Case No: A3/2000/0318
Neutral Citation Number: [2001] EWCA Civ 215 
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM MR JUSTICE LIGHTMAN
(CHANCERY DIVISION: REVENUE LIST)
Royal Courts of Justice
Strand, London, WC2A 2LL

Tuesday 20th February 2001

B e f o r e :

LORD JUSTICE SIMON BROWN
LORD JUSTICE ROBERT WALKER
and
LORD JUSTICE KEENE
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	COMMISSIONERS OF CUSTOMS & EXCISE	Respondent	
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	CRESTA HOLIDAYS LTD & ORS	Appellants	

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(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
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Mr G. Barling QC & Mr M. Conlon (instructed by K Legal, Solicitors, London EC4Y 8AE) for the Appellants
Mr P. Lasok QC & Mr M. Patchett-Joyce (instructed by Solicitor, H.M. Customs and Excise, London SE1 9PJ) for the Respondents

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Judgment
LORD JUSTICE SIMON BROWN:
Preface
1.	This is the Airtours Companies’ appeal against the order of Lightman J on 2 February 2001 striking out their appeals (the IPT appeals) to the VAT and Duties Tribunal.   It has been heard with great urgency because the IPT appeals themselves are listed for hearing by the Tribunal on 26 February and for the same reason we have striven to produce early judgments.   To this end I am taking the somewhat unusual course of incorporating the entirety of the judgment below as, so to speak, chapter 1 of my own judgment, to be taken not merely as read but as the starting point for such further consideration of the issues as remains necessary.   This opening paragraph should accordingly be regarded merely as a preface to a composite judgment, my own simply following on from that of the Judge below.
Lightman J’s judgment
2.	Lightman J’s central conclusions can, I think, be summarised as follows:
1.	The CCEs’ November 1999 letters constituted reviewed decisions confirming two October 1999 decisions:
(i)	that the higher rate of tax was properly chargeable (decision 1);
(ii)	rejecting the Airtours Companies’ claim to be paid the differential (decision 2) (Paragraphs 13 and 14 of  Lightman J’s judgment).   
2.	Decision 1 was not a s.59(1)(b) decision because the question as to the chargeability of the tax had been raised after, rather than before, the tax was paid.    Once payment has been made, the only relevant decision for s.59(1) purposes is one under paragraph (l), a decision on a claim for repayment.    The two regimes are distinct and mutually exclusive.  (Paragraph 18 for the reasons given in paragraphs 15 and 16).
3.	Decision 2 was not a s.59(1)(l) decision because a claim for repayment under paragraph 8 of Schedule 7 can only be made by the taxpayer himself, here the insurers, CGNU.   (Paragraph 20 for the reason given in paragraph 19(a)).
4.	Accordingly the decisions on review were not reviewed decisions for s.59(2) purposes (and thus gave rise to no appeal rights under s.60(1)(a)).   However wide a meaning is given to the words in S.59(2) “any person who is or will be affected by any decision”, that decision must first be one “to which this section applies”.   It applied to neither decision here.  (First part of paragraph 23).
5.	The Airtours Companies’ alternative argument to the effect that the November letters confirmed a separate decision by the CCE rejecting CGNU’s (rather than the Airtours Companies’) claim to be paid the differential (decision 3) failed for two distinct reasons:
(i)	there was no such third decision;  true, the CCE had stated that “they would reject any claim for repayment by an eligible claimant” (i.e. by CGNU as the taxpayers), but it was not the Airtours Companies who were making such a claim so that the CCE’s statement was not a decision in respect of a claim for repayment within the meaning of s.59(1)(l), and
(ii)	because, even if there were a third decision which was within paragraph (l), the Airtours Companies were not a person “affected” by it and so could not require a review and thereby become entitled to an appeal.  (Middle section of paragraph 23).
6.	Even had the Airtours Companies attempted to acquire a right of appeal by requiring a review of the CCE’s October 1999 decision refusing CGNU’s own claim for repayment of the differential (which in fact they never have done), such an attempt would in any event fail, for the same reason set out in paragraph 5(ii) above, namely that they were not a person “affected” by that decision.  (End of paragraph 23).
