“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.”
“…it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent’s case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant’s case is bad in law, the sooner that is determined, the better.”
“…it is not enough simply to argue that the case should be allowed to go to trial because something may turn up…”
“It is unnecessary to quote at length from the cases to which I have already referred. The following propositions can be drawn from them. (i) Where Parliament has legislated for a statutory remedy to apply in certain circumstances, whether that remedy ousts any common law remedy which would or might have arisen on the same facts depends upon whether, on the true construction of the particular statutory provisions, Parliament intended that provision to oust, or co-exist with, the common law remedy. The courts will not maintain a common law remedy in the case of an evident intention of Parliament to displace it (see, eg, Johnson v Unisys Ltd[2003] 1 AC 518 at para 58, per Lord Hoffmann, and para 80, per Lord Millett, Deutsche Morgan Grenfell Group Plc v Inland Revenue Commissioners[2007] 1 AC 558 , para 19 per Lord Hoffmann, and CPAG[2011] 2 AC 15 , para 27, per Dyson JSC). (ii) Where that intention is not express, the threshold for inferring ouster of common law rights is high; but it is not helpful to approach the question on the basis that there is a presumption against ouster. Nor, before common law rights are displaced, does ouster have to be a necessary implication, in the sense that the common law remedy is only displaced if, as a matter of logic, it cannot co-exist with the statutory regime (although, of course, common law remedies can be ousted by such necessary implication) (CPAG, para 31, per Dyson JSC). (iii) Whether common law remedies are ousted is dependent upon the true construction of the particular statutory provisions. However, where the statutory remedy covers precisely the same ground as the common law remedy, the latter will almost certainly have been excluded by necessary implication (above, at para 33). Furthermore, where the statutory regime provides a special or qualified remedy, it may (although not necessarily will) be inferred that Parliament intended to exclude any common law remedy that would or might arise on the same facts (see, e g, Deutsche Morgan Grenfell at para 19 per Lord Hoffmann, and at para 135 per Lord Walker of Gestingthorpe). (iv) The identification of some differences between the statutory scheme and the common law remedy will not necessarily lead to an inference that Parliament intended the former to oust the latter. As Dyson JSC put it in CPAG[2011] 2 AC 15 , para 34: “The question is not whether there are any differences between the common law remedy and the statutory scheme. There may well be differences. The question is whether the differences are so substantial that they demonstrate that Parliament could not have intended the common law remedy to survive the introduction of the statutory scheme. The court should not be too ready to find that a common law remedy has been displaced by a statutory one, not least because it is always open to Parliament to make the position clear by stating explicitly whether the statute is intended to be exhaustive. The mere fact that there are some differences between the common law and the statutory positions is unlikely to be sufficient unless they are substantial … The question is whether, looked at as a whole, a common law remedy would be incompatible with the statutory scheme and therefore could not have been intended by [sic] coexist with it.” (Emphasis in the original.)
“The evident aim is to protect public finances against the risk of a liability to repay tax emerging more than three years after the tax was received. It would be inconsistent with that intention for there to be a potentially far longer period within which non-statutory claims might be brought against the commissioners by the supplier’s customers.”
“In the absence of section 80(7), one would therefore conclude that section 80 impliedly excluded such liability (assuming that it might otherwise exist).”
“[Those limitations] would therefore be defeated if it were possible for the taxpayer to bring a common law claim. Parliament cannot have intended the special regime in section 78 to be capable of circumvention in that way.”
“… time runs from the point in time when the claimant has discovered, or could with reasonable diligence have discovered (a) that it had been mistaken with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking advice and collecting evidence, or (b) its mistake in the sense of recognising that a worthwhile claim arises.”
“… the question …whethers 39(5) of the Finance Act 1997 must be disapplied because it amounted to an unlawful curtailment of the exercise by BT of its directly effective EU rights under the Old Scheme.”
