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.