3.	It followed from these conclusions that the Airtours Companies were not themselves entitled to appeal against the CCE’s ruling on the main points at issue - these being essentially (i)  whether the higher rate of tax was properly charged during the period of differential rates, and (ii)  whether, even assuming it was not, the excess tax is still not repayable having regard to the defence of unjust enrichment.    Nevertheless, as the Judge observed, the Airtours Companies will be able to attend the hearing on 26 February and, with the Tribunal’s leave, intervene in CGNU’s conjoined appeal in which the identical points arise.    Given CGNU’s indisputable entitlement to make a claim under paragraph 8 of Schedule 7 (and their consequent right to appeal its rejection by the CCE on review), and given too that the CCE will not oppose the Airtours Companies’ proposed intervention in that appeal, the present appeal may seem somewhat academic:  very little purpose, it may be thought, would be served by the Airtours Companies themselves being appellants before the Tribunal.   They it is, however, who have the real financial stake in this litigation (apparently to the tune of some £9 million) and they say they cannot rely upon CGNU to pursue the IPT appeal (and, if necessary, any further appeal) and conduct the case as they would wish.
4.	I turn therefore to address the arguments advanced on this appeal although I shall hope to do so comparatively briefly.    It is convenient to relate them to the Judge’s conclusions enumerated above.
Conclusion 1 - the decisions were reviewed decisions
5.	The Airtours Companies naturally accept this conclusion.    Mr Lasok QC for the CCE, however, sought hesitantly to reopen the question resolved against him in paragraph 14.   He was right to be hesitant.   Not only was the Judge to my mind plainly correct in his conclusion but he would have had to have been plainly incorrect before the CCE’s appeal against the Tribunal’s interlocutory decision could have succeeded on this basis.   In any event there is no respondent’s notice before us.
Conclusion 2 - paragraphs (b) and (l) are mutually exclusive
6.	In arriving at this conclusion the Judge appears to have been influenced by two considerations in particular:  first, the language and scheme of the legislation (paragraph 15);  second, the apparent incompatibility between sub-sections (4) and (6) of  s.60 with regard to paragraph (b) appeals on the one hand and the unjust enrichment defence provided for by paragraph 8(3) of Schedule 7 with regard to paragraph (l) appeals on the other (paragraph 16).    Mr Lasok argues that the Judge was right in both respects and right too (in paragraph 17) to reject Mr Barling QC’s reliance on two Tribunal decisions in the cognate field of VAT appeals.
7.	I have not found this at all an easy point but in the end have concluded that Mr Barling is right and that s.59(1)(b) is not to be read as restrictively as Mr Lasok contends and the Judge below held.    The argument has to be considered in a historical context.   When initially VAT was introduced by the Finance Act 1972, the appeal provision, s.40, provided only for appealing the CCE’s decisions with regard to the tax chargeable and the like, not for a specific restitutionary claim equivalent to that provided for under the IPT scheme by s.59(1)(l).   On its face s.40 appeared to contemplate appeals only by the taxpayer (i.e. the supplier of the relevant goods or services).   In addition it contained provisions (now substantially re-enacted as sub-sections (3) and (8) of s.84 of the VAT Act 1994) equivalent to sub-sections (4) and (6) of s.60 of the Finance Act 1994 with regard to IPT.   Nevertheless, despite those provisions, the VAT Tribunal in Processed Vegetable Growers Association Limited v CCE [1973] VATTR 87 and Williams & Glyn’s Bank Limited v CCE [1974] VATTR 262 permitted appeals to be brought (a) by the recipient of the supplies (provided only that he had a sufficient interest) and not merely by the supplier, and (b) did so notwithstanding that the disputed tax had already been paid and accounted for to the CCE.   In the second of the two cases it was held in addition that the CCE were bound to give effect to the Tribunal’s decision by repaying the tax to the (non-appellant) supplier (or allowing the supplier to take credit for it in his next tax return) whereupon the supplier would hold the monies so repaid or credited as constructive trustee for the appellant recipients.   
