Commissioners of Customs & Excise v Cresta Holidays Ltd & Ors

Appeals under section 59(1)(b) and section 59(1)(l) of the Finance Act 1994 are not mutually exclusive. A person affected by a decision on whether tax is chargeable may appeal under section 59(1)(b), even where the tax has already been paid and a repayment claim may also be available. The repayment mechanism in paragraph 8 of Schedule 7 must, however, be initiated by the taxpayer. Once the taxpayer has made a repayment claim, persons who have borne the economic burden of the tax may nevertheless be persons affected by its rejection and may have review and appeal rights. A proposed appeal under section 59(1)(l) cannot succeed where the decision reviewed was not made on the taxpayer’s specific repayment claim.

The Airtours Companies appealed against Lightman J’s order striking out their appeals to the VAT and Duties Tribunal. The appeals concerned higher-rate insurance premium tax charged during an unlawful differential-rate regime and the possible repayment of the excess.

The lower court held that the chargeability decision fell outside section 59(1)(b), that only the taxpayer could make a repayment claim under paragraph 8 of Schedule 7, and that the Airtours Companies were not affected by rejection of the taxpayer’s claim. The central issues were whether the two statutory appeal regimes were mutually exclusive, who could make and challenge a repayment claim, and whether the Commissioners’ letters constituted decisions on the taxpayer’s claim.

The court allowed the appeals on the section 59(1)(b) issue and dismissed them insofar as they sought to appeal under section 59(1)(l). The order below was amended to reinstate permission to appeal on the chargeability issue. Permission to appeal to the House of Lords was refused.

1. Chargeability appeal. Simon Brown LJ, whose judgment Robert Walker LJ expressly adopted, held that section 59(1)(b) was not confined to current or contemporaneous disputes. Its statutory language and legislative history did not justify treating it as unavailable after payment of the tax. The earlier VAT decisions in Processed Vegetable Growers Association Limited v CCE [1973] VATTR 87 and Williams & Glyn’s Bank Limited v CCE [1974] VATTR 262 supported that approach. The Airtours Companies were persons affected by the decision that the higher rate remained chargeable and could maintain a section 59(1)(b) appeal.
2. Repayment claim. The court unanimously held that a claim under paragraph 8 of Schedule 7 had to be made by the taxpayer. The statutory scheme channelled repayment through the taxpayer, supported by paragraph 8(6) and regulation 14 of the IPT Regulations 1994. The Airtours Companies therefore had no right to bring their own repayment appeals under section 59(1)(l).
3. Persons affected by rejection. Simon Brown LJ held that, once the taxpayer had made a repayment claim, the claimant was not the only person affected by its rejection. Those who had borne the cost of the tax could have review and appeal rights. The conclusion was immaterial here because the Airtours Companies had never sought review of the rejection of CGNU’s claim.
4. Commissioners’ letters. The November letters rejected claims made by the Airtours Companies, not a specific claim by CGNU. They therefore did not constitute a decision on CGNU’s repayment claim.
5. Separate opinion. Keene LJ agreed with the reasoning on all other issues but would have dismissed the appeals entirely. He considered section 59(1)(b) and paragraph 8 of Schedule 7 to establish distinct regimes, with section 59(1)(b) applying before payment and paragraph 8 applying where tax had already been paid.

• Court of Appeal (Civil Division): Commissioners of Customs & Excise v Cresta Holidays Ltd & Ors [2001] EWCA Civ 215. Appeals allowed on the section 59(1)(b) issue and dismissed on the section 59(1)(l) issue.
• Chancery Division, Revenue List: Lightman J struck out the Airtours Companies’ appeals to the VAT and Duties Tribunal.