The Commissioners for Her Majesty's Revenue And Customs v British Telecommunications Plc
2014
COURT OF APPEAL (CRIMINAL DIVISION)
United Kingdom
CORAM
- LORD JUSTICE RIMER
- LORD JUSTICE CHRISTOPHER CLARKE
Areas of Law
- Tax Law
- Commercial Law
- EU Law
2014
COURT OF APPEAL (CRIMINAL DIVISION)
United Kingdom
CORAM
AI Generated Summary
British Telecommunications plc (BT) submitted a VAT bad debt relief claim to Her Majesty's Revenue and Customs (HMRC) for the period from 1978 to 1989, based on an alleged EU law right conflicting with domestic legislation. HMRC rejected the claim, leading to a series of appeals reaching the Court of Appeal. The Court of Appeal dismissed BT’s cross-appeal and held that BT did not exercise its EU law rights within a reasonable time. It ruled that section 39(5) of the Finance Act 1997 was valid and did not need to be disapplied. The case involved matters of Tax Law, Commercial Law, and EU Law principles.
Judgment
Lord Justice Rimer :
Introduction
On 30 March 2009, British Telecommunications plc (‘BT’) wrote to The Commissioners for Her Majesty’s Revenue and Customs (‘HMRC’) making a claim for hitherto unclaimed VAT ‘bad debt relief’ for the period 1 January 1978 to 31 March 1989 – thus for a period ended 20 years before the claim. The claim was for £91,822,303 plus interest. It was said to be in relation to BT’s business and private customers. It arose because, although BT had accounted for the standard rate of VAT on its supplies to customers, in some cases the customers had failed to pay BT either in part or at all for its supplies. The claim was for a refund of the VAT for which BT had accounted in respect of the amount unpaid by its defaulting customers.
The domestic legislation relating to claims for VAT bad debt relief in respect of supplies made during the period to 31 March 1989 was section 22 of the Value Added Tax Act 1983 (‘VATA 1983’), which (in materially identical terms) replaced section 12 of the Finance Act 1978 and required particular conditions to be satisfied before a claim could be made, including a condition that the customer was insolvent. BT’s letter suggested that it had, during the currency in force of section 22, made claims for relief in cases in which such conditions were satisfied. Its March 2009 claim was for relief in respect of cases where they were not. Its case was advanced on the basis that it had a directly enforceable European Union (‘EU’) law right to relief in such cases, with which the section 22 conditions, in particular the insolvency condition, were said to be incompatible. Whilst BT apparently recognised (although it misdescribed the relevant statutory provisions) that section 39(5) of the Finance Act 1997, which came into force on 19 March 1997, had finally precluded the making of its bad debt relief claims under section 22 in respect of supplies made before 1 April 1989, it asserted (or can be read as having intended to assert) that section 39(5) should be disapplied as denying BT its EU law right, leaving it free to make its claims 12 years later.
By a decision of 11 January 2010, HMRC gave their reasons for rejecting BT’s claim; and on 1 April 2010, following the carrying out of BT’s requested review of that refusal, HMRC wrote to BT upholding its decision.
BT appealed before the First-tier Tribunal (Tax Chamber) (‘the FTT’) against HMRC’s decision. By a direction released on 26 January 2012, BT’s appea