TC09568 - [2025] UKFTT 00917 (TC)

The authorities make it clear that I must decide whether the Tribunal has jurisdiction, not whether ICL’s Ground (1) is arguable. As the Upper Tribunal put the point in Woodstream Europe Limited v HMRC, [2018] UKUT 398 (TCC) at [18]:

“The proper task before the FTT was not to identify potentially non-fanciful arguments that jurisdiction might exist. The task was to determine whether jurisdiction did or did not exist; if it did, the application on that ground would inevitably be refused, and if it did not it would inevitably be granted.”

It would be wrong to investigate the underlying facts and merits of Ground (1) and the reasons why a C79 import certificate was not issued. The question for the tribunal is whether section 83(1) VATA allows a taxpayer to appeal the fact that a C79 was not issued to it by HMRC. The reasons why a C79 were not issued in this, or any other case, are irrelevant to the question of jurisdiction.

The Tribunal is a creature of statute. Section 83(1) VATA contains an exhaustive list of the Tribunal’s jurisdiction and does not allow ICL to challenge the fact a C79 import certificate was not issued to it by HMRC.

As a general rule, the Tribunal does not have a supervisory jurisdiction. Even though section 83(1)(c) refers to decisions “with respect to” the amount of input tax, HMRC v Noor, [2013] UKUT 71 (TCC) at [91]-[93], makes it clear that those words do not cover any legal question capable of being determinative of the issue of the amount of input tax which should be attributed to a taxpayer; it is focused on the large number of decisions on rights and obligations under the VAT legislation which HMRC have to make.

That said, HMRC accept that the FTT has jurisdiction under section 83(1)(c) to hear an appeal against the exercise of HMRC’s discretion under regulation 29. This is acknowledged in a number of cases, including Noor (at [87]), which comments that:

“The FTT has no general supervisory jurisdiction over the decisions of HMRC. That does not mean that under s 83(1)(c) the FTT cannot examine the exercise of a discretion, given to HMRC under primary or subordinate VAT legislation relating to the entitlement to input tax credit, and adjudicate on whether the discretion had been exercised reasonably (see eg Best Buys Supplies Ltd v Customs and Excise Comrs [2011] UKUT 497 (TCC) at [48]–[53], [2012] STC 885 at [48]–[53]—a discretion under reg 29(2) of the VAT Regulations). Although that jurisdiction can be described as supervisory, it relates to the exercise of a discretion which the legislation clearly confers on HMRC. That is to be contrasted with the case of an ultra vires contract or a claim based on legitimate expectation where HMRC are acting altogether outside their powers.”

There are two categories of discretion contained in regulation 29. First, subject to the four-year time limit in regulation 291(A), regulation 29(1) provides a discretion to allow late claims for input tax. Second, regulation 29(2) gives HMRC a discretion as to whether to entertain an application to establish the right to deduct otherwise than by a compliant invoice and, if this discretion is exercised in a person’s favour, HMRC has discretion to specify the documentary evidence they require to prove that the input tax has been incurred. Here, however, HMRC does not have any relevant discretion as whether to issue a C79.

The issuing of C79 import certificate is an administrative process and there is no discretion contained within regulation 29 as to whether HMRC issues a C79 import certificate or not. The correct venue to challenge dissatisfaction with the exercise of such an administrative process is by way of judicial review. Albeit out of time, this is what ICL have correctly done by way of their claim dated 29 May 2024, challenging the non-issue a C79 certificate on the established judicial review grounds of unlawfulness and irrationality.

Considering section 83(1)(c) VATA more generally, the fact it allows for an appeal relating to “the amount of any input tax which may be credited” does not mean it confers jurisdiction to challenge the reasons why a trader does not have the evidence or document required to make a claim for input tax in the first place. The fact that section 83(1)(c) VATA 1994 does not confer jurisdiction with respect to such evidence is underscored by the fact many of the other documents required to claim input tax under Regulation 29(2)(a-f) are not within HMRC’s gift to provide.

