CO225
Customs duty – repayment – liability of HMRC to pay interest on repaid duty – Finance Act 1999 sections 126 and 127
LONDON TRIBUNAL CENTRE
MOTOROLA LTD. Appellant
THE COMMISSIONERS FOR HER MAJESTY'S REVENUE AND CUSTOMS
Respondents
Tribunal: Dr. David Williams (Chairman)
Mrs E R Adams FCA FTII (member)
Sitting in public in London on 22 and 23 May 2006
Valentina Sloane of counsel, instructed by Vantis, for the Appellant
Owain Thomas of counsel, instructed by the Office of the Solicitor to Her Majesty's Revenue and Customs for the Respondents
© CROWN COPYRIGHT 2006
DECISION
- The Appellant company ("Motorola") imports, as part of its business requirements in the United Kingdom, electronic and telecommunications equipment including local area network ("LAN") equipment. During the period relevant to this appeal, Motorola was in dispute with the Respondents and their predecessors in law ("HMRC") about the amount of customs duty to be paid on some of these imports. As a result of both a European Commission directive and decisions of the European Court of Justice, it became clear that Motorola had paid excess customs duty. This has now been repaid.
- Motorola also claimed interest on the excess customs duty for the period during which it was, in the view of Motorola, clear that the payment of duty was excessive. This appeal concerns the refusal of HMRC to pay interest under sections 127 and 128 of the Finance Act 1999 to meet that claim.
- The tribunal was not required to make a substantive ruling on the liability to any items to customs duty. The issues previously in dispute between Motorola and HMRC have been resolved. There had been a dispute over items that HMRC maintained should be subject to customs duty under the Combined Nomenclature ("CN") heading 8517 as then defined. Motorola had maintained that the appropriate CN heading was 8471 as then defined. This resulted in a lower rate of duty. HMRC accepted, following decisions of the European Court of Justice, that 8471 was the correct heading for the items in question.
The issue in dispute
- It is common ground that HMRC received sums as customs duty, and held them, while the proper rate of customs duty payable by Motorola was determined by the European Commission and the European Court of Justice. Motorola claims interest on those sums with effect from the dates of the key European Court of Justice decisions. It made its claim by reference to sections 127 and 128 of the Finance Act 1999 ("FA 1999"). It withdrew a claim that interest was payable from any earlier dates shortly before the tribunal hearing, and the tribunal has not considered any earlier date than the earlier of the two European Court cases detailed below.
- HMRC refused to pay any interest on the outstanding sums. The decision under appeal was notified to Vantis on behalf of Motorola by letter dated 22 August 2005 from HMRC Solicitor's Office. This indicated the HMRC view that sections 127 and 128 FA 1999 did not apply to allow HMRC to pay interest in the circumstances of the particular claim made for Motorola. It also indicated agreement that section 126 FA 1999 would not assist. Section 126 was not raised before the tribunal, and is not considered in this decision.
The European law background
- Motorola imported LAN equipment into the European Union ("EU") (and specifically into the United Kingdom) from 1996 at a time when the correct CN classification of these items for customs duty within the EU had not been settled. HMRC, in common with some other state authorities, took the view that the proper classification was under CN heading 8517. Other state authorities were applying CN heading 8471, and a lower rate of duty. Consequently the customs regime of the EU became distorted, and it was necessary to ensure a consistent application of tariff headings.
- One aspect of the duty payable on disputed items came before the European Court of Justice in Peacock AG v Hauptzollamt Paderborn, Case C-339/98. Put shortly, this concerned the customs classification of what were termed in the decision network cards. The Opinion of the Advocate General in that case, Francis Jacobs, was given on 28 October 1999. His Opinion was that network cards designed to be used in automatic data-processing machines of heading 8471 in the CN should be given the heading 8471 as units of those machines.
