“Time within which a claim must be made] [165A] [(1) Subject to paragraph (3) [and (4)] below, a claim shall be made within the period of [4 years and 6 months] following the later of— (a) the date on which the consideration (or part) which has been written off as a bad debt becomes due and payable to or to the order of the person who made the relevant supply; and (b) the date of the supply. (2) A person who is entitled to a refund by virtue of section 36 of the Act, but has not made a claim within the period specified in paragraph (1) shall be regarded for the purposes of this Part as having ceased to be entitled to a refund accordingly.”
“80 Credit for, or repayment of, overstated or overpaid VAT] [(1) Where a person— (a) has accounted to the Commissioners for VAT for a prescribed accounting period (whenever ended), and (b) in doing so, has brought into account as output tax an amount that was not output tax due, the Commissioners shall be liable to credit the person with that amount…. (2) The Commissioners shall only be liable to credit or 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 by virtue of subsection (1) or (1A) above, that the crediting] of an amount would unjustly enrich the claimant. … [(4) The Commissioners shall not be liable on a claim under this section— (a) to credit an amount to a person under subsection (1) or (1A) above, or (b) to repay an amount to a person under subsection (1B) above, if the claim is made more than [4 years] after the relevant date. (4ZA) The relevant date is— (a) in the case of a claim by virtue of subsection (1) above, the end of the prescribed accounting period mentioned in that subsection, unless paragraph (b) below applies; (b) in the case of a claim by virtue of subsection (1) above in respect of an erroneous voluntary disclosure, the end of the prescribed accounting period in which the disclosure was made; (c) in the case of a claim by virtue of subsection (1A) above in respect of an assessment issued on the basis of an erroneous voluntary disclosure, the end of the prescribed accounting period in which the disclosure was made; (d) in the case of a claim by virtue of subsection (1A) above in any other case, the end of the prescribed accounting period in which the assessment was made; (e) in the case of a claim by virtue of subsection (1B) above, the date on which the payment was made. In the case of a person who has ceased to be registered under this Act, any reference in paragraphs (b) to (d) above to a prescribed accounting period includes a reference to a period that would have been a prescribed accounting period had the person continued to be registered under this Act. … (6) A claim under this section shall be made in such form and manner and shall be supported by such documentary evidence as the Commissioners prescribe by regulations; and regulations under this subsection may make different provision for different cases. [(7) Except as provided by this section [(and paragraph 16I of Schedule 3B and paragraph 29 of Schedule 3BA)], the Commissioners shall not be liable to credit or repay any amount accounted for or paid to them by way of VAT that was not VAT due to them.]”
“37 Any claim under section 80 of the Act shall be made in writing to the Commissioners and shall, by reference to such documentary evidence as is in the possession of the claimant, state the amount of the claim and the method by which that amount was calculated.”
“31 (1) Every taxable person shall, for the purpose of accounting for VAT, keep the following records— (a) his business and accounting records, (b) his VAT account, (c) copies of all VAT invoices issued by him, (d) all VAT invoices received by him,… and (i) all credit notes, debit notes, or other documents which evidence an increase or decrease in consideration that are received, and copies of all such documents that are issued by him,”
“32 (1) Every taxable person shall keep and maintain, in accordance with this regulation, an account to be known as the VAT account. (2) The VAT account shall be divided into separate parts relating to the prescribed accounting periods of the taxable person and each such part shall be further divided into 2 portions to be known as “the VAT payable portion” and “the VAT allowable portion”. (3) The VAT payable portion for each prescribed accounting period shall comprise— (a) a total of the output tax due from the taxable person for that period, (b) a total of the output tax due on acquisitions from other member States by the taxable person for that period, [(ba) a total of the tax which the taxable person is required to account for and pay on behalf of the supplier,] (c) every correction or adjustment to the VAT payable portion which is required or allowed by regulation 34, 35[, 38 or 38A], and (d) every adjustment to the amount of VAT payable by the taxable person for that period which is required, or allowed, by or under any Regulations made under the Act. (4) The VAT allowable portion for each prescribed period shall comprise— (a) a total of the input tax allowable to the taxable person for that period by virtue of section 26 of the Act, (b) a total of the input tax allowable in respect of acquisitions from other member States by the taxable person for that period by virtue of section 26 of the Act, (c) every correction or adjustment to the VAT allowable portion which is required or allowed by regulation 34, 35 or 38, and (d) every adjustment to the amount of input tax allowable to the taxable person for that period which is required, or allowed, by or under any Regulations made under the Act.”
