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I’ve been taking a canter through recent Upper Tribunal Decisions over lunch and came across Bratt Auto Services & ANO v HMRC [2016] UKUT 90 (TCC).

It concerns the proper form for making a claim for repayment of sums paid to HMRC by way of VAT which aren’t in fact VAT.

The basis of the claim isn’t important (unless you’re in the motor trade – in which case it was an Elida Gibbs and Italian case claim). Its importance stems from the construction the UT, in over turning Judge Berner (F-tT), has give to s80 VATA 1994.

S80 governs claims for repayment of VAT which has in essence been paid by mistake. It sets out the time limits and, somewhat obliquely, the form and manner of any such claim.

I say “obliquely” because the form and manner of a claim is in fact set out not only in s80 but also in Reg 37 of VAT Regulations – which must be read in conjunction with s80. Compliance with s80 and Reg 37 is mandatory – if all the boxes aren’t ticked, the claim will fail.

Judge Berner dismissed, at first instance, HMRC’s contention that because s80 facilitates a claim for VAT paid by mistake in a prescribed accounting period, the claim must specify the prescribed accounting period (or periods) to which it relates each sum making up a global claim relates. Bratt had made a global claim for a financial year.

The UT has disagreed with this. It says that HMRC are right – not only must a claim state the amount claimed and the method by which it was calculated, it must also identify the prescribed accounting periods to which each sum making the whole claim relates.

The rational for this construction, with which I agree, is that identification of a specific sum in respect of specific prescribed accounting period facilitates confirmation whether a claim is statute barred and, if it is not, calculation of statutory interest on the repayment due.

The UT goes on to say that where a taxpayer can’t apportion the claim to specific prescribed accounting periods, it is permissible to apportion it equally. So, if as in Bratt, the claim relates to a full 12 months and the taxpayer is on quarterly returns, the prescribed accounting periods might be 03/, 06/, 09/, and 12/ etc etc.

Because Bratt’s claim didn’t ascribe a sum to the specific prescribed accounting periods, the claim failed.

This to me seems harsh.

The legislation, s80 and reg 37, do not state in clear terms that this is necessary (given that they are mandatory requirements and the subject matter is tax, perhaps they ought). It is implied from the wording of s80(1) VATA.

Given the fact that both the amount of the claim (in excess of £1M) and the method by which it had been calculated were included in the claim, and given that the UT itself says that where the claim is for consecutive prescribed periods but the taxpayer has insufficient information to quantify the period specific claim (as here), it is permissible to apportion the claim equally between the periods in issue, it would have been better (and by that I mean more equitable) for the claim to have been treated as so divided rather than dismissed completely.

Maybe I’m getting soft(er) with age. Nah, I’m just concerned by what looks to me as a partisan approach by the UT.

You can read the decision here.