8.	Whether or not the CCE followed that approach with regard to repayment is unclear.   What, however, is clear is that a practice developed whereby taxable persons recovered overpaid tax by using the machinery made available for correcting errors, a practice challenged by the CCE but ultimately vindicated by the House of Lords in CCE v Fine Art Developments PLC [1989] 1 AC 914.   That decision proved to be the springboard for an amendment to the VAT legislation by way of s.24 of the Finance Act 1989 to introduce specific provision for the recovery of overpaid tax subject to a defence of unjust enrichment together with a related right of appeal.    These provisions, substantially re-enacted, are now s.80 of the VAT Act 1994 (the equivalent of paragraph 8 of Schedule 7 of the Finance Act 1994 with regard to IPT), and s.83(t) of the VAT Act 1994 (equivalent to our section 59(1)(l)).   
9.	Against this background it would seem to me inappropriate to confine s.59(1)(b) to what Mr Lasok describes as “current, on-going or contemporaneous disputes” unless there are compelling reasons to do so and unless the Court takes the view that the 1989 amendment to the VAT scheme operated to overturn the two longstanding Tribunal decisions.   I recognise, of course, that the VAT scheme and the IPT scheme are not in all respects identical, but there appears to me no sound basis for contending that they should be construed and operated differently in the respects now at issue.
10.	For my part I can see no compelling reason to confine paragraph (b) in the way Mr Lasok invites.   True, the paragraph is couched in the present tense but, as I understand to be common ground, this has no temporal connotation:  the words “is chargeable” here refer to the incidence of the tax which is “charged” on receipt of the premium by reference to the “chargeable amount”.    Mr Lasok’s argument is rather that, once the tax has been paid (otherwise than under the provisions of s.60(4)), it will in any event be necessary for the taxpayer to claim its repayment so that any issue that might originally have arisen under paragraph (b) will now inevitably be subsumed in an appeal under paragraph (l).    In these circumstances a paragraph (b) appeal becomes, submits Mr Lasok, “futile”, “of no utility”, “wholly otiose”.    S.59(1)(b)) is simply not necessary and so should not be available for “historical disputes”.
11.	Generally speaking I have no doubt that this will be so.    In Gil, for example -  the “white goods” case also concerning the consequences of imposing differential rates of IPT, in which the Tribunal’s judgment is currently awaited -  the appeal to the Tribunal (which Richards J held on the merits to have been rightly not struck out - CCE v Gil Insurance [2000] STC 204) was brought (by the insurers) under paragraph (l) alone.    But there may perhaps be other cases in which the taxpayer will wish to have some point of principle resolved before finally formulating his repayment claim or before deciding whether to involve himself in expensive unjust enrichment litigation.    And if, say, the dispute arises whilst the tax at issue is still being charged (as it would have been here had the reviewed decisions been sought whilst the differential rates remained in force), and then the tax regime changes before the appeal is heard, it would seem quite wrong to have to discontinue an existing paragraph (b) appeal so as to replace it with a retrospective paragraph (l) appeal.   How, one wonders, would that affect the taxpayer’s rights to recover any tax paid under s.60(4)?   
12.	That brings me to the conundrum presented by the contrast between sub-sections (4) and (6) of s.60 which apply in a s.59(1)(b) case and the unjust enrichment defence available to the CCE in a repayment case.    Various possible solutions were suggested to us.   To my mind, however, it is unnecessary for present purposes to resolve this difficulty.   If it were not regarded as insuperable in the two Tribunal cases in the 1970s, still less should it be so regarded here.   After all, in a case like this, by definition the disputed tax will have been paid.  
13.	In short, I would hold that those affected by a CCE ruling on the chargeability of tax are entitled to bring and maintain a paragraph (b) appeal irrespective of whether they or others have brought or are entitled to bring in addition an appeal under paragraph (l).