“119. As for BT’s claims in respect of supplies during the period1 October 1978 to31 March 1989 , I respectfully disagree with the Upper Tribunal that section 39(5) did anything amounting to an unlawful curtailment of the exercise by BT of its directly effective EU rights under the Old Scheme. 120. I admit to having derived little assistance in the resolution of this issue from the European authorities to which we were referred. I also regard the case as having little about it that is akin to what happened in Fleming. I would, however, agree with Mr Lasok [for HMRC] that, if at the time of the introduction of the New Scheme, BT had any expectations as to the future of the Old Scheme, it would, as a prudent and circumspect operator, be likely to have foreseen its eventual repeal. I also accept his submission that a claim by a litigant to a national court inviting a disapplication of a provision of its national law as infringing the litigant’s EU law rights is one that must be decided on the basis of the facts affecting the particular litigant, in this case BT. 121. The essential question for us is, I consider, whether BT is right that the enactment of section 39(5) of the FA 1997, which barred the making of any Old Scheme bad debt relief claims after19 March 1997 , infringed its directly enforceable rights under the Directive to claim VAT bad debt relief in respect of the bad debts the subject of the claim that BT eventually made in March 2009. Those debts all arose from supplies made prior to31 March 1989 , 20 years earlier. I explained in [48] above how, having regard to the nature of BT’s business, the badness of the latest bad debts to accrue would have been apparent to BT within (at most) months of the end of 1989 – and within several years before19 March 1997 (and see also the last part of [105] above). 122. It had, therefore, been open to BT from the dawn of the Old Scheme in 1978 down to 1990 to make bad debt relief claims under the machinery of the Old Scheme in respect of each bad debt now relied upon as it arose; and it continued to be open to it to make belated such claims during the remaining years of the 1990s in which the Old Scheme machinery remained on the statute book. Of course, in making good such claims BT would have had to show that the insolvency condition was incompatible with its EU law rights. I consider, however, that we must approach the case on the basis that it could and would have done so. The only reason BT did not make such claims is, I presume, because it was unaware that it was open to it to do so. 123. I do not understand how such unawareness can be a relevant consideration. EU law has been flowing up our estuaries since 1972 and BT had every opportunity to obtain the most expert advice as to its rights. I therefore fail to understand how BT can now say that the eventual demise by theFinance Act 1997 of a bad debt scheme that had included provisions that, so it claims and I would hold, infringed its directly enforceable EU rights was a change in the law that also infringed its directly enforceable EU rights. It did not. BT had literally had almost decades in which to enforce its rights, but did nothing towards doing so. The suggestion that the four-month warning of the impending change in the law was too short a warning for BT, or those in a like position, is one with which I also disagree. BT could in fact have sought to enforce its directly enforceable EU rights during that period, although in the event it still did nothing towards doing so for a further 12 years. It is in my view counter-intuitive that BT should now be entitled to bring such a stale claim. The Upper Tribunal’s further suggestion that the four-month warning was insufficient to enable traders to seek the opportunity, should they wish to, of satisfying the domestic insolvency condition may be correct as a matter of fact. But the more relevant question is, I consider, whether the enactment of section 39(5) is one that infringed BT’s directly enforceable EU rights to claim bad debt VAT relief in respect of its supplies made prior to31 March 1989 . In my judgment, it did not.”
“127. …it is common ground that the right to claim a reduction in the case of non-payment is not absolute. It is open to member states to impose formal conditions on the exercise of the right, and to subject its exercise to reasonable time limits. It is also open to member states to make changes to the scheme, whether by changing the conditions, or by exercising, in a proportionate way, its power to derogate from the right. To that extent, therefore, the debate about whether the regime is a mandatory or discretionary one is not susceptible of a binary answer. It is mandatory in the sense that effect must be given to the EU law right, but the manner in which that is done, in terms of conditions and time limits, affords the member state a margin of discretion. Taxpayers cannot rely on the conditions for relief remaining the same.”
“133. Against that background, was the exercise of GMAC’s EU law rights rendered excessively difficult or virtually impossible by section 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. It is no answer to say that GMAC’s claim would have been rejected by the Commissioners in the same terms as their actual claim was rejected when it was eventually made in 2006. As I have said, this part of the case must be approached on the basis of EU law for which GMAC contend and which I have held to be correct. 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 section 39(5)...”
