HBOS Plc & Anor v The Commissioners for HMRC
[2023] UKUT 13 (TCC)
Colaingrove Limited v The Commissioners for HMRC
29 May 2024
[2024] UKFTT 490 (TC)
First-tier Tribunal
A company overpaid VAT due to HMRC mistakes. They got some interest back, but wanted more. The court said they could get more interest for mistakes before a certain date, but not after. The amount was decided based on what it would have cost the company to borrow the money they were owed. It's a complex case about getting a fair deal when the government makes mistakes with your taxes.
Key Facts
- •Colaingrove Limited (Appellant) claimed additional interest under section 84(8) Value Added Tax Act 1994 (VATA) for VAT repayments following several disputes with HMRC (2000-2020).
- •Disputes involved VAT treatment of caravan contents, verandas, bingo fees, and gaming machine income.
- •HMRC accepted statutory interest under section 78 VATA but disputed additional interest under section 84(8).
- •Appellant claimed £8,244,823.19 additional interest based on the difference between the statutory rate and its borrowing costs.
- •HMRC raised jurisdictional objections, arguing that section 84(8) didn't apply to post-April 1, 2009 appeals or section 80 VATA claims.
Legal Principles
The FTT's power to award additional interest under section 84(8) VATA, including its application to appeals lodged before, but concluded after, April 1, 2009, was considered in light of transitional provisions and the Emblaze case.
Schedule 3 of the Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (TTFO), Emblaze Mobility Solutions Ltd v HMRC [2014] UKFTT 0679 (TC), Emblaze UT [2018] UKUT 373 (TCC)
EU law requires adequate indemnity for VAT overpayments due to misapplication of EU law; the UK statutory regime (including sections 78, 84(8), and 85A VATA) was deemed sufficient by the Supreme Court in Littlewoods.
Littlewoods Limited v HMRC C-591/10 ([2012] STC 1714), Littlewoods Limited v HMRC [2017] UKSC 70
In exercising discretion under section 84(8), the Tribunal should apply commercial principles, aiming for fair compensation without punishment or full indemnification; the Bank of England base rate plus 1% is a starting point.
HMRC v Royal Society for the Prevention of Cruelty to Animals [2007] EWHC 422 (Ch) (RSPCA), Emblaze UT
Section 84(8) VATA's applicability to decisions made after April 1, 2009, was examined; the Tribunal concluded that only decisions notified before April 1, 2009, and appealed before the repeal were covered.
Schedule 3 TTFO, Touchwood Services Limited v HMRC [2007] EWHC 105, Earlsferry Thistle Golf Club v HMRC [2014] UKUT 0250 (TCC), Adam Mather v HMRC [2014] UKFTT 1062 (TC)
The interpretation of section 84(8) regarding whether it applies to section 80 VATA claims was analyzed; the Tribunal determined that it did apply, despite HMRC's arguments.
Cresta Holidays Ltd [2001] EWCA Civ 215, FJ Chalke Ltd v HMRC [2009], Williams & Glyn’s Bank Ltd v CEC [1974] VATTR 262, HBOS plc and others v HMRC [2023] UKUT 13 (TCC)
Outcomes
Appeal allowed in part.
The Tribunal awarded additional interest under section 84(8) for pre-April 1, 2009 appeals, applying a 1.5% margin above the base rate, based on the accepted evidence of the Appellant's borrowing costs. The Tribunal rejected claims for interest on post-April 1, 2009 appeals and rejected HMRC's jurisdictional objections regarding section 80 VATA claims.
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