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The Facts in Outline
The Facts in Outline
When goods are imported into the UK and VAT paid, HMRC issue an import VAT certificate known as a C79. The C79 provides evidence of VAT paid on import and is required for reclaiming input tax. However, a C79 is only issued in circumstances whereby a taxpayer’s UK Economic Operator Registration and Identification (“EORI”) number is declared.
ICL is a global minerals manufacturer established in the Netherlands. It imports and exports products all around the world.
On 1 October 2015 ICL was registered for VAT in the UK with VAT registration number 220815932.
On 12 October 2015 ICL applied to link its UK VAT registration number with its Dutch EORI number.
On 13 October 2015 the link of ICL’s UK VAT registration number with its Dutch EORI number took effect.
On 14 October 2015, ICL applied for a UK EORI number (“the UK EORI number”). When applying for the UK EORI number, ICL incorrectly filled out the HMRC form to say they did not already have an EORI number. On the application form, ICL gave its UK VAT number and quoted its Dutch VAT number.
On 15 October 2015, HMRC emailed ICL to inform them that their UK EORI would become active from the next day (16 October 2015) and “should be advised to any freight/clearing agents or couriers you have acting on your behalf.”
From October 2015 onwards, ICL made a number of imports and used its UK EORI number. C79s were successfully issued in respect of those imports.
On 6 April 2017, ICL imported “muriate of potash granular grade 60% in bulk” from Israel into the UK (“the April 2017 Import”). When making the April 2017 Import, ICL used the services of a customs agent, and the customs agent quoted ICL’s Dutch EORI number.
ICL paid £1,194,908.65 import VAT to HMRC in respect of the April 2017 Import.
.It is not in dispute that following the April 2017 Import, no C79 was issued by HMRC to ICL.
On 21 December 2021, ICL emailed HMRC about the absence of a C79 certificate for the April 2017 Import and the fact they had not been refunded input VAT in respect of it. HMRC agreed to investigate.
On 9 March 2021 HMRC wrote to ICL to explain that no C79 certificate had been issued for the April 2017 Import because, at the time of import, ICL had declared an incorrect EORI number. HMRC asked for further information to be provided by the end of the month.
On 22 September 2021, ICL provided a substantive reply.
On 21 December 2022, following further correspondence, HMRC wrote to ICL and pointed out that, as more than 3 years had passed, the import declaration for the April 2017 Import could no longer be amended. HMRC decided that ICL could not recover input tax in relation to the April 2017 Import. The reason given for that decision was that “you have not provided the necessary evidence in the necessary timeframe to support [the] claim”. That decision was upheld in a review conclusion letter (“the Review Conclusion”) dated 31 January 2024.
On 1 March 2024 ICL lodged notice of appeal against the Review Conclusion. The notice of appeal was accompanied by a document setting out ICL’s grounds of appeal (“the Grounds of Appeal”) prepared by Stewarts Law LLP. HMRC criticised this document on the basis that the grounds “are not clearly set out, numerated or easy to specifically identify”.
On 30 April 2024 ICL issued a claim for permission to apply for Judicial Review. ICL requested that the judicial review proceedings be stayed pending the outcome of this appeal. HMRC did not object and a consent order signed by the parties has been approved by the High Court.
On 17 January 2025 ICL served a document (signed by leading counsel) described as “Voluntary Further Particulars of Grounds of Appeal” (“the Further Grounds of Appeal”) which set out four grounds of appeal, as follows:
HMRC should have issued a C79 document in respect of the April 2017 Import but failed to do so. ICL also contends that HMRC have wrongly failed to exercise their discretion under regulation 29 of The Value Added Tax Regulations 1995 (“the Regulations”) by not issuing a C79 certificate (“the C79 issue”);
ICL is not out of time to claim for input VAT under regulation 29(2) of the Regulations (“the time limit issue”);
HMRC should have exercised their discretion to waive the usual time limits under regulation 35 of the Regulations (“the regulation 35 discretion issue”).
HMRC wrongly exercised, or failed to exercise, their discretion under regulation 29(1) and (2) to consider alternative evidence of the charge to VAT (“the failure to consider alternative evidence issue”).
HMRC accept that Grounds (2) and (4) fall within the Tribunal’s jurisdiction and ICL concedes Ground (3) should be dealt with by way of judicial review. As a result, this application to strike out relates to Ground (1) only.
As we are concerned with Ground (1), I set it out in full below:
“By Ground 1 (paragraphs 14-16 and 19 of the Grounds of Appeal), the Appellant challenges HMRC’s refusal to permit its entitlement to deduct input VAT on the basis that it does not “hold a document authenticated or issued by the proper officer”. In taking that decision, HMRC have wrongly exercised their discretion and/or have failed to exercise their discretion in relation to whether to issue or authenticate the document required by regulation 29(2) of the 1995 Regulations. By refusing to issue a C79 or equivalent document for reasons which are irrational and in breach of obligations of proportionality, neutrality and effectiveness, HMRC have unlawfully denied or prevented the Appellant from exercising its right to deduct. Paragraphs 15 and 16 set out why the reasons relied upon by HMRC are wrong.”