“In my view the Marleasing principle can be applied in a simpler and more natural way by not construing section 33 as impliedly setting itself up as an exclusive provision (which it did not do expressly, unlikesection 80 of the Value Added Tax Act 1994 ). The test claimants submit that the application of Marleasing cannot rework section 33 in a way that serves any relevant purpose. But to read it as non-exclusive does not go against its grain. It would merely exclude an implication which is itself no more than a process of statutory construction.”
“[204] … No one suggests on this appeal that such a limited remedy could possibly be enough in itself to satisfy the virtually unqualified obligation of the United Kingdom to provide an effective means of recovering tax overcharged contrary to EU law. This does not of course matter if it is an additional remedy as opposed to an exclusive one. There is certainly nothing in the provision which expressly excludes the availability of other causes of action at common law. If that is its effect, it must be by implication. In the ordinary way, such an exclusion might be implied, on the ground that where Parliament confers a restricted right of recovery, that must impliedly displace a corresponding right at common law which would be unrestricted. However, it is axiomatic that the courts cannot imply an exclusion of unrestricted rights of action at common law where that would be inconsistent with an overriding rule of EU law that an unrestricted right must be available. Section 33 cannot therefore be an exclusive right to recover tax overcharged contrary to EU law. Whether it is an exclusive right in other circumstances, is not a point which needs to be considered on this appeal. [205] The Court of Appeal held that section 33 did impliedly exclude a right of action at common law, even in relation to claims for tax overcharged contrary to EU law. They then dealt with the resulting inconsistency with EU law by reinterpreting the section so as remove the offending restrictions and the element of discretion. I think that this was wrong in principle. I very much doubt whether such radical surgery can be justified even under the extended principles of construction authorised in Marleasing. Its effect would be fundamentally to alter the scheme of the provision. But, however that may be, it seems, with respect, eccentric to imply an ambit for section 33 which is inconsistent with EU law and then to torture the express provisions so as to deal with anomalies that but for the implication would never have arisen.”
“26. … it must be noted that art 90(1) of the VAT Directive [i.e. Article 90 of the Principal VAT Directive, previously Article 11C(1)] 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)).”
“[30] By way of anticipation of the arguments on the cross-appeal, Mr Lasok’s responsive submission was that s 24 and its successors have nothing to do with claims for bad debt relief. They were and are concerned only with cases in which an overpayment of tax had been made to the Commissioners and provide a restitutionary basis for the recovery of the excess. In a bad debt case, there was no payment of VAT that was not due, or therefore any overpayment of VAT. A failure to make a bad debt relief claim in a subsequent return still did not mean that there was any overpayment in the tax actually paid. If no relief claim was made, the tax paid was the tax due.” (Emphasis supplied.)
“Neither s80(1) nor s80(1B) can be utilised for the purposes of claiming relief for bad debts.”
“…I would simply record my view, which is in conformity with the view which GMAC expressed to the Commissioners in their original claim, that section 80 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 exercise of rights conferred on private persons by directly applicable provisions of Community law would, however, be rendered impossible or excessively difficult if their claims for restitution or compensation based on Community law were rejected or reduced solely because the persons concerned had not applied for a tax advantage which national law denied them, with a view to challenging the refusal of the tax authorities by means of the legal remedies provided for that purpose, invoking the primacy and direct effect of Community law.”
“It remains HMRC’s position that BT had no claim under section 80. Had there been an overpayment made by BT, mistaken or otherwise, BT would have had a section 80 claim which, as is common ground, would have ousted any common law claim (see section 80(7)). That BT has no right to bring a claim under section 80, as established in BT/CA and GMAC/CA, defeats any claim that it has enriched HMRC by overpaying VAT.”
“If everything else is equal I can see no principled distinction between a benefit consisting in money paid and a benefit consisting in a claim foregone.”