14.	I should add that it seems to me quite plain that the Airtours Companies are “affected” by the CCE’s decision in this case that the higher rate tax remains chargeable despite the unlawfulness (confirmed by the Court of Appeal in R v CCE ex parte Lunn Poly [1999] STC 350) of the differential rate regime itself.   Indeed, I did not understand Mr Lasok to press the contrary view upon us even though the Judge below (in the first part of paragraph 18) “incline[d]” towards it.   Again it would be most surprising if, the Tribunal in the 1970s having allowed recipients of supplies to be appellants in their own right because in reality it was their interest which was at stake, we should now decide that s.59(2), which first introduced the concept of a person “affected” into this branch of the law, was to be given a substantially narrower meaning.
15.	It follows that I would reinstate that part of the Tribunal’s interlocutory decision whereby the Airtours Companies were permitted to amend their notice of appeal so as to appear at the hearing of these conjoined appeals as appellants on a s.59(1)(b) appeal.   It must, of course, be recognised that in that capacity they can participate in the appeal only with regard to the first issue - whether the higher rate of IPT was lawfully charged during the unlawful differential regime.
Conclusion 3 - only the taxpayer can make a repayment claim
16.	Although Mr Barling sought to challenge this conclusion, it seems to me plainly - indeed almost self-evidently - right for the reasons given by the Judge in the first part of paragraph 19 of his judgment.    Both the language and the scheme of the legislation make it perfectly clear that any repayment is to be channelled through the taxpayer (see paragraph 12 of the judgment below) who must himself initiate the claim in the manner prescribed - see paragraph 8(6) of Schedule 7 and regulation 14 of the IPT Regulations 1994.   Nor is there any substance in Mr Barling’s contention that European Community Law and/or the ECHR precludes Member States from requiring any restitutionary claim to be brought in this (or indeed some other) particular way.    Such a claim, Mr Lasok rightly noted, is analytically different from a compensatory claim for damages and, of course, nothing can prevent those affected by a breach of Community Law from bringing an action on that basis.   On no view, however, would the Tribunal be able to entertain an action of that kind.
17.	In these circumstances it seems to me that the Judge was quite right in paragraph 20 of his judgment to rule that the Tribunal had no alternative but to strike out the Airtours Companies’ purported appeals under s.59(1)(l), either under rule 18(1)(a) or rule 19.3 of their own procedure rules.   I acknowledge the force of Richards J’s warning (in paragraph 11 of his judgment in Gil) that the courts should be wary of intervening in the Tribunal’s interlocutory decisions and should only do so if these are plainly wrong.   In this case, however, I am satisfied that the Tribunal was plainly wrong.   No appeal could be brought save in regard to a reviewed decision by the CCE rejecting a claim by the taxpayers themselves.
Conclusion 4 - that neither decision fell within s.59(1)
18.	This needs no separate consideration.   I have already stated my own conclusions, namely that decision 1 fell within paragraph (b) but that decision 2 was not within paragraph (l).
Conclusion 5 - the Airtours Companies’ alternative argument based on the CCE’s November letters failed
19.	Mr Barling submitted that it is “plausible” to interpret the CCE’s letter of 11 November 1999 as in effect rejecting the CGNU’s claim as well.    So it is, plausible but wrong.   Given that the CCE’s letter to the Airtours Companies was specifically rejecting claims by them and not a claim by the CGNU (albeit one had already by then been made), it seems to me that this argument is bound to fail just as the argument based upon the Airtours Companies own claims for repayment must fail.   The decision was simply not a decision upon a specific CGNU claim.   I would therefore uphold this conclusion of the Judge below for the first of the two reasons he gave.    