- The European Court of Justice gave its decision in Peacock on 19 October 2000, [2000] ECR I-8947. Its decision was in essence the same at that suggested by the Advocate General. The decision recorded a point emphasised more clearly by the Advocate General. The wording of the CN considered by the Advocate General and the Court in the Opinion and judgment in Peacock was the wording of the CN at the material time for the cases, namely the time at which the relevant goods were imported. The Advocate General recorded that after the imports in issue the European Commission made EC Regulation 1165/95. That classified certain relevant goods as under CN heading 8517. As with all Regulations, that was binding on all member states in its entirety and was directly applicable in all of them.
- HMRC took the view that Peacock applied only to network cards and only to the wording of the CN headings at the time of the case. The wording had been altered subsequently. It did not therefore alter the decision to be applied to other kinds of IT equipment or determine the meaning of the later wording. HMRC also considered that it was bound by the Commission Regulation.
- The broader question of the customs classification of LAN equipment was referred to the European Court of Justice by an Irish court in Cabletron Systems Ltd v Revenue Commissioners, Case C-463/98. Advocate General Jacobs gave his Opinion in that case on 1 February 2001. This dealt in detail with the relevant CN headings. The Opinion also noted the changes in the CN wording applied to heading 84 and 85.
It commented that the area had been "touched upon" by Peacock. That case had concerned network cards, while the current case concerned 58 named types of equipment covered explicitly or by analogy by the relevant Commission regulations. The Advocate General noted that it is for a national court, not the European Court, to decide on specific classifications.
- The Advocate General, after a detailed analysis, concluded that Commission Regulations 1638/94 and 1165/95 were in error and that that error in his opinion was such as to vitiate the regulations. He then considered the temporal effect of such a ruling. He concluded that he could not see any reason for limiting the ex tunc effect (effect from that past time) of the finding of invalidity which he proposed should be made. And he noted that it would apply only to the period to 1 January 2000.
- The European Court of Justice gave its decision in Cabletron on 10 May 2001,
[2001] ECR I-3495. The Court followed the Opinion of the Advocate General particularly closely in its decision. It ruled that Regulations 1638/94 and 1165/95 were invalid, in the latter case to the extent that it classified adapter cards described in item 4 of its annex under heading 8517 (or 85.17) of the CN. And the Court ruled that items of computer network equipment as described in the case were to be classified under heading 8471 (or 84.71) of the CN both before and after 1 January 1996.
- Thereafter, HMRC accepted that Motorola had been correct in contending that heading 8471 of the CN was the correct heading for the items involved in the dispute that gave rise to this appeal.
Payment of interest on customs duty payments not due
- The European Customs Code ("the Code") is set out in Council Regulation 2913/92/EEC. Articles 220 and 221 of the Code make provision for the correct time at which any sums of customs duty are to be entered into the accounts and also the amount of any debt communicated to the debtor. Articles 235 and following of the Code deal with the repayment and remission of duty. Article 241 of the Code is the only provision dealing with the payment of interest in such cases. It provides:
"Repayment by the competent authorities of amounts of import duties or export duties or of credit interest or interest on arrears collected on payment of such duties shall not give rise to the payment of interest by those authorities. However, interest shall be paid –
-where a decision to grant a request for repayment is not implemented within three months of the date of adoption of that decision,
- where national provisions so stipulate.
The amount of such interest shall be calculated in such a way that it is equivalent to the amount which would be charged for this purpose on the national money or financial market."
- It is common ground between the parties that this case does not fall within the category of cases where Article 241 requires the payment of interest. The question therefore falls to be determined by any national provisions that so stipulate, and is not to that extent a question of European law.
- The relevant provisions of United Kingdom law are in Part VII of FA 1999, sections 126 to 129. Section 126 (interest on unpaid customs debts) and section 129 (repayment of overpaid interest etc) are not relevant here. But section 127 (interest on repayments) and section 128 (periods to be disregarded in determining interest under section 127) are, in Miss Sloane's submission, directly relevant.