“increase in consideration” means an increase in the consideration due on a supply made by a taxable person which is evidenced by a credit or debit note or any other document having the same effect and “decrease in consideration” is to be interpreted accordingly;”
“31. Likewise, the court has held that a national authority may not rely on the expiry of a reasonable time limit if the conduct of the national authorities, combined with the existence of a time limit, means that a person is totally deprived of any possibility of enforcing his rights before the national courts (see, by analogy, Q-Beef and Bosschaert (para 51)).”
“40. However, it should be observed that it was not until the circular of26 February 1999 that it became clear that the tax authority, which is the administrative authority responsible for ensuring that the relevant legislation is applied, expressly stated that the consortium contributions were fiscal in nature[2012] STC 526 at 543 and that, accordingly, the payments owed by the consortia should be regarded as exempt from VAT for the purposes of art 10(5) of DPR No 633/72. As a consequence, such a circular retroactively reopened the question whether transactions consisting in the collection of those contributions were subject to VAT. 41. In such a situation, the tax authority must take account of the particular situations of the economic operators and, where appropriate, provide for adjustments to the way in which its new legal assessments of those transactions are applied (see, to that effect, Plantanol GmbH & Co KG v Hauptzollamt Darmstadt (Case C-201/08 )[2009] ECR I-8343 , para 49). ”
“ [91] The court has accepted that, in principle, a system under which only the supplier is entitled to seek reimbursement of VAT from the tax authorities, and the consumer can seek restitution from the supplier, meets the requirements of EU law: Reemtsma, para 39. The court added one caveat: “[I]f reimbursement of the VAT becomes impossible or excessively difficult, in particular in the case of the insolvency of the supplier, those principles may require that the recipient of the services to be able to address his application for reimbursement to the tax authorities directly.” ( Reemtsma, para 41). [92] This approach has been applied and restated in later cases. In the Danfoss case, the Court of Justice put the matter in this way: “27. It follows that a member state may, in principle, oppose a claim for the reimbursement of a duty unduly paid made by the final consumer to whom that duty has been passed on, on the ground that it is not that consumer who has paid the duty to the tax authorities, provided that the consumer - who, in the final analysis, bears the burden of that duty - is able, on the basis of national law, to bring a civil action against the taxable person for recovery of the sums unduly paid. 28. However, if reimbursement by the taxable person were to prove impossible or excessively difficult - in particular, in the case of the insolvency of that person - the principle of effectiveness requires that the purchaser be able to bring his claim for reimbursement against the tax authorities directly and that, to that end, the member state must provide the necessary instruments and detailed procedural rules.”