Conclusion 6 - the Airtours Companies are not a person “affected”
20.	I have already indicated my rejection of this view with regard to a s.59(1)(b) decision.    Mr Lasok, however, whilst apparently accepting that the Airtours Companies could properly be regarded as “affected” by a paragraph (b) decision (if, contrary to his argument, such a decision was made), nevertheless contends that they cannot be so regarded for the purposes of a s.59(1)(l) decision.   He submits that the concept of a person “affected” is a variable one depending upon the particular issue sought to be reviewed and appealed.    Given that only the taxpayer (whether the insurer or a taxable intermediary) can make a repayment claim, so, runs the argument, only the claimant is affected by its rejection.    Quite why this should be so I confess to having had difficulty in following.    Those who have borne the cost of the contended for over-payment, the Airtours Companies here, have no less interest in pursuing the repayment claim than the recipients of the services had in pursuing the VAT appeals in the two 1970s Tribunal cases.   True, as I feel constrained by the plain language of the legislation to hold, only the taxpayer can make the repayment claim in the first place.   Once he has done so, however, I can see no legitimate basis upon which to hold that he alone is affected by the rejection of that claim.    Mr Lasok sought to outline a number of scenarios in which, he suggested, it would be impractical to allow anyone other than the claimant himself to appeal against a rejected claim for repayment.   None of these contentions, however, did I find in the least convincing.   No doubt it would be advantageous, perhaps essential, to the appellant’s case that the claimant himself should co-operate in its presentation, not least with a view to defeating any defence of unjust enrichment.   But that must be a matter for them;  it cannot justify denying a right of appeal to those quite obviously affected by the decision.
21.	My conclusion on this issue, however, is of no present consequence.   As I have observed, the Airtours Companies have never to this day sought a review of the CCE’s rejection of CGNU’s repayment claim.
Result
22.	It follows from all this that I for my part would allow the Airtours Companies’ appeals with regard to s.59(1)(b) but dismiss them insofar as they seek to appeal additionally  against the rejection of the repayment claim.
LORD JUSTICE ROBERT WALKER:
23.	I have had the advantage of reading in draft the judgments of Simon Brown LJ and Keene LJ.  I find myself in full agreement with the judgment of Simon Brown LJ on all the points covered by his judgment.   Any completely satisfying reconciliation of the provisions of s.60 (4) and (6) with those in Schedule 7, para. 8 seems to me impossible to achieve;  all the views canvassed in argument seem to involve their own difficulties.   But that does not persuade me that s.59(1)(b) and (l) must be regarded as mutually exclusive, especially in view of their legislative history as explained by Simon Brown LJ.
LORD JUSTICE KEENE:
24.	I agree with the judgment delivered by Simon Brown L.J. on all but one aspect of this case.  After much deliberation I have concluded that on the facts of this case the Airtours Companies cannot rely on section 59(1)(b) of the Finance Act 1994, because a review does not lie where the tax has already been paid before a decision of the CCE is sought as referred to in that paragraph.
25.	That conclusion derives not so much from the use of the present tense “whether tax is chargeable” in section 59(1)(b) as from the structure of the statutory provisions viewed as a whole.  Where the tax has already been paid, Schedule 7, para. 8 provides the mechanism for reclaiming any tax which was not due.  That mechanism is subject to the potential defence of unjust enrichment set out in Schedule 7, para. 8(3).  A claim under those provisions will give rise to a decision by the CCE, which if adverse to the taxpayers will produce a right to a review under section 59(1)(l) and section 59(2), together with the appeal rights conferred by section 60.
26.	That is a very different regime from that contemplated by section 59(1)(b).  It is significant that that latter provision is, along with section 59(1)(d), the only category of decision which is made subject to section 60(4) and (6).  Those two subsections provide as follows:-
“(4)  Where the appeal is against a decision with respect to any of the matters mentioned in paragraphs (b) and (d) of section 59(1) above it shall not be entertained unless-
(a) the amount which the Commissioners have determined to be payable as tax has been paid or deposited with them, or
(b) on being satisfied that the appellant would otherwise suffer hardship the Commissioners agree or the tribunal decides that it should be entertained notwithstanding that that amount has not been paid or deposited.
...
(6) Where on an appeal under this section it is found that the whole or part of any amount paid or deposited in pursuance of subsection (4) above is not due, so much of that amount as is found not to be due shall be repaid with interest at such rate as the tribunal may determine.”