- Sections 127 and 128 (as amended) provide:
Interest on repayments
127 (1) Subject to the following provisions of this section, where the Commissioners are liable to repay an amount to any person in consequence of-
(a) the payment to them by way of customs duty of an amount that was not due from that person, or
(b) any requirement to repay an amount of customs duty in accordance with the Community Customs Code or Commission Regulation (EEC) No. 2454/93,
then, if and to the extent that they would not be liable to do so apart from this section, the Commissioners shall pay interest to him on that amount for the applicable period.
(2) The amounts that carry interest under subsection (1) above-
(a) include only so much of any amount mentioned in that subsection as is the subject of a claim that the Commissioners are required to satisfy or have satisfied; and
(b) do not include any amount of interest under this section.
(3) Subject to section 128 below, in relation to any amount that carries interest under subsection (1) above, the applicable period for the purposes of this section is the period which-
(a) begins with the thirty-first day after the making of the claim for repayment of that amount; and
(b) ends with the date on which the Commissioners issue the repayment of that amount,
and in paragraph (a) above "working day" means any day other than a non-business day within the meaning of section 92 of the Bills of Exchange Act 1882.
(4) The Commissioners shall not be liable to pay interest under this section except on the making of a claim for that purpose.
(5) A claim under this section must be in writing and must be made not more than three years after the end of the applicable period to which it relates.
(6) Any reference in this section to the issue by the Commissioners of any repayment of any amount includes a reference to the discharge by way of set-off of the Commissioners' liability to repay that amount.
(7) Interest under this section shall be payable at the rate applicable under section 197 of the Finance Act 1996.
(8) In this section and section 128 below-
"the Commissioners" means the Commissioners of Customs and Excise;
"the Community Customs Code" means Council Regulation (EEC) No. 2913/92 establishing the Community Customs Code; and
"customs duty" includes any agricultural levy of the European Community.
(9) The Commissioners may by order modify subsection (3) above so as to provide for interest under this section to begin to run from a time before the sixty-first day after the making of the claim for repayment.
(10) The power of the Commissioners to make an order under subsection (9) above shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.
(11) This section has effect in relation only to a repayment the claim for which is made on or after such day as the Treasury may by order made by statutory instrument appoint; and different days may be appointed under this subsection for different purposes.
Periods to be disregarded in determining interest under s. 127
128 (1) In determining the applicable period for the purposes of section 127 above in the case of interest on the amount of any repayment there shall be left out of account any period by which the Commissioners' issue of the repayment is delayed as a result of circumstances beyond their control.
(2) The reference in subsection (1) above to a period by which the Commissioners' issue of a repayment is delayed as a result of circumstances beyond their control includes, in particular, any period which is referable to any one or more of the matters mentioned in subsections (3) to (5) below.
(3) The first of those matters is any unreasonable delay in the making of any claim for the repayment of the amount on which interest is claimed.
(4) The second of those matters is any failure by any person to provide the Commissioners-
(a) at or before the time of the making of any such claim, or
(b) subsequently in response to a request for information by the Commissioners,
with all the information required by them to enable the existence and amount of the claimant's entitlement to a repayment to be determined.
(5) The third of those matters is the making, as part of or in association with such a claim, of a claim to anything to which the person making the claim has no entitlement.
(6) In determining for the purposes of subsection (4) above whether any period of delay is referable to a failure by any person to provide information in response to a request by the Commissioners, there shall be taken to be so referable any period which-
(a) begins with the date on which the Commissioners request that person to provide information which they reasonably consider relevant to the matter to be determined; and
(b) ends with the earliest date on which it would be reasonable for the Commissioners to conclude-
(i) that they have received a complete answer to their request for information;
(ii) that they have received all that they need in answer to that request; or
(iii) that it is unnecessary for them to be provided with any information in answer to that request.
