TC09640 - [2025] UKFTT 01114 (TC)

The Appellant’s appeal was lodged on 30 August 2021. On 3 December 2021 HMRC applied for the appeal to be struck out pursuant to rule 8(2)(a) FTT Rules. In essence, by that application, HMRC contended that the letter of the 3 August 2021 was not intended to be and did not represent a decision meeting one of the descriptions specified in section 83(1) VATA.

The application was heard (together with similar applications made in connection with the Stayed Appeals) on 29 September 2022 by Judge Anne Scott. In her judgment, issued on 9 January 2023 [2023] UKFTT 00023, Judge Scott determined that, despite a lack of clarity concerning the scope of the substantive issue disputed by the Appellant, the matter before her was “simply what constitutes an appealable decision”. Judge Scott applied the prior Tribunal judgment in Mather v HMRC [2014] UKFTT 1062 and interpreted the judgment in HMRC v Earlsferry Thistle Golf Club [2014] UKUT 250 (TCC) to conclude that for there to be an appeal under section 83(1)(b) VATA what was required was a decision made by HMRC on the VAT chargeable on the supply of any particular goods or services. In that context, Judge Scott identified that there must be a sufficiently crystallised issue in dispute between the parties. An appealable decision need not identify a specific supply and did not need a specific amount of VAT to have been determined but, to be an appealable decision, it could not concern hypothetical supplies. Further, a party seeking to bring an appeal was required to have a real legal interest in the outcome of the appeal in order for the Tribunal to have jurisdiction to hear an appeal.

Judge Scott acknowledged that, as the recipient of the supply, the Appellant’s right to recover VAT which may have been overpaid on supplies of Locums arose as a matter of contract between the Appellant and its supplier; only the Appellant’s supplier having a right of recourse to HMRC for recovery of amounts considered to have been overpaid by way of VAT. However, she accepted that, unless and until the liability of the supplies had been determined, the Appellant had no effective remedy against its suppliers.

Having carefully analysed the terms on which the Appellant had sought a ruling and the detailed terms of HMRC’s response, Judge Scott determined that the letter of 3 August 2021 represented a decision as to the liability of supplies whose nature had been identified by reference to sufficiently specific information provided by the Appellants and thereby met the terms of section 83(1)(b). Judge Scott rejected the notion that, because HMRC did not intend to issue an appealable decision, there was no such decision.

On the question of the Appellant’s standing to bring the appeal, Ms Newstead Taylor, who also represented HMRC at that hearing, provided a limited concession that the Appellant had a financial interest in any decision regarding the liability of supplies made to it in connection with the provision of Locums. On the basis of that limited concession, and as the identified recipient of supplies of Locums, Judge Scott concluded that the Tribunal had jurisdiction to hear and determine the appeal.

No appeal was brought against that decision. We accept it as having determined that there was both an appealable decision issued by HMRC, and that the Appellant had the right to bring the appeal.

By her skeleton argument, Ms Newstead Taylor reinvigorated HMRC’s challenge concerning the Tribunal’s jurisdiction to hear the appeal. We were taken to the Upper Tribunal (UT)judgment in Mainpay Limited v HMRC [2021] UKUT 270 (TCC) (Mainpay UT). In that case the approach adopted in determining the factual aspects of the appeal was stated to be a “matter of contractual interpretation viewed in the light of the commercial and economic reality … [involving] a consideration of all the relevant facts and circumstances in which the supply took place”. HMRC challenge the adequacy of the Appellant’s disclosure and the ability of the Appellant to rely on the statements of witnesses not tendered for cross examination. In light of that challenge, they contend that the Appellant cannot prove a factual case that, in the period prior to April 2021, (when the supply liability ruling was requested) it received supplies on which it could be said it had incorrectly incurred VAT. They submit that the Appellant is required to prove every aspect establishing the receipt of particular supplies on which VAT had been incurred in order that we could then proceed to determine the case. Without an ability to prove its factual case HMRC contend that the Appellant’s appeal must fail and there is no need for us to determine the legal issue concerning liability.

Ms Yang’s position was that the question of standing had already been determined and that whilst the evidential picture may not be perfect, there was sufficient evidence on which we could be satisfied that the Appellant had received supplies of Locums on which VAT had been incurred in the period prior to August 2021 and on which we were therefore entitled to determine the liability for VAT purposes.

In determining how to proceed we applied the overriding objective to determine the fair approach in all of the circumstances of this appeal. We took account of the following matters:

Having considered these factors we communicated to the parties that we were unwilling to make any determination on the quality of the evidence in isolation and that we proposed to determine the central legal issue. We would then rule on the adequacy of the evidence. As to the evidence we would consider, we invited the Appellant to extract evidence of an individual supply of a Locum received from each of an “on framework” and an “off framework” supplier. Even on this, the parties appeared to struggle to work cooperatively. Eventually, the Appellant identified particular supplies and extracted the relevant documents thereon. HMRC continued to refuse to accept that the documents extracted represented evidence capable of establishing the nature of the supply received and thereby whether it was capable of meeting the terms of the exemption provided for in Item 5 whatever our interpretation of that provision.

We determined to proceed on the basis of the sample transactions identified by the Appellant in the documents which had been extracted. Subject to our review of them, we were satisfied that we should determine the correct interpretation of Item 5, assess the evidence as to what it demonstrated and then apply the correct interpretation to our factual findings.