“In the case of cancellation, refusal or total or partial non-payment, or where the price is reduced after the supply takes place, the taxable amount shall be reduced accordingly under conditions which shall be determined by the Member States. However, in the case of total or partial non-payment, Member States may derogate from this rule.”
“When a supplier allows a credit or contingent discount to a customer who is a fully taxable person, he is not obliged to adjust the original VAT charge provided that both he and the customer agree not to do so. If they do not agree, the original VAT charge must be adjusted by both; the supplier must issue a credit note to the customer and keep a copy of it.”
“(1) Where a person has paid an amount to the Commissioners by way of value added tax which was not tax due to them, they shall be liable to repay the amount to him. (2) The Commissioners shall only be liable to repay an amount under this section on a claim being made for the purpose. (3) It shall be a defence, in relation to a claim under this section, that repayment of an amount would unjustly enrich the claimant. (4) No amount may be claimed under this section after the expiry of 6 years from the date on which it was paid, except where subsection (5) below applies. (5) Where an amount has been paid to the Commissioners by reason of a mistake, a claim for the repayment of the amount under this section may be made at any time before the expiry of 6 years from the date on which the claimant discovered the mistake or could with reasonable diligence have discovered it. … (7) Except as provided by this section, the Commissioners shall not be liable to repay an amount paid to them by way of value added tax by virtue of the fact that it was not tax due to them. (8) The preceding provisions of this section apply to an amount paid before, as well as to an amount paid after, the day on which this section comes into force, except where the Commissioners have received a claim for repayment of the amount before that day….”
“(1) Section 80 VATA [1994] does not apply to Iveco’s claim of9 November 2011 . Accordingly, the time limit for the making of such a claim contained in s 80(4) does not apply. (2) Regulation 38 of the 1995 Regulations is to be construed, in the circumstances of Iveco’s claim, without regard to regulation 38(5). Accordingly, Iveco may make an adjustment under regulation 38 to give effect to its directly-effective right under EU law in respect of any reduction to be made pursuant to article 11C(1) of the Sixth Directive consequent upon the making of bonus payments in the period1 January 1978 to31 December 1989 . (3) This tribunal has jurisdiction to determine this preliminary application.”
“[38] Although the effect of article 11C(1) [of the Sixth Directive] is that a price reduction after the time of the supply results in a reduction in the taxable amount, in the absence of implementation of that article so as to give it effect under domestic law, the most the Directive can give rise to is a directly-effective right in favour of the taxable person…. Unless or until the taxable person exercises that right, there is no basis for saying that the VAT accounted for by the taxable person was not ‘due’, which is the state of affairs required by s 80 [of VATA 1994]…. [39] Even if it were possible for HMRC to rely on the Directive itself in this respect, I do not consider that article 11C(1) could operate, independently of domestic legislation implementing it, so as to have the consequence that Iveco would have overpaid output tax in the accounting period in which the bonus payments were made. Article 11C(1) provides only for a reduction in the taxable amount; it says nothing of the consequences, in terms of the amount of output tax for which the taxable person must account, of that reduction. Those consequences can only flow from the domestic legislation that gives effect to the reduction of the taxable amount in those circumstances….”
“in the present state of Community law there is nothing to prevent a citizen who contests before a national court a decision of a national authority on the ground that it is incompatible with Community law from being confronted with the defence that limitation periods laid down by national law have expired, it being understood that the procedural conditions governing the action may not be less favourable than those relating to similar actions of a domestic nature”
“Although that provision [i.e. article 90 of the Principal VAT Directive] grants the Member States a certain degree of discretion when adopting the measures to determine the amount of the reduction, that does not alter the precise and unconditional nature of the obligation to allow the reduction in the taxable amount in the cases referred to by that provision. It therefore fulfils the conditions for it to have direct effect.”
“Once it had become apparent that the taxable amount should be reduced pursuant to art 11C(1), it would be open to the taxpayer to claim appropriate relief. If, as [counsel for GMAC] submits, s 22 does not apply, there is no domestic provision which indicates how or when the relief is to be given. But it is obvious, we think, that the onus is on the taxpayer to make a claim; in the absence of a claim, HMRC would have no way of knowing that a bad debt had arisen. It follows, unless and until a claim is indicated, that it cannot be said that any relief is to be afforded and that it cannot be said that any amount has been brought into account as output tax that was not output tax due. Accordingly, s 80 [of VATA 1994] does not, in our judgment, in terms apply to GMAC’s claims.”
“As regards supplies made during the first, nine-month, period during which there was no bad debt relief domestic legislation in place, BT was, as I would hold, entitled nevertheless to enforce domestically its directly effective rights under art 11C(1) of the Directive. There was some discussion in argument as to the nature of the claim that it could have made and I cannot see how it could have been otherwise than of an English common law restitutionary nature, in respect of which there would be a domestic limitation period of six years. I did not understand either side to suggest anything different.”
“Taking first the period 1 January to30 September 1978 , we had some generalised discussion about this during the argument, but it did not distinguish between the types of case referred to at [116] and [117] above [i.e. (a) bad debts arising before October 1978 and (b) bad debts arising after that date but on supplies made before it]. Given my overall conclusion in respect of the main part of BT’s claims, namely that part relating to supplies made during the period1 October 1978 to31 March 1989 , I regard it as unnecessary to deal separately with these two types of case. Either they are blighted by the same problem as relates to the main claim; or else the only right that BT ever had to claim relief in respect of these bad debts was a common law restitutionary claim, which is long since statute barred.”
