03 0530 BRIAN ELTON COX Michael Tildesley  Birmingham 1 July The Appellant did not appear and was not represented James Puzey, of counsel, instructed by the Solicitor's Office of HM Customs and Excise, for the Respondents 
06/07/2004 DRAFT MAN/03/0530
	REPAYMENT VAT  — three year cap — payments of VAT on assessments issued in the absence of returns — VAT returns rendered more than three years later — Appellant overpaid VAT — whether Respondents entitled to refuse repayment because of the three year cap — yes — s 80(4) of VATA 1994 — did the claim comply with requirements of Regulation 37 of VATR 1995 — no — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

 
 	
	BRIAN ELTON COX	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	 Michael Tildesley (Chairman)

Sitting in public in Birmingham on 1 July 2004

The Appellant did not appear and was not represented

James Puzey, of counsel, instructed by the Solicitor's Office of HM Customs and Excise, for the Respondents

	© CROWN COPYRIGHT 2004

DECISION

The Appeal
1.	The Appellant gave Notice of Appeal dated 3 July 2003 in respect of the Respondents’ decision dated 6 May 2003 to refuse repayment of VAT said to have been overpaid by the Appellant because the claim was made more than three years from when the VAT was paid by the Appellant to the Respondents.
2.	The Appellant’s grounds of  Appeal  were as follows:	
“That our client should be given credit/refund of the overpaid tax, that is not disputed by HM Customs and Excise to be set off against future liabilities. The overpayment cover periods 04/98, 01/99, 04/99”.
3.	The Respondents requested the Tribunal to hear the application in the absence of the Appellant pursuant to Rule 26(2) of The Value Added Tax Tribunals Rules 1986. Notice of the hearing was sent to the Appellant’s representatives, Gordon Cutler & Co Chartered Accountants & Registered Auditors, on 19 April 2004.  The “Notice” was endorsed with a note by the Tribunal Clerk which read “I have listed this as I am informed that Mr Cutler is ill and has no idea when he will return”. The Tribunal Clerk contacted Gordon Cutler & Co on the day of the hearing to discover why there was no appearance from the firm.  Gordon Cutler & Co informed the Clerk that they had not received the Notice of Hearing and in any event Mr Cutler was out seeing a client. The Tribunal was satisfied that the Notice of Hearing had been correctly addressed and sent by ordinary post to Gordon Cutler & Co. Mr Puzey was of the opinion that Gordon Cutler & Co had made no attempt to contact the Tribunal about the Appeal and had been difficult with the Tribunal Office about the fixing of dates to hear the Appeal. Mr Puzey considered that Gordon Cutler & Co had been avoiding the Appeal hearing.
4.	I agreed to the Respondents’ application to hear the Appeal in the absence of the Appellant. I was satisfied that the Appellant’s representatives were fully aware of the Appeal hearing and had made no effort to contact the Tribunal. Mr Cutler was fit enough to attend the Tribunal  because on the day of the hearing he was out seeing a client.
The Legislation
5.	Section 80 of the VAT Act 1994 provides that
(1)	Where a person has paid an amount to the Commissioners by way of VAT which was not VAT 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)	Not applicable.
(4)	The Commissioners shall not be liable, on a claim made under this section to repay any amount paid to them more than three years before the  making of the claim. 
(5)	Repealed
(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, the Commissioners shall not be liable to repay an amount paid to them by way of VAT by virtue of the fact that it was not VAT due to them.  
6.	Regulation 37 of the Value Added Tax Regulations 1995 provides that
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.
The Issues
7.	The Appellant did not submit VAT returns to the Respondents for the periods 04/98 to 04/99 and 07/02. As a result the Respondents issued central assessments for VAT against the Appellant which he paid. In April 2003 the Appellant furnished the Respondents with  returns for the said periods which revealed that he paid too much VAT for the periods 04/98, 01/99 and 04/99. The Appellant submits that the Respondents should repay him the amount representing the overpaid VAT.
8.	For the Applicant to succeed with his Appeal he will need to establish on the balance of probabilities that
a)	He made a valid claim for refund in accordance with requirements of Regulation 37 of the 1995 Regulations.
b)	He made his claim within three years of payment of the VAT to the Respondents   in accordance with s. 80(4) of the 1994 Act.
 The Evidence
9.	The Respondents did not call any witnesses. Mr Puzey relied upon the facts contained in the documents provided by the Respondents. Mr Puzey was of the view that there was no dispute about the facts of this Appeal.
The Facts
10.	The Appellant was a sole proprietor trading as Steward Street Café, 109 Wolverhampton Road South, Quinton, Birmingham B32 2AX. The Appellant was registered for VAT under registration number 704 904 55 with effect from 11 July 1997. 
11.	The Appellant did not submit VAT returns for the first five periods following registration. Central assessments were issued in respect of each period and were paid by the Appellant.  The details of the relevant assessments and payments are set out in the table below:
Date	Event	Amount (£)	
12.6.98	Central Assessment issued 4/98	1,377	
11.9.98	Central Assessment issued 7/98	470	
25.9.98	Payment received	1,636	
11.12.98	Central Assessment issued 10/98	486	
23.11.98	Payment received	470	
19.2.99	Payment received	486	
11.3.99	Central Assessment issued 01/99	2,200	
11.6.99	Central Assessment issued 04/99	2,874	
12.8.99	Payment received	5,000	
 
