[2012] UKFTT 125 (TC)
TC01820
Appeal number:
TC/2010/07711
VAT – notice of appeal
served out of time – whether interests of fairness required tribunal to extend
time for service – no – application dismissed
FIRST-TIER TRIBUNAL
TAX CHAMBER
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STATUS INVESTMENTS
LTD
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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 DAVID DEMACK
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Sitting in public in Manchester on 17 January 2012
Simon Buchan, Messrs Barber,
Harrison & Platt, for the Appellant
Mr Wayne Conroy of HM Revenue
and Customs, for the Respondents
© CROWN COPYRIGHT
2012
DECISION
1.
The application by Status Investments Ltd (Status) is for permission to
appeal out of time against a decision of the Commissioners to reject a
voluntary disclosure in which it sought to recover output tax declared and paid
on its gaming machine income from 24 January 1989 to 28 December 2006, the
latter being the date on which both the disclosure and application were made.
In the voluntary disclosure Status claimed that it was entitled to recover that
tax following the High Court judgment in Rank Group plc v Commissioners of
Customs and Excise [2009] Ch D All ER(D) 65.
2.
The voluntary disclosure was rejected by the Commissioners on 17 January
2007 and, under s.83 of the Value Added Tax Act 1994, Status then had 30 days
in which to appeal. In the letter of rejection, the Commissioners did inform
Status that it might appeal their decision, but failed to inform the company of
the statutory time limit for the purpose.
3.
Before me, Mr Wayne Conroy of HMRC appeared to represent the
Commissioners. Status was represented by Mr Simon Buchan of Messrs Barber,
Harrison & Platt, chartered accountants of Sheffield.
4.
By its representatives, Status explained the reasons for the late
notification of its appeal in its Notice of Appeal of 23 September 2010, as
follows:
“Our
client was unaware that he was required to submit an appeal within a set time
limit as HMRC’s letter of 17 January 2007 made no mention of any time limit in
relation to submitting an appeal. Our client believed that the submission of a
protective claim was all that was required whilst awaiting a ruling in respect
of the Rank Group case.
Following the Rank Group decision, our client wrote to HMRC
on 17/7/09, 18/5/10 and 22/6/10. HMRC did not reply to our client in respect of
this matter until 19/7/10 at which time HMRC suggested that our client may wish
to submit a late appeal to the VAT tribunal.”
5.
I might add that Status did not appeal to the tribunal until the
Commissioners took court proceedings against it to recover the tax in dispute.
6.
Essentially, Mr Buchan relied on the fact that Status had made a claim
to recover output tax said to have been overpaid, which it pursued in correspondence,
so that he submitted that it was entitled to depend on the Commissioners’
assurance in their Brief 11/10: “The aim is to process all existing claims,
where satisfactory evidence to support the claim has been provided, by 31 March
2011”. Implicitly, he claimed that the interests of fairness and justice
required me to grant the application.
7.
Mr Conroy contended that the application should be refused, simply
maintaining that the Notice of Appeal was given long after the statutory time
limit for its service had expired, and it was not in the interests of justice
to permit appeals after long periods of delay.
8.
A number of applications similar to that before me have been dealt with
by the tribunal, some under the VAT Tribunal Rules 1986 and others under The Tribunal
Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 which came into force
on 1 April 2009 on the tribunal system being reformed. I was not referred to
any of the resulting decisions, but find it helpful to refer to a number of
them.
9.
In one fairly recent case under the 1986 Rules, that of The Medical
House plc v Commissioners of Revenue and Customs (1986) Decision no.
19859, which came before me, I considered, as per rule 3.9 of The Civil
Procedure Rules (CPR), the following matters:
a. The interests of the
administration of justice
b. Whether the application
for relief had been made properly
c. Whether the failure to
comply was intentional
d. Whether there was any
good explanation for the failure
e. Whether there had been
non-compliance with other rules, practice directions, etc.
f. Whether the failure was
caused by the party or its legal representative
g. Whether any fixed date
could still be met
h. The effect which the
failure to comply had on each party
i. The effect which the
granting of relief would have on each party.