Application to this appeal
- Section 127 deals both with procedures for making a claim for the payment of interest and with the periods for which and the circumstances in which HMRC is liable to pay interest. It is not in dispute that there must be a written claim for payment made within a three year period of the end of the period of claim (called "the appropriate period"). Likewise, it is not in dispute that the period starts 31 working days after the claim was made and ends when the repayments were made. Nor is it in dispute that Motorola first claimed under this section with effect from the date of the Peacock decision of the European Court of Justice.
- The dispute centres on the scope of the general duty to pay interest under section 127 and also on the scope of the important exception set out in section 128(1). This leaves out of account, and therefore removes a duty to pay interest for, any period where the delay by HMRC in making the repayment is "as a result of circumstances beyond their control".
- For Motorola, Miss Sloane submitted that HMRC was under a duty to pay interest from 31 working days after the claim took effect on the date of the Peacock judgment. The claim made was within the scope of section 127, and section 128 did not assist HMRC on the facts. Motorola had made a proper claim in connection with that case and was entitled to interest from that date. In her view, HMRC had adopted a narrow interpretation of Peacock and had wrongly refused to consider the claim at all until the decision in Cabletron. Her clients had made a second claim prospective on Cabletron and were entitled to interest at the latest from 31 days after the date of judgment of the European Court of Justice in Cabletron on 10 May 2001, that is, from 10 June 2001. Repayment was not actually made until July 2002, the process being completed in September 2002. No interest had been paid. The tribunal was therefore asked to decide that the interest was payable.
- Mr Thomas' primary case on section 127 was that the claims made by Motorola fell outside the scope of the section. The section made limited provision for the payment of interest in certain cases, and this was not one of those cases. Alternatively, he submitted that there was in any event no liability for HMRC to pay interest on any basis before the decision of the European Court in Cabletron. Further, after that case HMRC were awaiting guidance from the European Commission. That guidance was issued on 12 February 2002. If any interest was due, it was not due until after HMRC had had a period of time to implement that guidance.
- He further contended that even if he was wrong on either of those arguments, his clients were entitled to the benefit of section 128. HMRC was not in control of either the litigation before the European Court or the subsequent guidance. Further, it remained bound by the European Commission Regulation until the European Court determined otherwise, and that was clearly beyond its control. Neither HMRC nor the national courts or tribunals could declare a Regulation invalid. The principle of legality required therefore that HMRC observe the Regulation until action was taken at the European level to deal with the matter.
The scope of section 127
- It is clear from Article 241 of the Customs Code that the interpretation of section 127 is entirely a matter of United Kingdom law, save that the provision must operate within the European Union rules and principles about and applicable to value added tax. There is no independent European law entitlement to interest in this case.
- It is also clear that section 127 lays down a general duty to pay interest for "the applicable period" where HMRC are liable to repay customs duty in either of the circumstances listed in subsection (1), read with subsection (2). It arises in all cases save where there is some other duty to pay. This is subject to the procedural requirement of a claim being made in the proper form.
- Mr Thomas argued the importance of reading subsection (1) with subsection (2). The latter, he submitted, limited the scope of the section as a whole to payments of interest on sums that "the Commissioners are required to satisfy". In his view this confined the section to repayments that were outside the scope of Article 241 but arose by reason of official error. It was wrong to take the approach of the Appellant and sideline this subsection. He supported this narrow view of the section by several other arguments. From a general standpoint, he noted the restricted nature of the duty to pay interest under Article 241 itself. There was no duty for a national authority to go further than that, and he contended that it would be surprising if in the absence of clear words national provisions did go much further than that. He also argued that the narrow approach to the section would mirror the narrow approach to the payment of interest to HMRC both under the Code and under section 126 FA 1999.
