19257
Input Tax Claim Voluntary Disclosure, claim made and met in part, purported decision not advising of right of appeal, whether final determination, whether additional ground of claim required to be treated as a new claim or an amendment to the original claim .

EDINBURGH TRIBUNAL CENTRE

	THE JOHN MARTIN GROUP	Appellant

	- and -

	HM REVENUE & CUSTOMS	       Respondents

			Tribunal:	 (Chairman):  T Gordon Coutts, QC
					 (Members):   James D Crerar, WS., NP
							  Mrs Helen M Dunn, LL.B.

Sitting in Edinburgh on Tuesday 30 August 2005

for the Appellant		Colin Tyre, QC

for the Respondents	Andrew Young, Advocate

© CROWN COPYRIGHT 2005.

DECISION

Introductory
This appeal is against a decision by the Respondents (HMRC) refusing to consider a revision to a claim submitted on 27 June 2003 for repayment of VAT overpaid by the Appellant (who were Car Dealers) on demonstrator vehicles and bonus payments.

The claims could be made as a result of ECJ Decisions; Commissioners v Italian Republic (C-45/95) and Elida Gibbs Ltd v Customs and Excise Commissioners (C317/94).  The Respondents issued business briefs resulting therefrom inviting claims.  It is not necessary to rehearse those decisions.

The Facts of the Present Dispute
The Appellants claim in response to the invitation in the business briefs was made on 27 June 2003.  It stated an amount and provided a calculation, thereby complying with Regulation 37 of the Value Added Tax Regulations 1995.  There was thereafter discussion between the parties culminating with an email from an officer of the Respondents dated 23 August 2004.

That document reads as follows:

“Dear Neil

Please find attached the schedule detailing the amounts that I consider to be re-payable to your client.

You will note that most of the Lawrence Elida claim has not been authorised.  This is in accordance with the Guidance Tables.  The sums not authorised are considered to be “Reg 29” errors and not section 80 claims.

Repayment will not be made in respect of those tax periods where a repayment claim was submitted.  The periods concerned are:  07/83, 01/84, 07/84, 01/85 and 07/87.

The reason for this being:
Given that the litigation in Marks and Spencer revolved around the three year time limit as it was introduced into, and applied to, section 80 of the Act only applies where “…. A person has paid an amount …. to the Commissioners by way of Vat which was not Vat due to them … “, claims to recover amounts over declared as output tax in returns for accounting periods which led to a repayment by the Commissioners to the taxpayer cannot be said to fall within the scope of section 80 as no amount has been paid to the Commissioners.

Should you wish to discuss this matter further please do not hesitate to contact me at Grangemouth.

Regards

John

John A Shields
Grangemouth Vat
01324 496627

That document was subsequently said by letter dated 17 February 2005 by HMRC to be a decision in relation to the case.  If so it would set time limits running.  Further communications by email between the parties representatives and HMRC occurred.  In particular on 11 October 2004 the Appellant wrote inter alia

“I was under the impression (given by Shirley Green and yourself) that at the time of payment of the claim that your Department would formally set out in writing (that is, by letter rather than email) the various restrictions made to JMG’s claims together with the precise reasons why those payments had not been made.  These formal details would then form the basis of any initial appeal, and be revisited should that appeal be successful.  In addition, if any subsequent legal decision was taken we could use this information to assess the impact to JMG.  I understood that this was as much to protect your Department’s position as much as JMG in relation to any subsequent actions/case decisions.

For example, in my previous mail I calculated that £496,123 would be repaid to JMG yet the amount actually received by JMG was £495,367.  Therefore, what has changed from the last position we discussed.  In addition, your last spreadsheet indicated the £526,706 was authorised for payment but I assume that this was further restricted for the JMG repayment periods (but whilst I know the periods involved, I do not know the figures for each to be able to check the restriction made).

Please appreciate that im not trying to be difficult here but I was expecting something more formal to set out your Department’s position regarding JMG’s claim.  Therefore, please let me know if the email sent on 23 August 2004 will be your Department’s final response on this as I will be appealing on behalf of JMG in respect of the restrictions made”.

In the meantime statutory interest had been calculated and a sum arrived at.  This was communicated to the Appellant by a formal letter concluding, as is invariably the practice for such letters, with the paragraph “should you wish to appeal against the amount of interest approved you have a period of 30 days from the date of this letter to appeal to an independent VAT Tribunal”.

Discussions had taken place and adjustments made to the repayment amount.  A calculation made on 31 August was transmitted to the Appellants.  That was contained in a document headed Notice of Voluntary Disclosure and at the foot of page 1 stated that there were rights of appeal but these could only be in relation to the statement of account.  It should be noted that there was a further similar document with a date of calculation of 4 March 2005 in the sum of £958 in relation to an amendment to the repayment calculation.  A statement of account is not equivalent to a decision letter.