27.	It is clear that section 60(6) requires repayment of the tax found not to be due, together with interest, when the section 59(1)(b) mechanism is used, and nothing in those provisions makes the CCE’s obligation to repay subject to any defence of unjust enrichment.  There is no reference to Schedule 7, para. 8(3).  If Parliament had intended this obligation to be subject to that defence, it would have so provided.  But if that is right, then if the section 59(1)(b) mechanism could be used even when the tax had already been paid, it would provide an alternative for the taxpayer to a Schedule 7, para. 8 claim and an easy means of circumventing the unjust enrichment defence which might otherwise be available to the CCE.
28.	Mr Barling’s response to this difficulty was twofold.  First, he contended that the section 60(6) obligation on the CCE to repay only arises where the money has been paid or deposited “in pursuance of” section 60(4) and that that would not be the case if it had been paid in the normal course of making quarterly returns.  It was argued that section 60(6) only operates if the reason for the payment was in order to comply with section 60(4). The fact that the terms of section 60(4) had been met would not be enough.
29.	I find that unpersuasive.  The object of section 60(4) is simply to ensure that the taxpayer’s request for a decision as to whether or how much tax is chargeable does not become, through the review and appeal process, a device for delaying payment.  Once payment has been made, irrespective of the taxpayer’s motive, the pre-condition for an appeal set out in section 60(4) would have been met.  That would then bring section 60(6) into play.  There would be considerable practical difficulties in applying the interpretation suggested by Mr Barling, with its need for an investigation into the motive behind the payment.
30.	The second response by the Airtours Companies to this dilemma was to argue that section 60(6) is in the statute only to provide for the payment of interest on sums found not to be due.  On such a construction one might then be able to regard the obligation to repay as subject to Schedule 7, para. 8(3), the unjust enrichment provision.  Apart from the difficulties with such an argument already referred to earlier, the structure of section 60 indicates that the point is not a good one.  Section 60(6) has its counterparts in section 60(7) and (8), which provide for the payment by the taxpayer of amounts found to be due, together with interest.  It seems impossible to confine the effect of these three provisions simply to the interest part of each of them.  They create obligations as to payment of the capital sums as well.
31.	It seems to me that there must be a clear distinction between the two regimes, that is to say, between section 59(1)(b) with its associated provisions in section 60(4) and (6) on the one hand and the restitutionary mechanism of Schedule 7, para. 8 with the possibility of a review under section 59(1)(l) on the other.  The latter will apply where money has been paid by way of tax before there has been any decision by the CCE on what is due.  That will be a common situation, because normally this tax is paid by registered persons without the need for any decision by the CCE.  The former regime is there where the taxpayer seeks a decision from the CCE before he pays the tax.  Hence the need for section 60(4) and (6).  
32.	I was for a time concerned about how persons in the position of the Airtours Companies, who have borne the burden of the tax payment in reality but who are not the immediate taxpayer, could challenge the legality of a past payment.  Not being the taxpayer, they could not make a claim under Schedule 7, para. 8.  Section 59(1)(b) would have the advantage of providing them with such a method of challenge.  However, I accept the point made by Mr Lasok that they would have a remedy available to them in any event by way of judicial review of a decision by the CCE.
33.	Consequently, although I agree with all the remaining matters dealt with in the judgment of Simon Brown, L.J., I am unable to conclude that section 59(1)(b) avails the Airtours Companies.  In my judgment, Lightman J. was right on this aspect of the case.  I would have dismissed these appeals.
 
ORDER: Appeal allowed with regard to the s 59 (1) (b) issue and dismissed with regard to the 59 (1) (l) issue. The order below to be amended to reinstate the permission to appeal on s 59 (1) (b) granted by the tribunal, but struck out by the court below. Permission to appeal to the House of Lords refused. The appellant’s to have half their costs of the action (in the tribunal, the court below and here).
(Order does not form part of approved Judgment)