- The tribunal is not persuaded that subsection (2) has the narrow effect contended by Mr Thomas. Its effect, rather, is to limit the duty under subsection (1) so that there is a duty to pay only on amounts not due, or repayable, where there has been a claim for the repayment. This is separate from the need to claim the interest, provided for in subsection (4) of this section. Subsection (2) is necessary careful drafting to provide that there must be both a claim for repayment and a claim for interest before the duty under the section is activated. It is in that context, not a context of any substantive limit to the section, that it is necessary to provide for claims to be made. The approach adopted to provide for substantive limits to the duty to pay is that of confining the duty to pay interest to "applicable periods" only and then to limit those periods by subsection (3) and section 128. Assuming that the necessary claims have been made properly so as to activate the general duty in section 127, the question then is whether section 128 removes the duty to pay for all or part of the periods for which claims have been made.
The scope of section 128
- Section 128 limits the duty to pay interest by excluding from any applicable period "any period by which the Commissioners' issue of the repayment is delayed as a result of circumstances beyond their control". The section gives three examples of such circumstances, all of which are examples of action or inaction by third parties. In the view of the tribunal, section 128 provides the only exception to the duty under section 127, but it is broadly drawn. The use of illustrations in the section emphasises the absence of any definition of the scope of the section. The phrase "circumstances beyond their control" is one in common use and is used in other Acts of Parliament. For examples, the provisions in Schedule 3, Part 2 to the Finance Act 2001 on payments of interest by HMRC on delayed repayments of excise duty use the same phrase (in paragraph 6). It is in the view of the tribunal a residual rule to deal with a variety of situations that may not be entirely foreseeable or do not justify individual identification in the legislation. Whether it applies to the delay in payment of interest in this case is therefore, in the tribunal's view, essentially a question of fact.
- What were the circumstances that caused the delay in payment in this case other than a decision of HMRC not to pay? The Appellant dropped any claim that HMRC was under a duty to repay at any date before 31 working days after the date of the Peacock judgment in respect of the earlier of the two claims it made, so the tribunal is not concerned with circumstances before that date. HMRC contended that the delay was caused by circumstances beyond its control until at least 31 working days after it had received guidance from the European Commission about the effect of the Cabletron judgment in respect of all claims, or at the earliest not until 31 working days after the Cabletron judgment was delivered.
- The essential differences between the views of the parties are as to the view to be taken of the Peacock judgment and the Cabletron judgment, the significance of the European Commission Regulation struck down by the second of those judgments and the importance of the guidance subsequently issued by the European Commission.
- In evaluating the circumstances of any claim for interest for repayment of customs duty, it is important to remember that national authorities, including HMRC, are collecting European customs duties under European law, and are under a legal duty to do so in line with general European application of a specific provision. The decision of the United Kingdom Parliament to require HMRC to pay interest in circumstances additional to those provided for by European Union legislation does not alter the fact that HMRC is acting for the EU, and not simply the United Kingdom, when dealing with customs duties. For that reason, the tribunal finds entirely unpersuasive the argument for the Appellant that in dealing with customs duties HMRC should act otherwise than in entire compliance with a European Commission Regulation that has direct effect for the United Kingdom, or otherwise than in entire compliance with the decisions of the European Court of Justice once they take effect.
- Miss Sloane argued that HMRC could not rely on the European Commission Regulation struck down by the European Court in Cabletron. This was because by law the Regulation must be treated as never having any legal effect. The European Court had considered whether the Regulation should be struck down only with prospective effect, and had not taken that approach. So its decision has retrospective effect. The tribunal does not agree with her approach. The task of the tribunal is to identify any periods during which HMRC was prevented by circumstances beyond its control from making the repayment of customs duty. That is a continuing provision to be tested on an ongoing basis, and not after the event with the benefit of hindsight. HMRC could not properly anticipate either of the decisions of the European Court before the announcement of the decisions, whether because of the Opinion of an Advocate General or for any other reason. Nor could it properly anticipate the judgment of the European Court in striking down a Commission Regulation. The circumstances leading to those decisions, in neither of which the United Kingdom was a party, were clearly circumstances beyond the control of HMRC for current purposes until those decisions had taken effect.
