“29(1A) The Commissioners shall not allow or direct a person to make any claim for deduction of input tax in terms such that the deduction would fall to be claimed more than 3 years after the date by which the return for the prescribed accounting period in which the VAT became chargeable is required to be made.”
“18.2 The taxable person shall effect the deduction by subtracting from the total amount of value added tax due for a given tax period the total amount of the tax in respect of which, during the same period, the right to deduct has arisen . . . 18.3 Member States shall determine the conditions and procedures whereby a taxable person may be authorised to make a deduction which he has not made in accordance with the provisions of [paragraph 2].”
“[2] In 1989 and 1990 Mr Fleming, the sole proprietor of a business engaged in the purchase and servicing of quality cars, purchased thirteen Aston Martin motor cars for the purpose of his business. He duly reclaimed the input tax on ten of the thirteen cars, and Customs & Excise paid his claim. However, he did not receive VAT invoices at the time of purchasing the remaining three cars. He needed those invoices to make a claim to recover input tax on purchase of the three remaining three cars. In the event, it was not until23 October 2000 that Mr Fleming made a claim for repayment of VAT paid on these three cars and his claim was refused.”
“[24] The Court of Justice [in Grundig] was considering a case where, what was in issue, was the sufficiency of transitional provisions. It seems to me, however, that the principles, highlighted in that passage from the judgment, are equally applicable where the relevant time limit imposed by the national legislature is not, as in the case of reg 29(1A), accompanied by any such transitional provisions. The effect of what the Court of Justice is saying in this case is that, even in the case of individuals whose claims have accrued before the time limits were imposed and who may therefore be in a position to require the national court to disapply the time limits to their claims, if brought within a reasonable time after the imposition of the limits, the imposition of the time limits does not continue indefinitely thereafter. If they allow too long a period to go by before making a claim the national court may properly conclude that the principle of finality or legal certainty requires it to refuse to disapply the limitation provisions.”
“[80] . . . Whilst a benign purposive construction of an inadequate transitional period may possibly lead to the implication of a period of grace which is judged to be reasonable, I simply cannot see how one can construe something out of nothing. If it were possible, Marks & Spencer would surely have been decided differently. [81] In my judgment the failure of the Commissioners to include any transitional time limit in regulation 29(1A) is fatal to their case. The regulation as it is without any transitional period fails the Marks & Spencer test. Consequently, in my judgment, it must be disapplied. The appeal must be allowed accordingly.”
“[65] I derive from Ghaidan the principle that however strong and radical the obligation on a court to interpret legislation, there is a line the courts may not cross. . . . [66] The duty is to read legislation in such a way that it gives proper effect to Community rights ‘so far as possible’. I emphasise ‘so far as possible’ or as Lord Oliver put it at page 559E of Litster [Litster v Forth Dry Dock & Engineering Co Ltd[1990] 1 AC 546 ] the duty to construe legislation in this way arises ‘if the legislation can be reasonably construed so as to conform’. For my part, I cannot accept that this is a Litster type situation. I cannot accept that the legislation here can be reasonably construed as incorporating a transitional period where none was provided or contemplated. In my judgment it is simply not possible to do so however broad or robust an approach the court is obliged to adopt.”
“[39] The second possible approach is that the principle of effectiveness requires that a taxpayer should be entitled to enforce his Community law right until the time has been reached when he could first have been expected to assert that right; and that he could not be expected to do so as long as that right had not been established and was subject to challenge in the ECJ by the Member State concerned. He should, therefore, have a reasonable time in which to assert his Community law right once that right had been established . . .”
“[49] The question of the availability of knowledge (or foresight) is relevant here primarily for the purpose of the principles of legal certainty and legitimate expectations. Those Community principles are in my judgment not satisfied in the circumstances of this case unless taxpayers, who are entitled to claims that would otherwise be capped, have a transitional period for making late claims whose expiry is fixed by reference to the date of the handing down of the judgment of the Court of Justice in the Marks & Spencer case. . . . That would mean that Mr Fleming's claim could not be rejected by reason only that it was made later than the expiration of an adequate transitional period commencing on1 May 1997 . . .”