“[133] Against that background, was the exercise of GMAC’s EU law rights rendered excessively difficult or virtually impossible by s 39(5)? I do not consider that it was. GMAC had more than adequate time to exercise their EU law rights and were given adequate notice of the withdrawal of the scheme…. [134] I do not therefore consider that it is necessary for the court to find some other route to give effect to GMAC’s EU law rights, so as to avoid collision with s 39(5). I would simply record my view, which is in conformity with the view which GMAC expressed to the Commissioners in their original claim, that s 80 [of VATA 1994] is not the appropriate domestic provision for giving effect to bad debt relief. When GMAC accounted for VAT on the whole value of the supply it did not account for VAT which was not due. That did not change at the point when GMAC considered the debt to be bad. To that extent, to the extent they are different, I prefer the views of the UT expressed in the present case to those expressed in Iveco.”
“[The Upper Tribunal in Iveco Ltd v Revenue and Customs Comrs] said this in relation to a particular hypothetical example: ‘[21] If T [the taxpayer] fails to implement reg 38, that is not an end of T’s claim to credit or repayment of£200 . The result of failing to implement reg 38 [of the 1995 Regulations] is that, in the case where the amount otherwise due exceeds£200 , T has paid too much VAT in the prescribed period just mentioned. It is accepted by both HMRC and Iveco that s 80 [VATA 1994] is applicable. In other words, the reduction in VAT which T could have achieved by using reg 38 remains VAT which was not due to HMRC so that T can make a claim under s 80 to recover it. We consider that that is a correct and purposive approach to the legislation.’”
“upon a proper construction of arts 11A(3)(b) and 11C(1) of the Sixth Directive, the taxable amount in respect of goods supplied by mail order from a catalogue to a customer for the customer’s own use where the supplier allows the customer a discount from the catalogue price, a separate account being credited in the customer’s favour with the amount of that discount as and when instalment payments are paid to the supplier—a discount which may then be immediately withdrawn or used in another way by the customer—is the full catalogue price of the goods sold to the customer, reduced accordingly by the amount of that discount at the time when it is withdrawn or used in another way by the customer”
“at the time when it credits the amount in question to the agent’s account established in its books, Freemans has not yet actually paid the … discount to the agent. Where the agent does not use that amount, Freemans disposes of it by adding it to its profit and loss account. It is only when the customer uses the … discount that the discount is actually paid, so that, as art 11C(1) of the Sixth Directive provides, the taxable amount for the corresponding purchase must be reduced accordingly under conditions to be determined by the member states”
“If it is impossible or excessively difficult for the supplier of goods or services to recover, within a reasonable period, the excess VAT paid to the tax authorities on the basis of the initial invoice because of the condition at issue in the main proceedings, the principles of VAT neutrality and proportionality require the member state concerned to permit the taxable person to establish by other means before the national tax authorities, first, that he has taken all the steps necessary in the circumstances of the case to satisfy himself that the purchaser of the goods or services is in possession of the correcting invoice and that he is aware of it and, second, that the transaction in question was in fact carried out in accordance with the conditions set out in the correcting invoice.”
“26. As to whether the principles of VAT neutrality and proportionality preclude such a requirement, it must be noted that art 90(1) of the VAT Directive [i.e. the Principal VAT Directive] requires the member states to reduce the taxable amount and, consequently, the amount of VAT payable by the taxable person whenever, after a transaction has been concluded, part or all of the consideration has not been received by the taxable person (see Goldsmiths (Jewellers) Ltd v Customs and Excise Comrs (Case C-330/95 )[1997] STC 1073 ,[1997] ECR I-3801 , para 16). 27. That provision embodies one of the fundamental principles of the VAT Directive, according to which the basis of assessment is the consideration actually received and the corollary of which is that the tax authorities may not in any circumstances charge an amount of VAT exceeding the tax paid by the taxable person (see, to that effect, Goldsmiths (para 15)). 28. It is also apparent from case law that measures to prevent tax evasion or avoidance may not, in principle, derogate from the basis for charging VAT except within the limits strictly necessary for achieving that specific aim. They must have as little effect as possible on the objectives and principles of the VAT Directive and may not therefore be used in such a way that they would have the effect of undermining VAT neutrality, which is a fundamental principle of the common system of VAT established by the relevant European Union legislation (see, to that effect, Goldsmiths (para 21); Staatssecretaris van Financien v Stadeco BV (Case C-566/07 )[2009] STC 1622 ,[2009] ECR I-5295 , para 39 and the case law cited: and Vandoorne NV v Belgium (Case C-489/09 ) (27 January 2011 , unreported), para 27). 29. Consequently, if reimbursement of the VAT becomes impossible or excessively difficult as a result of the conditions under which applications for reimbursement of tax may be made, those principles may require that the member states provide for the instruments and the detailed procedural rules necessary to enable the taxable person to recover the unduly invoiced tax (Stadeco (para 40) and the case law cited). 30. Moreover, as regards the possibility, under art 183 of the VAT Directive, of providing that excess VAT is to be carried forward to the following tax period or refunded, the court has made it clear that the conditions for the refund of excess VAT cannot undermine the principle of fiscal neutrality by making the taxable person bear the burden of the VAT in whole or in part (EC Commission v Hungary (Case C-274/10 ) (26 May 2011 , unreported), para 45). 31. The court has stated that such conditions must enable the taxable person, in appropriate circumstances, to recover the entirety of the credit arising from that excess VAT. This implies that the refund is to be made within a reasonable period of time (EC Commission v Hungary (para 45)).”