Foundry Supplies UK Limited v The Commissioners for HMRC
[2023] UKFTT 656 (TC)
Metatron DOO v The Commissioners for HMRC
25 January 2024
[2024] UKFTT 115 (TC)
First-tier Tribunal
A Slovenian company tried to get back VAT it paid twice on goods bought from UK sellers. A UK court said it couldn't because of rules about reclaiming VAT in Europe, and because of Brexit, a special way to get the money back if the seller went bankrupt also isn't possible anymore.
Key Facts
- •Metatron d.o.o., a Slovenian VAT-registered business, claimed VAT refunds from HMRC for goods purchased from UK suppliers via eBay (2019-2020).
- •HMRC rejected the claims, arguing no right to a refund under section 39 VATA for intra-community supplies.
- •HMRC subsequently offered to consider a 'Reemtsma' claim for the 2019 claim but refused it.
- •HMRC applied to strike out the appeals, arguing lack of jurisdiction and/or no reasonable prospect of success.
Legal Principles
The Tribunal has no inherent jurisdiction; its powers are limited to those in taxing statutes (VATA).
David Beadle v HMRC [2020] EWCA Civ 562
Section 39 VATA allows HMRC to repay VAT to EU businesses, but regulations (Part XX VAT Regs, Notice 723A) exclude claims for intra-community supplies.
Value Added Taxes Act 1994 (VATA), Value Added Tax Regulations 1995 (VAT Regs), Notice 723A
Section 80 VATA allows recovery of incorrectly paid VAT, but only for those who accounted to HMRC.
Section 80 VATA
Reemtsma establishes that direct recovery from tax authorities is possible only when recovery from the supplier is virtually impossible or excessively difficult.
Reemtsma Cigarettenfabriken GmbH v Ministero delle Finanze C-35/05
HMRC v Earlsferry Thistle Golf Club [2014] UKUT 250 (TCC) confirms that a commercial claim against the supplier, and against HMRC if the former is impossible, suffices for EU law compliance. Post-Brexit, no longer an obligation to comply with EU law in this area.
HMRC v Earlsferry Thistle Golf Club [2014] UKUT 250 (TCC)
Rule 8 FTT Rules allows striking out proceedings for lack of jurisdiction or no reasonable prospect of success.
Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009
Outcomes
Appeal relating to section 39 VATA claims struck out.
The Tribunal had jurisdiction under section 83(1)(ha) VATA, but the appeals had no reasonable prospect of success as the claims were precluded by regulation 173B VAT Regs and Reemtsma.
Appeal relating to the Reemtsma claim struck out.
The Tribunal lacked jurisdiction; post-Brexit, UK no longer obliged to provide a Reemtsma-type remedy, and Rule 5(3)(k)(i) FTT Rules does not allow transfer to a court.