“20. [The tribunal] finds that – as it now turns out, wrongly – all those involved with CNP VAT liability were thinking in terms of claims under section 80 [VATA 1994] rather than Regulation 29 at the relevant times. It finds that CNP was aware of under recovery of input tax on this form of expenditure at the relevant time from at least receipt of the VAT Notes in 1994. It finds that the only relevant information of which CNP was aware before the Price Waterhouse notice of September 1997 was in the VAT Notes sent out by the respondents. It finds that at no time did the individual responsible for making VAT claims and returns for CNP – Mr Michael – take any initiative to make any claim, nor make any enquiry save those to his immediate superior, related to this issue. Further, the approach taken by Mr Michael on that issue was one for which a clear justification has been identified, that justification being entirely reasonable in the particular circumstances of CNP. It further finds that, as a matter of considered management policy, CNP had taken no steps to see if it could recover the under recovered tax at any time before 2003. Nor did the tribunal see any evidence that CNP had put in any other protective claim in connection with VAT at any time. While the tribunal finds that CNP did not consider the possibility of putting in a "global" claim for all past years until 2003, CNP did consider the question whether to claim before there was a time limit, and rejected the opportunity to do so. It also rejected the opportunity to do so for a three year period after the time limit came in. It did not react, until the current claim, to notification by the respondents or from any other source of transitional periods. 21. The Deloittes letter contends that, nonetheless, it is ‘inconceivable’ that CNP would not have put in an uncapped claim if given a transitional period in which to do so in 1997. The tribunal is unable to agree that this was ‘inconceivable’. When the current claim was made it was by the initiative of a third party talking to Mr Michael's superior on terms that did not involve Mr Michael in any decision making, staff time, or specific expenditure prior to the claim being made by the third party. The only basis for concluding that a failure to claim by CNP was ‘inconceivable’ would be that it was clear on the evidence beyond all doubt that such a third party would make such an approach to Mr Michael or his superior. The tribunal is unable to make that finding. Even using the standard of the balance of probabilities, the tribunal is unable to conclude otherwise than that a claim may have been made, and would probably have been made if there had been such an approach as was in fact made by Deloittes some years later. There is no evidence that advice would have been sought, or would have come in any other form than it did come, from CNP's retained advisers. The tribunal has no evidential basis on which to consider whether such an approach by an outsider would have been probable.”
“48. . . . there is no evidence that the amendments introduced to regulation 29 stopped the appellant making any claim that they were minded to make, or had done any work on making, at that time, nor any clear evidence of any other detriment to this appellant's consideration of any claim for unrecovered input tax at that time. There is therefore no disadvantage shown to this appellant in the introduction of the time limit without a transitional period.”
“[22] First, consistent with the decision in [the Marks & Spencer case]transitional provisions should have been included in relation to Regulation 29 just as they should have been included in relation to section 80 [VATA 1994]. The absence of an adequate transitional period renders the amendment made by Regulation 29(1A) unlawful since the amendment then constitutes an unacceptable fetter on CNP's right to recover input tax. Regulation 29(1A) in its current form is in breach of Community law and provides no legitimate basis on which the Commissioners can refuse repayment. . . . [24] Although [counsel] maintained his first principled submission, it seemed to me that, taken to its logical conclusion, it leads to the result that, since no transitional provision has, even to this day, been adopted (whether by statute or by practice) in relation to Regulation 29, it would still be open to a taxpayer who had not yet made a claim now to make one in relation periods prior to1 May 1997 . [Counsel], recognising that such a result would be extreme, accepted that it would now be too late to make a claim.”
“[38] The first possible approach is that the new national time limit can be relied on by the Member State once a reasonable time has passed since its introduction; and this is so regardless of whether the taxpayer knew that he had, or believed that he might have, a Community law right which he could enforce notwithstanding the failure to provide for a proper transitional period. . . . [39] The second possible approach is that the principle of effectiveness requires that a taxpayer should be entitled to enforce his Community law right until the time has been reached when he could first have been expected to assert that right; and that he could not be expected to do so as long as that right had not been established and was subject to challenge in the ECJ by the Member State concerned. . . .”
“[38] On that approach, it may be that a longer period should be allowed for enforcement of the directly enforceable right than the minimum period which could have been expressly provided. In the present case, and assuming that a 6 month transitional period for the purposes of Regulation 29 would have been appropriate, the time limit for making a claim would have expired 6 months after either 26 March or1 May 1997 , long before the claim was in fact made by CNP on27 June 2003 . Even allowing a longer period for enforcing Community law rights, a reasonable period would have expired long before that date.”