12.	On 20 March 2002 the Appellant’s representative submitted an application to deregister the Appellant for the purposes of VAT because the Appellant was trading below the registration threshold. The Respondents refused the Application on the ground that the returns for the periods 04/98 to 04/99 were outstanding.
13.	On the 23 April 2003 the Appellant’s representatives sent the completed returns for the outstanding periods 04/98 to 04/99 under a covering letter to the Respondents. The covering letter stated that
“On the 20 March 2002 we wrote to you enclosing our client’s application to cancel his VAT registration. At the time, his VAT returns were in arrear and the deregistration was refused. We have today sent six outstanding returns to Southend with the hope that they will be processed immediately and our client’s outstanding liability revised accordingly.
He now wishes to de-register as the business is going from bad to worse as is his health. It would be appreciated if you were to take such steps as are necessary to de-register him immediately”.
The Appellant was deregistered for the purposes of VAT from 26 April 2003. 
14.	On 6 May 2003 the Respondents wrote to the Appellant advising him that he  overpaid VAT in the sums of £580.77, £1,480.68 and £2,036.90 for the periods 4/98, 1/99 and 4/99 respectively. Further, the Respondents were not liable, however, to repay any amount paid to them more than three years or earlier under the terms of section 80(4) of the 1994 Act.
15.	On 19 May 2003, Gordon Cutler & Co, the Appellant’s representatives, requested that the Respondents reconsider their decision not to repay the overpaid VAT to the Appellant stating that
	“Whilst we appreciate the terms of section 80 (4) of the Act, in our opinion this section means that if a registered trader makes a claim that was not available to him previously and if that claim is more than three years old the Commissioners in accordance with the Act do not have to repay it. We would rely on section 80(1) and section 80(2) where it clearly states that where a trader pays to the Commissioner an amount of VAT which was due to them, that they would be liable to repay the amount to him”.
16.	On the 17 June 2003 the Respondents reviewed their decision not to make a repayment of the overpaid VAT by the Appellant. J Michie, Senior Officer for the Respondents’ Appeal Team, upheld the refusal to repay. He pointed out that the Appellant’s latest payment of assessed VAT was on the 12 August 1999 and the missing returns were received on 24 April 2003; a time lag of well over three years. J Michie also considered the contention of Gordon Cutler & Co in their letter of  19 May 2003 but pointed out that section 80(4) bars repayment under section 80 (1) when certain time conditions are not met.   
Authorities
17.	I was referred to the following decision of the VAT & Duties Tribunal:
	DG and SE Hamer  v Commissioners of Customs and Excise [VTD 17669]
Reasons for My Decision
18.	The Respondents accepted that the Appellant had overpaid VAT in the sums of £580.77, £1,480.68 and £2,036.90 for the periods 4/98, 1/99 and 4/99 respectively. Under section 80(1) of the 1994 Act the Appellant was entitled to repayment of the overpaid VAT provided:
a)	He made a valid claim for refund in accordance with requirements of Regulation 37 of the 1995 Regulations. and/or
b)	He made his claim within three years of payment of the VAT to the Respondents which is the subject of the claim in accordance with section 80(4) of the 1994 Act.
Did the Appellant make a valid claim for refund?
