BT Plc v The Commissioners for HMRC
[2023] EWCA Civ 1412
Allegion (UK) Limited v The Commissioners for HMRC
7 March 2023
[2023] UKFTT 273 (TC)
First-tier Tribunal
Allegion claimed they were owed money in VAT because of a past law that was later deemed unfair. The tax office said they didn't have enough proof and found evidence that they had already claimed this money before. The judge agreed with the tax office and said Allegion didn't get the money.
Key Facts
- •Allegion (UK) Limited appealed HMRC's refusal of a retrospective VAT bad debt relief (BDR) claim for £584,655 (originally £615,697) covering 1 April 1989 to 19 March 1997.
- •HMRC rejected the claim due to insufficient evidence meeting requirements in Revenue & Customs Brief 1/2017, particularly demonstrating no prior BDR claims.
- •The Appellant's late submission of additional evidence (witness statement and exhibits) was refused by the Tribunal.
- •The claim was based on the assertion that the UK's Property Condition (requiring property in goods to pass to the customer for BDR), later deemed incompatible with EU law in GMAC UK plc, prevented valid claims.
- •The Tribunal heard evidence from Mr. Crampton, a Chartered Management Accountant employed by the Appellant.
- •HMRC relied on Schedules of Irregularity indicating previous BDR claims and factoring by a subsidiary (TLL) within the Appellant's VAT group.
- •The Appellant argued that a Retention of Title (RoT) clause in their contracts prevented BDR claims, but this clause was deemed potentially ineffective given the nature of the goods and SOGA legislation.
- •The Appellant's methodology for calculating the BDR claim was also challenged due to errors and lack of supporting documentation.
Legal Principles
EU Directive 2006/112/EC (formerly 77/388/EEC) on VAT bad debt relief.
Article 11C(1) 6th Council Directive 77/388/EEC (now Article 90 Directive 2006/112/EC)
Finance Act 1990, s.11 (BDR rules, Property Condition).
Finance Act 1990, Section 11
Value Added Tax Act 1994, s.36 (BDR rules).
Value Added Tax Act 1994, Section 36
VAT Regulations 1995 (claim procedures, evidence requirements).
VAT Regulations 1995, Regulations 165A, 166, 167, 168, 169
GMAC UK plc v Revenue and Customs Commissioners [2017] STC 1247 (Property Condition incompatible with EU law).
GMAC UK plc v Revenue and Customs Commissioners [2017] STC 1247
Revenue & Customs Brief 1/2017 (HMRC guidance on historical BDR claims).
Revenue & Customs Brief 1/2017
Sale of Goods Act 1979 (property passing, RoT clauses).
Sale of Goods Act 1979, Sections 17, 25
San Giorgio principle (evidence requirements cannot render EU rights unenforceable).
Amministrazione Delle Finanze Dello Stato v San Giorgio [1985] 2 CMLR 658
Burden of proof rests on the taxpayer to demonstrate a valid BDR claim.
Regency Factors plc v The Commissioners for HM Revenue and Customs [2022] STC 323
Approach to evidence based on recollection (Gestmin and Kogan principles).
Gestmin SGPS S.A v Credit Suisse [2013] EWHC 3560; Kogan v Martin [2019] EWCA Civ 1645
Saint-Gobain Building Distribution Limited v R&C Comrs [2019] UKFTT 0314 (TC) & [2021] UKUT 75 (TCC) (precedent case)
Saint-Gobain Building Distribution Limited v R&C Comrs
Outcomes
Appeal dismissed.
The Appellant failed to discharge the burden of proof to demonstrate a valid BDR claim. Insufficient evidence supported the existence of bad debts, the absence of prior claims, and the accuracy of the claim calculation. The Tribunal placed little weight on Mr. Crampton's recollection, and the contemporaneous evidence suggested previous BDR claims.