Building Societies Ombudsman Company Ltd, R (on the application of) v Commissioners for Customs and Excise

Retrospective legislation imposing a shorter time limit for VAT repayment claims did not authorise the Commissioners to recover administratively sums paid pursuant to a prior tribunal decision determining their repayment liability. The statutory provisions concerned claims and repayments, not the administrative discharge of judicial determinations. Clear words were required before Parliament could be taken to have overridden such a determination. The Commissioners’ later enactment of the same cap by the Finance Act 1997 did not itself alter the liability existing when payment was made, because the cap was already in force under the provisional resolution. A tribunal appeal may concern liability and quantum where the tax authority accepts the underlying claim but refuses or defers payment. The appeal was therefore allowed.

The Building Societies Ombudsman Company Ltd sought repayment of VAT paid on regulatory activities which were later accepted not to be taxable. Following a government announcement of a proposed three-year retrospective cap, the Commissioners delayed payment. BSOC appealed to a VAT tribunal. The Commissioners applied for the appeal to be allowed on the same reasons and terms as the Royal College of Obstetricians and Gynaecologists decision. The tribunal’s direction became final on 16 December 1996, after the provisional cap had taken effect.

The Commissioners subsequently repaid the claim and issued a clawback assessment under amended section 80 of the Value Added Tax Act 1994. Moses J dismissed BSOC’s judicial review challenge. The central issues were whether the tribunal decision had determined the Commissioners’ repayment liability and whether the retrospective provisions authorised the clawback assessment.

1. Appeal allowed. The tribunal decision determined BSOC’s claim for repayment. The Commissioners’ application had adopted the reasons and terms of the RCOG decision, and the dispute concerned payment of the claimed sum, not merely an administrative discretion to defer payment. A dispute about refusal or deferral could involve both liability and quantum. The tribunal therefore had jurisdiction under section 83(t) of the Value Added Tax Act 1994.
2. The amended section 80 did not clearly authorise the Commissioners to use the new clawback power to override a prior judicial determination. Sections 80(4A) and (4B) were framed around claims, repayments and the Commissioners’ liability at the time of payment. They did not indicate an intention to permit administrative reassessment of a liability determined by a tribunal. The presumption against retrospective interference with accrued rights and judicial decisions was therefore not displaced.
3. The fact that the tribunal decision became effective after the provisional cap had been enacted did not alter the result. The Commissioners could have withdrawn their application, objected, or appealed. Having allowed the decision to stand, they could not disregard it through an administrative assessment.
4. Section 47 of the Finance Act 1997 did not constitute a provision subsequently affecting the liability at the date of payment. The three-year cap was already in force under the provisional resolution. Section 80(4B)(b) likewise referred to the liability established at the time, which included the unchallenged tribunal decision.
5. The court also considered, but did not need to decide, the Commissioners’ discretion and Community law arguments. The provisional conclusion was that recovering previously repaid VAT was not itself the imposition of VAT or a turnover tax, and that BSOC had established no directly effective Community law right to repayment.

• Court of Appeal (Civil Division): allowed BSOC’s appeal from the decision of Moses J in the Queen’s Bench Division. The court held that the three-year cap did not retrospectively invalidate the VAT tribunal’s decision of 16 December 1996.