The Commissioners for HMRC v Abubaker Arrbab
[2024] EWCA Civ 16
Betindex Limited (in liquidation) v The Commissioners for HMRC
13 March 2024
[2024] UKFTT 222 (TC)
First-tier Tribunal
A company, Betindex, asked the tax office (HMRC) to change its tax accounting period retrospectively to reduce its tax bill. HMRC said no, claiming they couldn't do it. A tax tribunal ruled that HMRC *could* have done it but had made a mistake of law. So, the tribunal ordered HMRC to reconsider the company’s request.
Key Facts
- •Betindex Ltd (in liquidation) appealed HMRC's refusal to retrospectively amend its General Betting Duty (GBD) accounting periods under section 165(3) Finance Act 2014.
- •HMRC refused the request, stating there was no provision for retrospective amendment of accounting periods.
- •Betindex argued this was a material error of law, as section 165(3) grants HMRC the power to agree to non-standard accounting periods, without explicitly limiting this to prospective application.
- •The appeal was heard under the limited jurisdiction of section 16(4) Finance Act 1994, focusing on whether HMRC's decision was one that no reasonable officer could have reached.
- •Betindex sought a review of HMRC's decision, not a direction to approve its request.
Legal Principles
The First-Tier Tribunal (FTT) has a supervisory, not merits-based, jurisdiction in appeals concerning ancillary matters under section 16(4) Finance Act 1994.
Revenue and Customs Commissioners v Ahmed (t/a Beehive Stores) [2017] UKUT 359 (TCC)
To determine if a decision was unreasonable, the FTT considers: (1) Could no reasonable officer have reached the decision? (2) Was there a material error of law? (3) Were all relevant considerations taken into account? (4) Were all irrelevant considerations excluded?
Customs and Excise Commissioners v J H Corbitt (Numismatists) Ltd [1980] 2 WLR 753
A statutory power not expressly limited to prospective application can be applied retrospectively unless the language or purpose of the legislation indicates otherwise.
Hoey v HMRC [2022] EWCA Civ 656
Section 165(3) Finance Act 2014 allows HMRC to agree with a person to treat specified periods as accounting periods for GBD, without explicitly restricting this power to prospective applications only.
Finance Act 2014, section 165(3)
Outcomes
The Tribunal found that HMRC's decision was unreasonable because it was based on a material error of law.
HMRC incorrectly believed they lacked the power under section 165(3) FA 2014 to retrospectively agree to a non-standard accounting period. The Tribunal found that the legislation does not explicitly restrict this power to prospective applications only.
The Tribunal directed HMRC to review their decision in light of the Tribunal's finding that they do possess the power under section 165(3) FA 2014 to agree to a retrospective amendment of accounting periods.
The Tribunal's decision only addressed the question of whether HMRC had the power to make the retrospective amendment. Whether HMRC should exercise that power in this specific case remains a matter for their discretion.