Two other letters should be noted, one dated 22 February 2005 informed the Appellant that a supplementary claim pursuant to a revision made by the Respondent to tables they had promulgated in relation to Elida Gibbs claims had been allowed in part and the other dated 3 March 2005 provided for an additional payment in respect of corrections to the claims by the Appellant and their wholly owned subsidiary, Lawrence of Kemnay Ltd.

In the meantime, and known to HMRC, a revision of the whole matter was undertaken by a new firm of accountants.  This was submitted on 4 February 2005.  It was rejected in the following terms: 

“I would point out that a decision was given in relation to this case on 23 August 2004 and the appropriate amounts repaid.  Consequently, the claim forwarded by you, constitutes a new claim and as such is outwith the time limits and must be refused”.  By letter dated 9 March 2005 the new agents for the Appellant wrote intimating that they had been unable to locate any written correspondence from the Commissioners dated 23 August 2004 and seeking information by asking how the decision was communicated, and further intimating that the time limits within which to appeal the decisions contained in a letter of 22 February 2005 from the Respondents had not expired.

The issue for the Tribunal
Counsel for both parties were agreed that the issue for the Tribunal was whether the revisal to the claim dated 4 February 2005 was an amendment or a new claim.

The Respondents Statement of Case had argued that the email communication of 23 August was a decision which since it had not been appealed was final but in argument to the Tribunal it was said that the communications in October might constitute finality.

For the Appellant it was argued that the matter had never been resolved and was still ongoing in the light of the whole correspondence at the date of the amended claim letter.

Previous Decisions
Counsel were unable to provide guidance for the Tribunal other than that contained in 2 other Tribunal Decisions University of Liverpool (16769) and Quicks Plc Decision No 15836.  The latter decision was in relation to an argument that the parties contentions could not be revised in the light of a subsequent Court decision affecting the issue.  Unsurprisingly the contention failed and the amendment of the grounds of appeal was allowed on the basis that this was an additional reason which the Tribunal could consider.

More nearly in point is the University of Liverpool case.  The facts in that case were different from the present in respect that it was plain that in relation to the claims made for the University there had been payment.  That had been treated as a completed claim by the University and its advisors and was not subject to any further discussion.  Later it was sought to introduce a different method of calculation, which in that case related to allocation of exempt supplies in the recovery of input tax.  The Tribunal treated that matter as decisive and their reasoning cannot in my view be faulted.  The Chairman, Mr Demack at para 26 distinguished between claims which were outstanding and those which were completed.  We agree with the analysis.  At 28b he treated as completed a claim which had been met in part by the Commissioners and the time limit for appealing against the rejection of the remainder prescribed by rule 4.1 of the VAT Tribunal Rules 1986 as amended had expired.  He further defined expiry as including exhaustion of the appeal processes and opined that an application for leave which had been made but not determined meant that the claim remained outstanding.

That decision is helpful in focussing attention on whether or not a claim has been completed and accordingly whether a subsequent claim is new or an amendment to the original claim.

Decision
The Tribunal having considered the content and form of the document of 23 August are wholly unable to consider that as being a decision letter.  It contains no reference to the matter of finality or of appeal and, worse, no letter from the Respondents in this case purported to be either final or to comply with the internal guidelines for officers of the Respondents in relation to decisions or reconsiderations.  No finality would be deduced from any of the Respondents letters dealing with the merits of the claims as submitted, and that despite the terms of the Appellant’s letter of 11 October.  HMRC made invitations on all the correspondence to discuss further.

By paragraph 12.1 of the Customs document V1-29 it is plainly stated that HMRC letter must be issued within the appropriate time and provided it concerns an appealable matter must …. contain a statement that if the Appellant wishes to appeal it has 30 days from the date of the letter to appeal to an independent Vat and Duties Tribunal. 

Nowhere in that guidance is it contemplated that a letter could properly be issued which could be asserted by HMRC to be a decision which did not contain intimation of the right to appeal nor, even, that a decision could be communicated other than by letter.  This Tribunal does not consider that email chat can constitute such a significant communication as will contain intimation of the need to appeal and as a consequence be significant in relation to time limits and capping provisions.

For these reasons therefore it follows that the amendment proposed in the letter of 4 February 2005 is not a new claim but an adjustment of an existing claim.  Accordingly the Tribunal allow the appeal, the consequence of which is that the matter of the repayment to which the Appellant is entitled is ongoing and requires determination.

T GORDON COUTTS, QC

CHAIRMAN

RELEASE:  7 SEPTEMBER 2005.

EDN/05/44