19.	Section 80(6) of the 1994 Act requires the claim to made in such form and manner as may be prescribed by the Regulations. Under regulation 37 of the 1995 Regulations the claim shall be in writing, stating the amount of the claim and the method by which that amount was calculated. The letter of the 23 April 2003 from the Appellant’s representatives makes no mention of a claim for overpayment. The purpose of this letter was to secure the deregistration of the Appellant for VAT purposes. The facts suggest that it was the Respondents who first raised the issue of overpayment of VAT in their letter of the 6 May 2003 when they specified the amounts of overpayment and the periods to which they related. The Appellant’s letter of 19 May 2003 from his representatives claiming repayment of the VAT failed to specify the amount of the claim and the method by which the amount was calculated. The Appellant, therefore, has failed to meet the technical requirements of regulation 37 of the 1995 Regulations.
Did the Appellant make his claim within three years of  payment of the VAT which is the subject of the claim?
20.	Section 80(4) of the 1994 Act extinguishes the Respondents’ liability to meet a claim for repayment if made more than three years from the date of payment. The legislation provides no exceptions to the cap of three years on repayments imposed by section 80 (4) except transitional provisions which are not applicable to this Appeal. The Appellant paid the VAT to the Respondents which is the subject of the claim on 25 September 1998 (period 4/98) and 12 August 1999 (periods 1/99 and 4/99). Assuming that the Appellant had made a claim in accordance with regulation 37, the earliest date for such a claim would be the 24 April 2003 when the  returns for the outstanding periods 04/98 to 04/99 were received by the Respondents. The date of 24 April 2003 was more than three years and eight months after the last date of payment on 12 August 1999. Thus the Respondents are not liable to repay the overpaid VAT because the Appellant did not submit a repayment claim within three years of the date of payment of the VAT.
21.	I have decided to dismiss the Appeal principally because no claim for repayment was made within the three year time limit. I have also found that the claim submitted after the three year period did not meet the requirements of Regulation 37. If the latter had been the sole issue before me, I might have been sympathetic to the Appellant’s cause because it appears to me that the purpose of Regulation 37 is to provide a mechanism for resolving disputes about the entitlement to and the amount of the repayment.  In this Appeal the Respondents did not dispute that an overpayment had been made and the amount of the overpayment.  Instead the Respondents were denying liability to repay because of the three year time limit.  
22.	Mr Puzey has requested an order for the Respondents’ costs.  The current policy of the Respondents is not to seek costs against unsuccessful Appellants except in certain narrowly defined cases. One of those cases is where the Appellant fails to appear before the Tribunal which is the situation in this Appeal. I, however, do not consider it appropriate in the circumstances of this Appeal to make an order for the Respondents’ costs.  The Respondents have not suggested that the Appellant himself has abused the Tribunal process.  The Appellant would appear to be in a poor state of health.  An order for costs would aggravate his sense of grievance from not being able to recover overpaid VAT.  I, therefore, make no order for costs.
23.	The Appellant or any other person interested in this matter can apply to the Tribunal within 14 days after the date of release of this decision to set aside the decision in accordance with rule 26 (3) of the 1986 Tribunal Rules.

MICHAEL TILDESLEY
CHAIRMAN
Release Date
MAN/03/0530
££Cox v Customs and Excise [2004] UKVAT V18709 (21 July 2004)