There has been no decision by HMRC, let alone an appealable one, not to issue ICL with a C79 import certificate. Mr Hayhurst says that it is “trite law” that no appeal can be made unless HMRC has made a decision in relation to it, citing the FtT’s comment in Donsaw Ltd v HMRC, [2016] UKFTT 471 (TC) at [35] that:

“We respectfully agree with both judgments [in Marks & Spencer Plc v CCE [1997] VATTR 15302 and Olympia Technology Ltd v HMRC [2006] VATTR 19984], and find that the Tribunal only has jurisdiction if HMRC has made a decision.”

A consequence of regulation 29 not conferring any discretion as to whether to issue a C79 import certificate is that no actual decision was made (or could have been made) by HMRC under regulation 29 not to issue ICL with a C79 import certificate. There has thus been no appealable decision falling within section 83(1)(c) VATA 1994 by HMRC not to issue ICL with a C79 import certificate. The appealable decision contained in HMRC’s decision letter dated 21 December 2022 was that ICL was out of time to provide the necessary evidence to support a claim for input tax. That appealable decision (that ICL was out of time to provide the necessary evidence to support a claim for input tax) should not be confused with why ICL was not in possession of the evidence that it needed to claim input tax.

As ICL has conceded, the Tribunal has no power to order HMRC issue a C79 import certificate and so even if the Tribunal were to decide HMRC were wrong not to have issued one, ICL would still not be able to claim input tax under regulation 29(1)(c). This underscores the lack of jurisdiction. The correct forum to challenge this administrative process (leading to the non-issue of a C79 import certificate) is by way of judicial review where the High Court can make a mandatory order that HMRC issues one.

ICL was not without alternative remedy and did not have to resort to judicial review. Notwithstanding the non-issue of a C79 import certificate, ICL had four years to provide “other evidence of the charge to VAT” but failed to do so. HMRC fully accept the Tribunal has jurisdiction to hear the Grounds (2) and (4), which relate to whether ICL is out of time to present such alternative evidence and the exercise of HMRC’s discretion in relation to the same.

So far as section 84(10) is concerned HMRC point to Metropolitan International Schools Ltd v HMRC, [2019] EWCA Civ 156, where the Court of Appeal held that section 84(10) is of a relatively limited scope, being designed as a statutory response to the decision in Customs and Excise Comrs v J H Corbitt (Numismatists) Ltd, [1981] AC 22, where the House of Lords held that the Tribunal had no power to review HMRC’s exercise of a discretion (not to allow a trader to use a margin scheme) in a way which resulted in the VAT liability against which the trader appealed. Newey LJ (with whom David Richards and McCombe LJJ agreed) observed:

“22.

In my view, the UT was right that section 84(10) of the VATA is of relatively limited scope. For section 84(10) to apply, the decision under appeal must have “depended upon a prior decision”. The provision thus requires both a “prior decision” and that the appealed decision “depended” on it. The need for a “prior decision” implies, I think, that section 84(10) cannot be invoked to challenge something that amounted to no more than a factor in the subject of the appeal, not a distinct “prior decision”. The subsection would not, therefore, be in point merely because, for instance, HMRC had chosen to take a particular matter into account in making the decision under appeal, even if they had resolved on their attitude to the matter in question in advance of the appealed decision. Any challenge to what HMRC had done would have to be mounted under section 83, as part of the appeal against the (final) decision, or perhaps by way of judicial review, not under section 84(10).

23 Turning to the significance of the word “depended”, the UT considered that it “connotes a decision A which has to be taken before decision B both as a matter of fact and as a matter of legal necessity or requirement”. This formulation seems to me to capture the sense of section 84(10) of the VATA. In the context, “depended” signifies that decision B (i e that under appeal) could not have been taken but for decision A. Parliament had in mind a “prior decision” comparable to the “necessary legal precursor” in Corbitt [1981] AC 22.”