[2013] UKFTT 785 (TC)
TC02436
Appeal number:
TC/2012/3689
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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MOULTON 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, Moulton Working Mens
Club (“The Club”) applied for an extension of time in which to lodge the appeal,
the decision appealed against being dated 19 July 2007. The Respondents
opposed this application and themselves applied for the appeal to be struck
out. Both applications came 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
£1,500. This surplus would be applied to maintaining the fabric of its
building.
4.
Following the ECJ in 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 15 August 2006, covering periods 1 July 2003 to 30 November 2005 and in
the sum of £6,752
5.
By letter dated 19 July 2007, the Respondents rejected the claim, merely
stating that it was their view that the UK does not breach fiscal neutrality in
the way gaming machine income was taxed. The letter went on to offer a
reconsideration. Mr Vann told us that it had been his intention to apply for a
reconsideration but had clearly overlooked it. He did not realise it had been
overlooked until he received a response from the Respondents on the case of
Wilby Working Mens Club which he was running along side the present case. He
took no further action.
6.
Mr Vann advised us that he was aware of the right to appeal to the
Tribunal, the details of how this could be done, having been given to him by
the Respondents in the Wilby case. However he and the Club made a deliberate
decision not to appeal. This decision was 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.
7.
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.
8.
By letter dated 3 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”.
9.
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 2011, repeating that the claim had already
been rejected, was not under appeal and was therefore closed and would not be
reconsidered.
10.
The Notice of Appeal was received on 3 December 2011.
The Club’s case
11.
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
12.
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.
13.
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
14.
As set out in paragraph 13, 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.
15.
This is a small non profit making club and the financial impact of “losing”
the repayment would be significant. This is a factor which would be favourable
to the Club in their application for extension.
16.
We were not called upon to a make detailed analysis of merit and indeed
had very little information before us upon which we could. The Respondents had
requested no further information from the Club in response to the voluntary
disclosure, having merely rejected the claim. 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.
17.
In considering the 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 the interest of good administration that
there should be legal and financial certainty. This need will inevitably weigh
against an applicant in an application to extend time limits. However there
may well be additional prejudice unique to a particular case. Mr Ridley was
unable to tell us what, if any, further investigation into the claim would be
made if the application were to be granted. We would have thought that some
investigation would be needed but as we were told of none we cannot take this
into account as being a factor favourable to the Respondents.
18.
We have discussed above the factors favourable to the Club – the
financial significance to them of the amount claimed and the fact that their
claim is not without merit. However these factors must be weighed against the
length of the delay and the culpability of the Club in that delay. The decision
letter was dated 19 July 2007. The appeal was received on 3 December 2011.
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 the incurring of further expense
was incorrect. Whilst we accept that this was why the appeal was not lodged,
it cannot excuse it. Any delay by the Respondents in answering the
correspondence cannot justify the Club’s delay in lodging its appeal.
19.
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.
20.
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.
21.
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
