[2012] UKFTT 575 (TC)
TC02252
Appeal number:
TC/11/09987
Gaming machine – RANK case
– late claim – Strike out
FIRST-TIER TRIBUNAL
TAX CHAMBER
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KIRKSHAWS NO. 1
SOCIAL 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 ANNE SCOTT, LLB, NP
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CHARLOTTE BARBOUR, CA, ATII
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Sitting in public at George
House, 126 George Street, Edinburgh on Thursday 6 September 2012
Mrs Margaret McCarroll for the
Appellant
Mrs Elizabeth McIntyre, HM
Revenue and Customs, for the Respondents
© CROWN COPYRIGHT
2012
DECISION
1.
The Appellant appealed the decision of HMRC dated 26 July 2011. That
decision was to the effect that the voluntary disclosure in the amount of
£26,777.00 VAT in relation to Gaming Machine income for the periods 1 November
1998 to 5 December 2005 inclusive was rejected since the claim had
not been submitted within the statutory time limit.
2.
In summary, the basis of the appeal was that the Appellant believed that
they had not received appropriate guidance and assistance from the Debt
Management Unit (DMU) of HMRC in India Street, Glasgow when they had approached
them for assistance in approximately 2006-07. Following consultation with DMU
the Appellant had decided that there appeared to be no basis on which to make a
claim and therefore had not done so at that juncture. The Appellant had found
it expensive and difficult to source appropriate advice and believed that HMRC
should have known the law and advised them appropriately. The Appellant also
alleged that they had suffered from errors made by HMRC and the two matters
should be offset.
3.
HMRC submitted an Application in terms of Rule 8(3)(c) of The Tribunal
Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. They requested that
the proceedings be struck out.
4.
Rule 8 (3)(c) reads:
(3) The
Tribunal may strike out the whole or a part of the proceedings if—
(c) the
Tribunal considers there is no reasonable prospect of the appellant’s case,
or part of it, succeeding.
5.
This Hearing addressed that Application and also the Appellant’s request
for a postponement of the Hearing. The basis for the request for postponement
was that having sought professional advice they needed additional time to
compose the case and call for evidence and witnesses. The Appellants were
unrepresented and at the outset of the Hearing, which was informal, the
Tribunal explained their Inquisitorial function, the limits of their
jurisdiction and specifically that they could only consider the decision under
appeal and the current applications for strike out and postponement. Extraneous
matters such as offset of tax debts and HMRC ‘s approach to taxpayers could not
be considered in this forum.
6.
Mrs McCarroll, for the Appellants, was a clear, good and credible
witness. In good faith, she had obviously done what she could for the Appellants.
The Tribunal accepted her evidence, which was that she had heard “on the
grapevine” that it was possible that she should make a claim, for the non-profit
making club for which she was a bookkeeper, and thereby recover VAT on gaming
machine income. In approximately 2006-07, she had asked accountants for advice
and they had said that a claim was not possible. She had also contacted the
DMU with whom she had had dealings on a regular basis: she believed that she
could rely on their advice and assumed that they would know the true legal
position. They told her verbally that they knew nothing about the possibility
of such a claim, so she did nothing. In September 2010, she again asked DMU
about this matter and again was told that they knew nothing about it. The Appellants
could not afford to seek specialist advice. Ultimately, in 2011, she sought to
reclaim VAT paid on gaming Machine Income on the basis that that should have
been exempt from VAT since May 1997. These are known colloquially as
Linneweber claims and referred to as such by HMRC. Her core argument was that
DMU should have been aware of Linneweber and given her advice on that at a much
earlier stage.
7.
HMRC pointed out that Revenue and Customs Brief 40/09 issued on
14 July 2009 and the Brief 11/10 issued on 16 March 2010 dealt
specifically with claims in relation to gaming machines and identified the time
limit for such claims. The Tribunal accepts that there was information
available in the public domain long before the claim in this case was
submitted.
8.
The crux of the problem here is that it is not disputed that the claim
in this case was received on 1 July 2011 and that it related to the period
ending 5 December 2005. As indicated in paragraph 1 above, that claim was
rejected by HMRC because it was “out of time”.
9.
The legislation covering the time limit for such a claim is to be found
in section 80 Value Added Tax Act 1994. That reads:-
“80 (1) Where a person—
(a) has
accounted to the Commissioners for VAT for a prescribed accounting
period (whenever ended), and
(b) in
doing so, has brought into account as output tax an amount that was
not output tax due, the Commissioners shall be liable to credit the
person with that amount.
….
(4) The
Commissioners shall not be liable on a claim under this section—
(a) to
credit an amount to a person under subsection (1) or (1A) above, or
(b) to repay an amount to a person
under subsection (1B) above,
if the claim is made more than [4
years] after the relevant date.
(4ZA) The relevant date is—
(a) in the case of a claim by
virtue of subsection (1) above, the end of the
prescribed accounting period mentioned in that subsection, unless
paragraph (b) below applies;
(b) in
the case of a claim by virtue of subsection (1) above in respect of an
erroneous voluntary disclosure, the end of the prescribed accounting period in
which the disclosure was made;”
10.
In summary, what this means is that HMRC can never be liable to credit
or repay tax if a claim is not received within four years of the end of the
accounting period in question. Accordingly, since this claim was received on 1
July 2011, HMRC are correct in stating that the earliest accounting period it
could relate to is 06/07. Of course, that is long after the periods covered by
the voluntary disclosure. The fact that the Appellant was not aware of the
possibility of making a claim before she did so cannot assist her since a statutory
time limit cannot be extended on the basis that a taxpayer was ignorant of the
law.
11.
Unfortunately for the Appellant, in simple terms, the claim is indeed
“out of time” and therefore the merits of the claim cannot be considered by
either HMRC or the Tribunal.
12.
Accordingly, for the reasons set out above, the Tribunal finds that
there is no reasonable prospect of the Appellant’s case, or part of it
succeeding and therefore refuses the request for postponement and strikes out
the case.
13.
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.
ANNE
SCOTT, LLB, NP
TRIBUNAL JUDGE
RELEASE DATE: 10 September 2012