“40. I can return, then, to the points on which Mr Ghosh relies as necessitating a relaxation of the limitation period in Leeds' particular case. 41. So far as the first point is concerned, it is clear as a matter of EU law that the fact that a member state has not properly transposed a Directive does not preclude the taxing authorities of that state from relying on a limitation period against a person asserting a directly effective EU right: (Case C-188/95 ) Fantask A/S v Industriministeriet (Erhverministeriet) [1997] ECR 1-6783 at [52]. That case concerned a provision in a Directive that had been wrongly transposed, rather than a case in which a provision had not been transposed at all. Mr Ghosh says that in principle there can be no difference between the two cases. Mr Macnab agrees, and so do I. There is nothing in this point. 42. So far as the second point is concerned, article 4.5 may indeed be difficult to understand or to apply. I express no view one way or the other. But the fact that a piece of European legislation is difficult to understand or apply cannot justify an extension of the limitation period. If the meaning of a piece of European legislation is unclear it can be referred to the CJEU which sometimes manages to clarify its meaning. If and in so far as there was a perceived problem it arose because of uncertainties about the law, and had nothing to do with any shortcomings in domestic procedure for claims for repayment of VAT. 43. So far as the third point is concerned, there is no rule of EU law requiring the running of a limitation period to be deferred until the existence of a right to recover the payment has been judicially established. It is not uncommon for a claim to repayment to have become time-barred in national law while proceedings are still in progress to determine whether the member state was in breach of EU law: FII at [151] (Lord Sumption). Thus the fact that HMRC advanced a view of the law which is now conceded to be wrong does not preclude reliance on the limitation period. If a taxpayer is dissatisfied with HMRC's view of the law, the proper course is to appeal to the appropriate tribunal. That course has always been open to Leeds. Mr Ghosh accepted that not every contested case would justify an extension of the limitation period. Ignorance of one's legal rights is not a ground for disapplying a limitation period: British Telecommunications plc v HMRC[2014] EWCA Civ 433 ,[2014] STC 1926 at [106] and [123]. But Mr Ghosh argued that he was complaining not merely that HMRC were wrong, but that they had thrown Leeds off the scent by failing to mention article 4.5 at all and focussing on what turned out to be legally irrelevant arguments. I cannot see that this makes any difference. The provisions of the Sixth Directive were readily available and were (and were known to be) directly effective. If (as was the case) HMRC were barking up the wrong tree, Leeds could readily have identified the right tree: British Telecommunications plc v HMRC at [123]. Mr Ghosh suggested that there was a difference between a case in which HMRC's erroneous view of the law was rejected by a tax tribunal, and a case in which HMRC acknowledged the error of their ways without such a ruling. In the former case there would be no warrant for any extension of the limitation period, but in the latter case there would. I reject that submission, which would have the consequence that HMRC would be compelled to defend what they knew to be their own erroneous interpretations in the tax tribunals, merely for the sake of not having to concede an extension of the limitation period…. 46. If a limitation period were held to apply only to ill-founded claims it would serve very little purpose. It must follow that it is permissible for claims that are well-founded in law to be barred for limitation reasons alone. Moreover the principle of effectiveness means not that it must be easy to obtain a remedy, but that it must not be “excessively difficult” to do so. Where, as in the UK, there is a specialist tax tribunal system whose principal purpose is to allow the taxpayer to challenge decisions by HMRC I cannot see that it is “excessively difficult” to obtain a remedy”
“We do not think there is anything in Mr Bridge's argument about effectiveness and purposive interpretation which changes that conclusion. We can accept that BAS and BAC were, in the particular circumstances of their case, unable to assemble the requisite information necessary for them to make a fully compliant claim before the expiry of the time limit but, as Mr Hill rightly said, the position in which they found themselves thereafter is no more than the ordinary consequence of its expiry. In other words, an effective remedy was available to the taxpayers but they failed to exercise it in time.”
“The critical point is that s 80(2) requires a claim to be made, while s 80(6) requires the claim to be 'made in such form and manner' as may be prescribed; as we have said, the prescription appears in reg 37. In our view, these provisions taken together mean that a claim can be treated as a claim only if it satisfies the requirements of form and manner which are prescribed. There is no room within reg 37 for a claim to be made, without the specification of an amount or the method of calculation, but upon the basis that they will be provided later. … compliance with the reg 37 requirements is mandatory, and accordingly that a claim which does not[2016] STC 1463 at 1474 satisfy those requirements is not a claim within the statutory meaning. … It is clear that sub-s (1) is directed at an amount for which the taxpayer has accounted as output tax but which was not output tax due for a single prescribed accounting period. It is impossible to read the subsection in any other way. Subsection (2) then provides for a claim for repayment of 'an amount under this section'; we agree with Mr Hill that the 'amount' referred to here must be the same amount' as is mentioned in sub-s (1). Thus although, as Roth J said in Reed Employment , it is possible to make claims relating to several prescribed accounting periods, by sending a letter or by voluntary disclosure, the taxpayer must comply with s 80(6) and reg 37 in respect of each period. Even if the overall claim relates to several prescribed accounting periods a separate claim must be made for each such period, identifying that period, the amount for which repayment is sought and the method by which it has been calculated.”
