.
Mr Vann, other than taking us through the chronology, added little to
what he had set out in the correspondence referred to in the preceding
paragraphs. He maintained, and this was accepted by Mr Ridley, that the
Respondents had paid out on a number of similar claims and it was unfair and discriminatory
not to be meeting the Club’s claim. Mr Ridley, had no knowledge of the claims
which had been met and the reasons why but both parties seemed to agree with
our suggestion that the claims may have been those which had been appealed.
Mr Vann also pointed to certain delays by the Respondents in replying to
correspondence.
The Tribunal’s approach to the Applications
14.
Under Rule 20(4) of the 2009 Tribunal Procedure Rules, an appellant may
apply for an extension of time in which to lodge his Notice of Appeal. The
Tribunal is thus given the power to extend the time within which an appeal may
be brought and in exercising the discretion involved in that power we have to
give effect to the overriding objective in Rule 2 (1) of the Rules to deal with
cases fairly and justly.
15.
In exercising our discretion, we take our approach from that set out by
Judge John Walters QC in paragraph 68 of the case of Former North Wiltshire
District Council v HMRC (TC/00/714).
“68. In our judgment, the crucial balancing
exercise which we must carry out in order to exercise our discretion in a fair
and just disposal of the application is between, on the one hand, our
assessment of the Appellant’s culpability in the delaying to lodge their notice
of appeal and the prejudice to HMRC in terms of the public interest in good
administration and legal certainty, and, on the other hand the loss and injury
which would be suffered by the Appellant if an extension of time is refused.
We consider that the criteria in CRP 3.9(1), which are relevant to this case,
are effectively addressed in this balancing exercise.”
Conclusions
16.
The approach of the Tribunal is in effect a balancing exercise in which
we have to identify the various and relevant factors to which we should give
weight and, of some importance, the weight to be attached to these factors.
17.
In favour of allowing an extension would be the fact that, given our
reasoning in paragraph 5, the Club’s claim had been fully evidenced and
required no more investigation by the Respondents. The Club had cooperated
fully and their response of 6 November 2006 was factually full and well
argued. This is a small non profit making Club and the financial impact of “losing”
the repayment would be significant. These are all factors which would be
favourable to the Club.
18.
We were not called upon to make a detailed analysis of merit.
We expressly asked Mr Ridley if the claim would be repaid as other similar ones
were being, if we allowed the extension. He, for perfectly proper reasons,
would not commit to repayment but he readily accepted that given the current
status of the Rank litigation, this would be a claim to which consideration for
repayment would be given. For our purposes, all we need say is that the claim
quite clearly is not without merit – again a factor which would be favourable
to the Club.
19.
In considering prejudice to the Respondents, if an extension were to be
given, we were in some difficulty. We tried to press Mr Ridley who told us he
had not been briefed on the question of prejudice. Quite clearly it is always
in the public interest and in the interests of good administration that there should
be legal and financial certainty. This need will inevitably, and it does here,
weigh against an Appellant in an application to extend time. However, whether
there is any specific prejudice, unique to this case, we do not know. Given
that we were told of none and we have made a finding that the claim has been
verified, we find that there would be no additional prejudice to the
Respondents if we were to allow the extension.
20.
All the above factors, which to a greater or lesser extent would appear
to favour an extension of time, must be weighed against the length of the delay
and the culpability of the Club in that delay. The decision letter was dated
14 January 2008 and the appeal was only received on 3 December 2011 –
delay of just short of four years. Nothing at all was done for two and half
years until the claim was resubmitted in October 2010. Throughout this period
it cannot be overlooked that the Club was being professionally advised. As Mr
Vann now accepts, his belief that the mere lodging of the appeal would
inevitably lead to incurring much greater expense was incorrect. Whilst we
accept that this was why an appeal was not lodged, it cannot excuse it. Any
delay by the Respondents in answering the correspondence was of no more than a
matter of a very few months and cannot begin to justify the Club’s delay. It
also should be noted that the Respondents went out of their way to point the
club in the direction of lodging an appeal. The rejection letter of 14 January
2008 not only advised the Club of its right to appeal but told it how to do it,
including to ask for the stand over.
21.
It is our conclusion, having weighed all the factors above mentioned
that whilst there are clearly some factors weighing in favour of granting the
extension these are by far outweighed by the pure length of the delay and the
discerned culpability of the Club for the delay in initiating the appeal.
22.
For the reasons given above, we therefore refuse the Club’s application
for an extension of time in which to lodge its appeal and we grant the
Respondents’ application that the appeal be struck out.
23.
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.
LADY JUDITH MITTING
TRIBUNAL JUDGE
RELEASE DATE: 17 December 2012
