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

Ground 1: The post-April 2009 Objection is wrong as a matter of domestic law. The FTT erred in law at FTT [94]-[105] when it determined that, as a matter of statutory interpretation, it had no jurisdiction to award additional interest pursuant to section 84(8) VATA in respect of an appeal filed after 1 April 2009 but which depended upon a pre-1 April 2009 decision of principle as to the underlying VAT liability.

Section 84(8) VATA 1994 is preserved where no appeal has yet been brought but where “HMRC have notified a decision relating to a matter to which section 83 of [VATA] applies”, pursuant to paragraph 4 of Schedule 3 of the Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009/56 (‘TTFO’). Section 83(1)(b) VATA provides that one such matter is “the VAT chargeable on the supply of any goods or services”.

The FTT erred in failing to give these words their natural meaning in context (FTT [86]-[97]). A decision of principle as to the liability of a particular supply to taxation predating 1 April 2009 – which is given effect in subsequent assessments postdating 1 April 2009 – is a matter to which section 83 applies and therefore in respect of which section 84(8) is preserved.

The FTT wrongly failed to recognise that this construction reflects the deliberately broad language of the saving provision, as well as its purpose, which is to ensure that taxpayers are not prejudiced in long running disputes about decisions of principle with HMRC which started before 1 April 2009 and continue thereafter.

Ground 2: post-April 2009 Objection is wrong as a matter of EU law. The FTT erred in law when it declined to give a Marleasing (Footnote: ⁶) compliant interpretation to Schedule 3, paragraph 4 TTFO and/or section 85A VATA.

Those provisions must be read in compatibility with EU law in respect of each of the decisions in this case, which long predated IP Completion Day: see Lipton v BA Cityflyer [2024] UKSC 24, SC at [66]-[68]; [91], [94], [95] and [100].

EU law requires an “adequate indemnity” for wrongfully being kept out of money by the tax authorities: Case C-591/10 Littlewoods Retail Ltd v HMRC EU:C:2012:478, [2012] S.T.C. 1714, at [27] (“Littlewoods CJEU”). A discretion is required for those cases (such as this case) where the statutory interest rate fails to give “adequate indemnity”. The FTT erred in finding FTT [62-64] that the Supreme Court’s judgment in Littlewoods Limited v HMRC [2017] UKSC 70 (“Littlewoods Limited”) concluded otherwise FTT [62-64].

The FTT fell into error in its analysis of the Appellant’s accrued EU law right to interest FTT [98–103]. The accrued right in question is a right to interest under EU law in respect of ongoing disputes about liability which start before 1 April 2009, as recognised in Emblaze Mobility Solutions Ltd v HMRC [2014] UKFTT 0679 (TC) and on appeal in Emblaze Mobility Solutions v HMRC [2018] UKUT 373 (TCC). HMRC did not appeal the conclusion that the taxpayer had a right under EU law to interest on repayments of tax wrongly withheld and that ruling is binding on HMRC. The FTT erred in failing to give effect to this accrued right.

Further, paragraph 4 TTFO and/or s. 85A VATA must be read in light of general principles of EU law, which were directly effective at the time: Lipton v BA Cityflyer at [66]-[68]. In particular, it runs counter to EU law principles of equivalence and effectiveness artificially to guillotine the interest that an Appellant can recover in the course of an ongoing and long-running dispute. The FTT erred in failing to give effect to these EU general principles when interpreting paragraph 4 TTFO and/or s. 85A VATA.

Accordingly, the FTT erred in law when it failed to give a Marleasing compliant interpretation to paragraph 4 TTFO and/or s. 85A VATA.

Ground 3: the FTT found as a fact that the Company’s cost of borrowing was the Bank of England base rate plus 2.27%. However, the FTT held at FTT [75] that the company was entitled to interest at base rate plus 1.5%. The Company appeals on the basis that the FTT erred in law when it found that the Company was only entitled to interest at base rate plus 1.5%.