British Telecommunications PLC v The Commissioners for HMRC
[2023] UKUT 122 (TCC)
BT Plc v The Commissioners for HMRC
4 December 2023
[2023] EWCA Civ 1412
Court of Appeal
BT tried to get back VAT on unpaid bills, but missed the deadline for claiming under the UK's system. The court said there was no other way to get the money back because it wasn't an unlawful payment – just a missed opportunity.
Key Facts
- •BT claimed VAT bad debt relief from HMRC for £65.2m plus interest for unpaid customer debts (1978-1989).
- •The claim relates to improper implementation of Article 11C(1) of the Sixth Directive (VAT bad debt relief).
- •No UK bad debt relief scheme existed for the first nine months of 1978. The 'Old Scheme' (from October 1978) had an insolvency condition, and the 'New Scheme' (from April 1989) a time condition.
- •The Old Scheme was effectively cancelled in March 1997.
- •BT's initial statutory appeal and common law claim were stayed.
- •The Upper Tribunal ('UT') allowed moulding of the Old Scheme to comply with EU law but disallowed disapplication of the 1997 cancellation.
- •The Court of Appeal ('CA') affirmed this, leading to BT's statutory claim being time-barred.
- •BT's common law claim for restitution was heard by Miles J, who allowed the claim for the 9-month period (no domestic scheme), and rejected it for the main period (Old Scheme applied).
Legal Principles
Test for striking out/reverse summary judgment: Claimant must have a realistic, not fanciful, prospect of success.
Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch)
Whether a legislative scheme ousts common law remedies depends on Parliament's intent; a high threshold for inferring ouster exists.
Various cases summarized in Southern Gas Networks Plc v Thames Water Utilities Ltd [2018] EWCA Civ 33
Unjust enrichment requires a normatively defective transfer of value; mere economic benefit is insufficient.
Investment Trust Companies v Revenue and Customs Commissioners [2017] UKSC 29; Prudential Assurance Co Ltd v Revenue and Customs Commissioners [2018] UKSC 39
Section 32(1)(c) Limitation Act 1980: Mistake must be an essential element of the cause of action; 'discovery' defined in FII Group Litigation v HMRC [2020] UKSC 47.
Test Claimants in the FII Group Litigation v Revenue and Customers Commissioners [2012] UKSC 19; FII 2020
Outcomes
BT's appeal dismissed for the main period (1 October 1978 – 31 March 1989).
The Old Scheme was an exclusive remedy; no unjust enrichment; no mistake of law that would justify a claim outside the scheme.
HMRC's cross-appeal allowed for the 9-month period (1 January 1978 – 30 September 1978).
BT's claim for this period failed because, even if there was a mistake, the claim would engage s.80 VATA 1994, which excludes other remedies, and that claim was already struck out.