“ 24. It is true that regulation 37 does not, as the FTT held, expressly spell out the requirement that the claim must be made by reference to prescribed accounting periods, but it is clear in my judgment that such a requirement exists. The power under section 80(6) to make regulations is only for “claims under this section”, and such claims can only be claims to establish HMRC's liability to credit the taxpayer with the amount of output tax which he has brought into account for a prescribed accounting period which is not output tax due. The “claim” must therefore be made by reference to the prescribed accounting period, and the “amount” of the claim in question must be the amount of the credit claimed for that period. … as I have explained, regulation 37 and section 80 have to be read together so as to give “claim” and “amount” a consistent meaning throughout. A claim under section 80 is not any demand for repayment of overpaid tax, but is a demand for repayment of overpaid output tax for a prescribed accounting period which is not output tax due…. Thus I would not agree that a claim under section 80 “may relate to one accounting period or many”
“Dear Mr O’Neill, Re: First Agency Limited (“FAL”) VAT Reg: 850 2348 45/VAT Error£109,856.92 Please find enclosed VAT documents you requested. They include original invoices, credit notes, revised invoices, Account statements that give rise to the invoices VAT computation (sic) based on the revised invoices for VAT quarters ended: 1. Q/E 31/08/08 2. Q/E 30/11/08 3. Q/E 28/02/09 4. Q/E 31/05/09 5. Q/E 31/08/09 6. Q/E 30/11/09 7. Q/E 28/02/10 8. Q/E 31/05/10 9. Q/E 31/08/10 10. Q/E 31/11/10 11. Q/E 28/02/11 12. Q/E 31/05/11 13. Q/E 31/08/11 14. Q/E30/11/11 15. Q/E 29/02/12 16. Q/E 31/05/12 Yours sincerely, Mark Obez”
“On20 February 2016 the Appellant submitted an Error Correction Notice (comprising of a cover letter, credit notes, original invoices and revised invoices, related credits, VAT computation (sic), and the summary of VAT reclaimed and the sales figures set out on an A4 sheet etc) which were received by the Respondent on22 February 2016 at 07:01 AM. (See pages 161-162)”
“The inspectors caused the delays in the course of their investigation. We complained to VAT Error Correction Team on two occasions…The Complaints Officer …concluded…”
“Further to our last meeting, Lieven and I agreed to reduce First Agency’s overstated commission that you reported to us I therefore hereby send you with this letter the new revised invoices and related credit notes that he gave me in order that you can quickly account for them.”
“36. In my view, paragraphs 33 to 36 of Freemans show that a legal entitlement to a refund is not sufficient to reduce the taxable amount and create a right to a repayment of VAT until the refund is paid to the customer or credit given is used by the customer. In paragraph 33, the ECJ states that what is now Article 90 “… requires the member states to reduce the taxable amount whenever, after a transaction has been concluded, part or all of the consideration has not been received by the taxable person”
“While the Respondents were still disputing the error, the Appellant could not determine with certainty the amount of the Bad Debt. If the Appellant proceeded and made a Bad Debt Relief Claim without knowing the exact amount of debt, the Respondent would have argued that the claim lacked consideration, and that it therefore lacked certainty and clarity. It is likely that the claim would have been rejected if it were made prior to HMRC’s acceptance of the amount…”