BT Plc v The Commissioners for HMRC
[2023] EWCA Civ 1412
British Telecommunications PLC v The Commissioners for HMRC
30 May 2023
[2023] UKUT 122 (TCC)
Upper Tribunal
BT tried to get back VAT on unpaid phone bills from years ago. A court already said they couldn't, and another court agreed that trying again was wasting everyone's time.
Key Facts
- •British Telecommunications plc (BT) appealed a First-tier Tribunal (FTT) decision to strike out its VAT bad debt relief claim.
- •The claim related to unpaid phone bills from 1978 to 1989.
- •BT argued it had directly effective rights under Article 11C(1) of the Sixth VAT Directive.
- •A preliminary issue was referred to the Upper Tribunal, then appealed to the Court of Appeal.
- •The Court of Appeal's decision was not appealed further.
- •BT argued that the Court of Appeal's judgment did not fully resolve all issues and that it could raise new issues based on a subsequent decision in *Iveco Ltd v HMRC*.
- •The FTT struck out BT's appeal, finding it had no reasonable prospect of success.
Legal Principles
Article 11C(1) of the Sixth VAT Directive provides for reduction of the taxable amount in case of non-payment, but Member States may derogate.
Sixth VAT Directive
Section 80, VAT Act 1994, provides for credit or repayment of overstated or overpaid VAT.
Section 80, VAT Act 1994
Res judicata principles (cause of action and issue estoppel) prevent re-litigation of issues already decided.
Various case law, including *Virgin Atlantic Airways v Zodiac Seats UK Ltd*, *Fidelitas Shipping v V/O Exportchleb*, and *Johnson v Gore Wood & Co*
FTT Rule 8(3)(c) allows striking out of an appeal with no reasonable prospect of success.
FTT Procedure Rules
The test for striking out requires a 'realistic' prospect of success, not merely an arguable one.
Case law including *Fairford Group plc v HMRC*, *Easyair Ltd v Opal Telecom Ltd*
EU law requires compliance with domestic mechanisms for claiming relief, suitably moulded to give effect to directly effective EU rights.
Case law including *GMAC UK plc v HMRC*, *Iveco Ltd v HMRC*, and *Répertoire Culinaire v HMRC*
Outcomes
BT's appeal dismissed.
The Court of Appeal's decision on the preliminary issues resolved all relevant questions. BT's attempt to relitigate issues already decided constitutes an abuse of process. Claims under section 80 were not applicable.
FTT's decision to strike out BT's appeal upheld.
BT's claim had no reasonable prospect of success given the Court of Appeal's decision and the principles of res judicata.
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