In HMRC v Vodafone Group Services [2016] UKUT 89 (19 February 2016), the UT found that a claim for repayment of VAT could not be amended so as to include later claims relating to different transactions.
Vodafone had written to HMRC requesting a repayment of over £4m, representing the amount by which it claimed to have over-declared its liability for output tax under the Nectar card scheme in its VAT returns for the periods 01/04 to 01/06. HMRC had disagreed and rejected the claim. Vodafone had subsequently made further claims (the ‘later claims’) unrelated to the Nectar scheme. Although HMRC accepted that those claims related to overpayments of VAT, it refused to repay some of them on the ground that they had been made out of time. Vodafone contended that it was possible to amend the Nectar claim, which had been made in time, to encompass those later claims.
The UT observed that a taxpayer’s claim under VATA 1994 s 80(2) was not simply for a sum of money, but was for a sum of money related to particular transactions in respect of which output tax had been wrongly accounted for. It was therefore not possible to extend the claim to cover entirely different transactions.
The UT added that Reed Employment [2013] UKUT 109 was authority for the proposition that ‘a claim could be amended, even if the amendment consisted of a change in the amount claimed or the method of calculation, as long as the fundamental character of the claim was unchanged: in other words, the amended claim had to arise out of essentially the same facts or circumstances as the original claim’. This was not the case here and the errors discovered by Vodafone after the Nectar claim could not be subsumed into it.
Why it matters: According to the UT, Vodafone was essentially attempting to change the entire basis of its claim; however, the tribunal was not prepared to let Vodafone ‘abandon one claim and pursue another’. The tribunal also accepted that there may be an asymmetry between the position of the taxpayer and the tax authority. It noted, however, that there was an obvious difference between the position of HMRC, which in many cases does not have access to the full facts, and that of the taxpayer, who has, or should have, access to his own records.
In HMRC v Vodafone Group Services [2016] UKUT 89 (19 February 2016), the UT found that a claim for repayment of VAT could not be amended so as to include later claims relating to different transactions.
Vodafone had written to HMRC requesting a repayment of over £4m, representing the amount by which it claimed to have over-declared its liability for output tax under the Nectar card scheme in its VAT returns for the periods 01/04 to 01/06. HMRC had disagreed and rejected the claim. Vodafone had subsequently made further claims (the ‘later claims’) unrelated to the Nectar scheme. Although HMRC accepted that those claims related to overpayments of VAT, it refused to repay some of them on the ground that they had been made out of time. Vodafone contended that it was possible to amend the Nectar claim, which had been made in time, to encompass those later claims.
The UT observed that a taxpayer’s claim under VATA 1994 s 80(2) was not simply for a sum of money, but was for a sum of money related to particular transactions in respect of which output tax had been wrongly accounted for. It was therefore not possible to extend the claim to cover entirely different transactions.
The UT added that Reed Employment [2013] UKUT 109 was authority for the proposition that ‘a claim could be amended, even if the amendment consisted of a change in the amount claimed or the method of calculation, as long as the fundamental character of the claim was unchanged: in other words, the amended claim had to arise out of essentially the same facts or circumstances as the original claim’. This was not the case here and the errors discovered by Vodafone after the Nectar claim could not be subsumed into it.
Why it matters: According to the UT, Vodafone was essentially attempting to change the entire basis of its claim; however, the tribunal was not prepared to let Vodafone ‘abandon one claim and pursue another’. The tribunal also accepted that there may be an asymmetry between the position of the taxpayer and the tax authority. It noted, however, that there was an obvious difference between the position of HMRC, which in many cases does not have access to the full facts, and that of the taxpayer, who has, or should have, access to his own records.