10.
The Commissioners accepted that Medical House would have been entitled
to the VAT input tax credit it claimed following the decision of the Court of
Justice of the European Communities (the ECJ) in Kretztechnik AG v Finanzamt
Lenz (Case C465/03) [2005] STC 1118 but nevertheless I determined that the
remaining factors had such weight that there should not be an extension of
time: the interests of legal certainty required finality of VAT obligations.
11.
Exceptionally, Judge John Walters QC granted an application for an
extension of time to appeal in Former North Wiltshire District
Council v Commissioners of Revenue and Customs TC00714, an application made
under the 2009 rules. He held that the tribunal was under no obligation to
consider the criteria in r.3.9 of the CPR, but should apply the overriding
objective of r.2.2 of the 2009 rules to deal with cases fairly and justly. He
balanced on the one hand the assessment of the appellant’s culpability in
delaying appealing and the prejudice to the Commissioners 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 its
application were to be refused.
12.
In another case brought under the 2009 rules, that of Aston Markland
v Commissioners of Revenue and Customs TC/2011/01404, the tribunal observed
that there is no guidance in the legislation as to the criteria to be applied
when considering whether to give permission for a late appeal. However, it
observed that in GSM Worldwide Ltd v Commissioners of Revenue and Customs TC/2010/07222,
the then President of the tribunal, Sir Stephen Oliver QC, said in the context
of a provision similar to that found in s.83G(3) of the Value Added Tax Act
1994:
“To
allow the application I would have to be satisfied that there were exceptional
reasons that, consistent with the obligation to deal fairly and justly with
those parties, required me to extend what would otherwise be the statutory 30
days for appealing. I am unable to think of any good reason that accounts for
GSM’s delay in lodging the appeal notice. For those reasons I dismiss the
application.”
13.
And in another case with which Sir Stephen dealt, that of Ogedegbe v
Commissioners of Revenue and Customs LON/09/0200, he said, “While this
Tribunal has got power to extend the time for making an appeal, this will only
be granted exceptionally”. I observe that in the Ogedegbe case the
tribunal considered the appellant’s case to have little prospect of
succeeding.
14.
I might also mention yet another case. In Pledger v Commissioners of
Revenue and Customs [2010] UKFTT 342 (TC) the tribunal declined to exercise
its discretion to permit a late appeal where the appellant had “deliberately
embarked upon a course of delay and obstruction”.
15.
In my judgment, amongst the most important considerations in the instant
case is the fact that the interests of legal certainty require finality of
legal obligations. Any contributory delay to the service of the notice of
appeal said by Status to have been occasioned by the Commissioners may be
excused on the basis of their being unable properly to deal with the company’s
correspondence in 2009 and 2010 as the Rank Group appeal was in the process
of being dealt with by the ECJ.
16.
Mr Buchan advanced no good reason for Status’s failure to serve notice
of appeal, if not timeously then within a reasonable time of the Commissioners’
rejection of the voluntary disclosure. His reliance on the contents of the
Commissioners’ brief 11/10 as reason for such failure does not, in my judgment,
amount to good reason. The company did nothing between January 2007 and July
2009 to pursue its claim; that appears to me to be a deliberate decision. That
too, in my judgment, is an important consideration.
17.
I am not bound by any of the decisions to which I have referred, and
must exercise my own discretion in determining whether to allow the
application. Nevertheless, I have taken account of them all in arriving at my
own decision. Since I am satisfied that that there were no exceptional reasons
that require me, consistently with the obligation under the 2009 rules to deal
justly and fairly with the parties to the appeal, to extend the statutory time
for appealing, I dismiss Status’s application.
18. 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.
TRIBUNAL JUDGE
RELEASE DATE: 13 February 2012