- The tribunal is for that reason also not persuaded by Miss Sloane's argument that HMRC could have reclassified all relevant items after the Peacock judgment. In particular, the tribunal does not accept that HMRC was under an obligation to consider what items, if any, should be reclassified by analogy with the items covered in that decision. As is clear from the Opinions of the Advocate General in the two cases, Peacock was a narrow decision on a specific (and time limited) formulation of the relevant heads of the CN as applied to a limited range of electronic equipment. It left the Commission Regulation that was later struck down undisturbed and therefore binding on HMRC.
- The Peacock decision gave guidance about the application of CN 8471, 8473 and 8517 as worded between 1990 and 1995. It was confined to the classification under the CN of the items described as network cards in the Opinion of the Advocate General. And it gave no wider or general guidance on the issue. The Advocate General's Opinion expressly excluded comment about Regulation 1165/95 as it came into effect after the importations in question in that case. The European Court made the same exclusion by expressly (paragraph 24 of its judgment) limiting its decision to the period from July 1990 to May 1995. The narrowness of the decision is clearly deliberate, and no doubt took into account the litigation pending before the Court about the later period. HMRC was entitled, if not required, fully to observe the limits placed on the decision by the Advocate General and the Court. The classifications of relevant forms of electronic equipment more generally were only reopened when Cabletron was released, the Commission Regulation struck down and the more general guidance of the European Court on classification of these goods was given.
- Were HMRC also entitled to await the release of guidance notes by the European Commission following Cabletron? Mr Thomas argued that no repayment could properly be made prior to the issue of the guidance of the Commission in February 2002. The guidance of the Commission was plainly beyond the control of HMRC. He emphasised that the test in section 128 was of delay caused by circumstances beyond control. This was one of them. It was not HMRC's fault that the Commission took as long as it did to issue its guidance.
- The European Court's view in Cabletron clearly required the European Commission to do some rethinking. Not only was its Regulation struck down, but also its request that this be done only prospectively was also turned down. The European Court also gave its own guidance as to the proper CN classifications in this area. What did the Commission guidance add to that? The Commission guidance, Guidelines on product coverage and repayment of duties in Case C-4634/98 (Cabletron), was issued on 12 February 2002. Its opening statement is that "member states have asked the Commission services for guidance on how to implement in practice the ruling in the Cabletron case…". The introductory note concludes that member states are invited to submit cases of doubt to the Commission for examination by the Customs Code Committee. The note then gives some guidance on product coverage, and then guidance about repayments.
- The tribunal finds that this guidance was not a necessary step in giving effect to the Cabletron decision. Nor is such guidance a common practice. Nor does it have legislative or other binding effect. The terms of the guidance itself show that it was issued only at the request of member states. It was not required as a matter of law, nor was it procedurally necessary or substantively necessary for HMRC to await the guidance. The time taken to issue the guidance did not put the delay in repaying the customs duty that was shown to be overpaid by the striking down of the Commission Regulation and the guidance of the European Court beyond the control of HMRC.
- The tenor of the correspondence seen by the tribunal suggests that HMRC waited for guidance from the European Commission before reviewing any of the items disputed between the parties to this appeal and all similar applications, and it then had the task of dealing with all relevant applications. If that is so, then in the tribunal's view that approach was the result of HMRC management decisions not a requirement of European law. The resultant delay is a delay within the control of HMRC and one for which interest is properly payable under section 127. The fact that HMRC was not required to repay any customs duty until the decision of the European Court does not mean that it was beyond the control of HMRC to anticipate the administrative pressures that would arise if the Opinion of the Advocate General proved persuasive. There was in management terms a clear risk of the prospective need to make provision for the relevant decision making and repayment processes from the issue of the Opinion of the Advocate General in Cabletron. There was clear knowledge of a legal duty to repay, and therefore of the need to process claims, from the date of the issue of the decision in Cabletron. The tribunal concludes that the handling of the claims from 31 working days after the Cabletron decision were not circumstances beyond HMRC control because either of the Commission guidance or any internal need to process claims.
