UT-2024-000123 - [2025] UKUT 00360 (TCC)

Mr Beal argued that, as a matter of domestic law, the TTF Order preserved the FTT’s power to award interest in relation to decisions taken on or after 1 April 2009 which either depended upon a prior decision taken before that date or which related to VAT incurred and repaid prior to that date. This was, Mr Beal said, a matter of statutory construction.

First, the ordinary and natural meaning of the words used in paragraph 4 of Schedule 3 to the TTF Order preserve the power to award additional interest where no appeal has yet been brought but where “HMRC have notified a decision relating to a matter to which section 83 applies.” Section 83 (1) (b) provides that one such matter is “the VAT chargeable on the supply of any goods or services.” Accordingly, Mr Beal submitted that there had to be (i) a “decision” notified (ii) which must “relate to” (iii) “the VAT chargeable on the supply of any goods or services.”

Thus, in Mr Beal’s submission, there was a “decision” notified to the Company i.e. a decision of principle as to the liability of a particular supply predating 1 April 2009 – which was given effect in subsequent assessments postdating 1 April 2009. This was a matter to which section 83 applied and therefore in respect of which section 84(8) was preserved. The Company’s post-April 2009 appeals were not against an “abstract or notional” decision of principle, as HMRC suggested. It was entirely normal for HMRC to reach a decision of principle and which is then applied in future assessments on an ongoing basis. The Company appealed against decisions applying the disputed decision of principle, and in doing so brought into issue the decision of principle predating April 2009 (to which every subsequent application “relates”).

Secondly, the words used in the TTF Order were, according to Mr Beal, intended to be deliberately broad – Parliament had used the word “decision” which was broader than “assessment” or “rejection”. The issue in the present case, which HMRC’s submissions failed to address, was the treatment by the TTF Order of the relationship between a decision of principle and a (properly appealed) subsequent decision applying that earlier decision of principle.

The FTT erred when it concluded (FTT [96]) that the “decision” needed to be “adverse to the [Company] in a specific and identified in regard being an assessment or rejected claim” and (FTT [97]) that “there must be an amount which is identified within the scope of the appeal by reference to the decision under appeal i.e. the individual decision of HMRC adverse to the taxpayer in a specific and identifiable amount.” There was, Mr Beal submitted, no such requirements in the TTF Order.

Thirdly, the FTT failed to have regard to the purpose of the TTF Order which was to ensure that taxpayers were not prejudiced in longer-running disputes about decisions of principle with HMRC which started before 1 April 2009 and continue thereafter.

Thus, a taxpayer which finds itself in a lengthy dispute with HMRC receives only partial protection, despite the fact that the dispute started at a time when there was a power in the Tribunal to award additional interest. The FTT’s interpretation effectively rewarded HMRC for delaying the conclusion of the statutory appeal process.

Furthermore, a taxpayer is incentivised to settle the dispute of principle, rather than insist on their legal rights, in order to avoid HMRC issuing further assessments in respect of which no additional interest can be claimed.