In H Hewitt v HMRC [2021] UKUT 231 (TCC) (17 September 2021), the Upper Tribunal (UT) held that the taxpayer was not entitled to bring a late appeal against a decision by HMRC that was in breach of his EU law rights. The opportunity the taxpayer had to request a statutory review of the HMRC decision or appeal it to the FTT within 30 days meant that he had an effective remedy for the breach.
The background was an HMRC decision to exclude the taxpayer from using the agricultural flat rate scheme (AFRS). It was common ground, following the CJEU in Shields & Sons Partnership v HMRC (Case C-262/16), that the HMRC decision was in breach the taxpayer’s EU law rights. It was also common ground that the principle of effectiveness was a retained general principle of EU law within the meaning of European Union (Withdrawal) Act 2018 s 6(7) and that it should be given full effect in relation to the matters under consideration.
The taxpayer argued that the principle of effectiveness requires that there is no time limit on the enforcement of EU law rights when a directly effective right is not properly transposed into national law. Alternatively, he argued that the effectiveness of a remedy can only be judged when a taxpayer can enforce it, and until the CJEU had released its decision in Shields, the taxpayer was unable to enforce his rights.
The UT rejected both arguments. As regards the first argument, the UT noted that case law (for example, Leeds City Council v HMRC [2015] EWCA Civ 1293) is clear that a failure to properly transpose an EU law right into domestic law does not prevent a national tax authority from relying on a reasonable limitation period which forms part of domestic law against a person seeking to enforce a directly effective EU law right. In relation to the alternative argument, the UT referred to decisions which confirm that a claimant’s subjective view of the prospects of success of their claim is irrelevant when considering the adequacy or otherwise of the remedy available under domestic law. For example, in Caterpillar Financial Services sp.z.o.o. v. Dyrektor Izby Skarbowej w Warszawie (Case C-500/16), the CJEU found that the claimant company’s perception that it was futile to challenge the compatibility of local VAT rules with EU law was not relevant in determining whether it was impossible or excessively difficult to make the claim.
The UT held that the time-limited right to request a statutory review of the HMRC decision, or appeal it to the FTT, provided the taxpayer with an effective remedy.
Why it matters: The case confirms the continuing relevance of the principle of effectiveness as a retained general principle. It also confirms that the start of a time-limited period for requesting a statutory review of an HMRC decision, or appealing the decision to the FTT, cannot be deferred until it becomes clear that the HMRC decision is wrong. The right to request a statutory review or submit an appeal within a period of 30 days of being notified of an HMRC decision is itself an effective remedy. A taxpayer who fails to exercise that right should not expect to be allowed to submit a late appeal.
In H Hewitt v HMRC [2021] UKUT 231 (TCC) (17 September 2021), the Upper Tribunal (UT) held that the taxpayer was not entitled to bring a late appeal against a decision by HMRC that was in breach of his EU law rights. The opportunity the taxpayer had to request a statutory review of the HMRC decision or appeal it to the FTT within 30 days meant that he had an effective remedy for the breach.
The background was an HMRC decision to exclude the taxpayer from using the agricultural flat rate scheme (AFRS). It was common ground, following the CJEU in Shields & Sons Partnership v HMRC (Case C-262/16), that the HMRC decision was in breach the taxpayer’s EU law rights. It was also common ground that the principle of effectiveness was a retained general principle of EU law within the meaning of European Union (Withdrawal) Act 2018 s 6(7) and that it should be given full effect in relation to the matters under consideration.
The taxpayer argued that the principle of effectiveness requires that there is no time limit on the enforcement of EU law rights when a directly effective right is not properly transposed into national law. Alternatively, he argued that the effectiveness of a remedy can only be judged when a taxpayer can enforce it, and until the CJEU had released its decision in Shields, the taxpayer was unable to enforce his rights.
The UT rejected both arguments. As regards the first argument, the UT noted that case law (for example, Leeds City Council v HMRC [2015] EWCA Civ 1293) is clear that a failure to properly transpose an EU law right into domestic law does not prevent a national tax authority from relying on a reasonable limitation period which forms part of domestic law against a person seeking to enforce a directly effective EU law right. In relation to the alternative argument, the UT referred to decisions which confirm that a claimant’s subjective view of the prospects of success of their claim is irrelevant when considering the adequacy or otherwise of the remedy available under domestic law. For example, in Caterpillar Financial Services sp.z.o.o. v. Dyrektor Izby Skarbowej w Warszawie (Case C-500/16), the CJEU found that the claimant company’s perception that it was futile to challenge the compatibility of local VAT rules with EU law was not relevant in determining whether it was impossible or excessively difficult to make the claim.
The UT held that the time-limited right to request a statutory review of the HMRC decision, or appeal it to the FTT, provided the taxpayer with an effective remedy.
Why it matters: The case confirms the continuing relevance of the principle of effectiveness as a retained general principle. It also confirms that the start of a time-limited period for requesting a statutory review of an HMRC decision, or appealing the decision to the FTT, cannot be deferred until it becomes clear that the HMRC decision is wrong. The right to request a statutory review or submit an appeal within a period of 30 days of being notified of an HMRC decision is itself an effective remedy. A taxpayer who fails to exercise that right should not expect to be allowed to submit a late appeal.