- In taking that view, the tribunal notes the minor but important point that section 127(3)(a) provides that the applicable period "begins with the thirty-first working day after the making of the claim". Although the tribunal did not hear argument on this, it considers it important to bear in mind that this is not a standard "30 day" period. It excludes the day on which the claims are received. It excludes non-working days for HMRC, so is limited to a maximum of five days a week. And it excludes from those five days in any week any bank or general holiday applying to HMRC staff or any other day that was not a working day. Depending on precise dates, it therefore allows between six and seven weeks before the duty to pay interest starts.
Conclusion
- The tribunal concludes that HMRC is in principle under a duty to pay Motorola interest under section 127 of FA 1999 from 31 working days after the issue of the Cabletron decision in all cases. This is subject to the proviso that all necessary claims were properly made at those times. It further concludes, subject to the same proviso, that HMRC is in principle under a duty to pay interest under that section from 31 working days after the issue of the Peacock decision if any claimed items are clearly and directly covered by that decision.
- The proviso that there must be proper claims is important for the reasons explained to the tribunal by Mr Thomas at the conclusion of his case. Some key correspondence between the parties only came to light shortly before the tribunal hearing. Some was not before the tribunal at all. The tribunal is therefore not in a position to decide if claims were properly made so that they operate from the relevant date after either the Peacock decision or the Cabletron decision.
- It is common ground that claims were made. Miss Sloane may be correct in asserting that her clients provided HMRC with all the details they could reasonably require in connection with those claims, at least in time for the claims to take effect after the Cabletron decision. But HMRC do not accept that and the tribunal does not know that. It did not have all the relevant correspondence before it, so can make no finding on the issue. Nor can it be assumed that the claims do meet all requirements, although they may. The tribunal has some sympathy with Miss Sloane's protests that this point was raised for HMRC at a late stage. But it notes that late disclosure of documents came from both sides. It also considers that as the issue here is interest only (there being no substantive issue of classification outstanding and all repayments of customs duty having been made some time ago), any prejudice to the Appellant can be dealt with adequately by an appropriate order for costs.
- The tribunal therefore accepts Mr Thomas' application to adjourn that aspect of the case, and does so. It rejects Miss Sloane's objection that it is too late for that issue to be raised. At the same time the tribunal puts on record Mr Thomas' statement that his clients cannot resist the costs arising from the need for the tribunal to hold that matter over regardless of the outcome.
- For the same reasons, the tribunal did not look at the details of the claim made for repayment under the Peacock decision. It is therefore not in a position to form a view about how far, if at all, the items for which claims for repayment and for interest were made are to be decided in the light of the Peacock decision alone. It must give a decision in principle on this issue also, and again adjourn the factual issues about what was claimed, when, whether the claims were full claims, and whether the claims fell within the limited scope of the Peacock decision.
- The tribunal was not asked to determine the interest payable. Any dispute about that cannot, of course, be decided until the other issues are first resolved. This must also be adjourned. Section 127(2)(b) expressly excludes the payment of interest on interest, so that does not arise for decision. But the further delay is a factor to be borne in mind in dealing with costs.
- The tribunal grants the parties leave, if they cannot first agree, to seek a decision of the tribunal on the adjourned aspects of the decision. It directs the parties to give early attention to the matters adjourned. And it invites them to apply to the tribunal for directions for a timetable to resolve the outstanding matters.
- The decision of the tribunal adopts neither the primary case of the Appellant nor its case on the Peacock decision. Nor does it adopt the primary case for the Respondents. It makes no decision on costs at this stage. But it records that, although the Appellant succeeds in the appeal in principle, it does not do so beyond the fallback position adopted by Mr Thomas in the Respondents' arguments.
DAVID WILLIAMS
CHAIRMAN
RELEASED: 13 October 2006
LON/05/7066
