Upper Tribunal Tax and Chancery Chamber

UT (Tax & Chancery) UT/2022/000103 - [2024] UKUT 00183 (TCC)

Fecha: 13-Mar-2024

Grounds 2 and 4 – Section 85 VATA 1994

Grounds 2 and 4 – Section 85 VATA 1994

49.

Grounds 2 and 4 both concern the effect of section 85(1) and (4) VATA 1994 which provide as follows:

85 Settling appeals by agreement

(1)

Subject to the provisions of this section, where a person gives notice of appeal under section 83 and,

before the appeal is determined by a tribunal, HMRC and the appellant come to an agreement (whether in writing or otherwise) under the terms of which the decision under appeal is to be treated —

(a) as upheld without variation, or

(b) as varied in a particular manner, or

the like consequences shall ensue for all purposes as would have ensued if, at the time when the agreement was come to, a tribunal had determined the appeal in accordance with the terms of the agreement.

…

(4)

Where —

(a) a person who has given a notice of appeal notifies HMRC, whether orally or in writing, that he desires not to proceed with the appeal; and

(b) 30 days have elapsed since the giving of the notification without HMRC giving to the appellant notice in writing indicating that they are unwilling that the appeal should be treated as withdrawn,

the preceding provisions of this section shall have effect as if, at the date of the appellant's notification, the appellant and HMRC had come to an agreement, orally or in writing, as the case may be, that the decision under appeal should be upheld without variation.

50.

In this case, TTSL gave notice that it was withdrawing the Assessment Appeal. That notice fell within section 85(4) so that TTSL and HMRC were deemed to have come to an agreement that the decision under appeal should be upheld without variation. Section 85(1) was therefore engaged. It is common ground on the facts of this case that the “decision under appeal” was the Assessment. TTSL’s position is that it is only the Assessment which is deemed to have been upheld and there has been no deemed determination by the tribunal of the underlying substantive issue of whether TTSL was entitled to input tax credit on supplies of investment management services. HMRC say that the effect of section 85(1) is that there has been a deemed determination that TTSL was not entitled to such input tax credit.

51.

Mr Jones KC accepted that an express agreement within section 85(1) could give rise to a deemed decision extending beyond an assessment being upheld, depending on the terms of the agreement. He gave, as examples, the section 85(1) agreements entered into in Littlewoods Retail Ltd v HM Revenue & Customs [2014] EWHC 868 (Ch) (“Littlewoods”). We shall refer to this case in more detail in relation to Ground 3 and cause of action estoppel.

52.

There was an issue before the FTT as to whether the Assessment was made pursuant to section 73(1) or (2) VATA 1994. The FTT concluded that the Assessment was made pursuant to section 73(1) and that conclusion is not challenged on this appeal. Section 73(1) provides:

73 Failure to make returns etc

(1)

Where a person has failed to make any returns required under this Act (or under any provision repealed by this Act) or to keep any documents and afford the facilities necessary to verify such returns or where it appears to the Commissioners that such returns are incomplete or incorrect, they may assess the amount of VAT due from him to the best of their judgment and notify it to him.