“[54] In the absence of a transitional period in the legislation, the most that a taxpayer could expect, even under the second approach, would be a reasonable time within which to make a claim under Regulation 29. . . . The sole question is, I consider, the duration of the reasonable period from, at latest5 August 2002 (when the Community law requirement that there should be a transitional period was first recognised by the Commissioners in the first Business Brief), during which a Regulation 29 claim (not subject to the new time limit) could be made. In my judgment, CNP's claim, made in late June 2003, was made after the expiry of a period which would have been reasonable.”
“[61] In my judgment, it is not possible to impose this requirement on taxpayers. The principle of effectiveness is designed to protect a person's rights. As a matter of Community law, taxpayers in the position of CNP had, prior to the introduction of Regulation 29(1A), a right to reclaim input tax. That right has been curtailed. The jurisprudence of the ECJ tells us that such rights must be protected for a transitional period. I can detect nothing in the language used in the judgments of the ECJ which describes the purpose of the protection as to put the taxpayer in the same position which he would have been in if the transitional provision had been included. The language is that of protecting rights: if those rights are not properly protected during a transitional period by national laws, then Community law disapplies the national law to the extent necessary to preserve those rights. [62] If it is correct that the second approach discussed in [39]ff above is correct (and it is only if it is correct that the question now under consideration arises - if the first approach is correct, the claim has, in fact, to be made within the reasonable period and no question arises about what the taxpayer might have done since we will know what he in fact has done), then the Community law right which the taxpayer had during the transitional period is not to be taken away from him for a reasonable period after he could first reasonably be expected to have asserted it. The fact that he did not have the opportunity to exercise it during the transitional period is entirely the fault of the Member State in failing to comply with its Community law obligations. It would, against that background, make it excessively difficult, in my judgment, for him to exercise his Community law right if it were the rule that a taxpayer had to prove something which might, in its nature, be very difficult to prove, namely that he would have exercised his right had a transitional period been included.”
“Do the principles of effectiveness and of the protection of legitimate expectations preclude reliance on a new time limit which curtails, without providing a transitional period of at least six months duration as laid down inCase C-255/00 Grundig, the period within which payment of VAT incurred by way of input tax can be claimed where: (i) the right to deduct arose more than six years prior to the making of the claim, and/or (ii) the claim could not and/or would not have been made during such a transitional period, even if such a transitional period had been contained in the legislation.”
“3(1) For the purposes of all legal proceedings any question as to the meaning or effect of . . . any Community instrument shall be treated as a question of law and, if not referred to the European Court, be for determination as such in accordance with the principles laid down by and any relevant decision of the European Court or any court attached thereto.”
“[17] . . . Accordingly, if an inconsistency with directly enforceable Community law exists, formal statutory requirements must where necessary be disapplied or moulded to the extent needed to enable those requirements to be applied in a manner consistent with Community law. . . . So if the residence restriction is found to be inconsistent with Community law this provision will need adapting so as to give effect to the overriding Community rights. . . .”
“[43] . . . That degree of certainty is best achieved by adhering, even in the Convention context, to our rules of precedent. It will of course be the duty of judges to review Convention arguments addressed to them, and if they consider a binding precedent to be, or possibly to be, inconsistent with Strasbourg authority, they may express their views and give leave to appeal, as the Court of Appeal did here. Leap-frog appeals may be appropriate. In this way, in my opinion, they discharge their duty under the 1998 Act. But they should follow the binding precedent, as again the Court of Appeal did here.”
“if the first approach [described under issue (3)] is correct, the claim has, in fact, to be made within the reasonable period and no question arises about what the taxpayer might have done since we will know what he in fact has done”
“The Court of Appeal has now held that a claim for input tax not claimed previously is not one made undersection 80 of the VAT Act 1994 but under regulation 29 of theVAT Regulations 1995 . As claims made under regulation 29 were not capped until May 1997, the University’s claim was not capped and is payable in full. So, as the claim submitted for Conde Nast Publications Limited relates to input tax underclaimed, then it does not fall within the scope of s80 VATA and so the M&S Business Briefs cannot apply – the claim is capped under normal rules relating to Regn 29(1A).”
“[54] . . . I see no reason why, as a matter of Community law, the taxpayer should be entitled to see replicated the scheme which the Commissioners, in the Business Briefs, adopted in relation to section 80.”