Commissioners of Customs & Excise v DFS Furniture Company Plc

For the purposes of the statutory time bar, a judgment may constitute evidence of facts even though it is also evidence of the law. Its existence, contents and effect may justify a later assessment. The time bar must be construed in its statutory context, particularly where the legislation creates a comprehensive mechanism for recovering excessive VAT repayments following a later judicial or legislative development.

The Commissioners appealed from a decision of the VAT and Duties Tribunal concerning assessments issued against D F S Furniture Company Plc. DFS had received repayments of VAT and interest after the Court of Appeal’s decision in the Primback litigation. A subsequent preliminary ruling of the European Court of Justice led to the House of Lords restoring the earlier first-instance decision.

The Commissioners issued recovery assessments under VAT Act 1994, sections 78A(2) and 80(4A). The Tribunal held that the European Court of Justice judgment was a fact as to its existence, but that its contents were matters of law and could not trigger the time bar. The issue was whether the judgment, including its contents and effect, constituted evidence of facts sufficient to justify the assessments.

1. Appeal allowed. The order of the VAT and Duties Tribunal was set aside.
2. The time bar in VAT Act 1994, section 78A(2), had to be construed in the context of section 80(4A), which provided a statutory mechanism for recovering repayments exceeding the Commissioners’ liability under section 80(1).
3. Section 80(4B)(a) required account to be taken of subsequent retrospective legislation. It would be capricious to exclude a subsequent judicial decision with equivalent effect.
4. The existence of a judgment, its contents and its effect were facts or evidence of facts for section 78A(2), notwithstanding that a judgment might also be evidence of the law. Those categories were not mutually exclusive.
5. R v Governor of Brockhill Prison, ex parte Evans (No 2) did not require a different result. Lord Hobhouse had distinguished a judgment from a statute as a conclusive source of law, but had not decided that a judgment could not also be a fact or evidence of facts for a statutory time bar.
6. The same construction was consistent with the comparable VAT time bars and furthered the statutory purpose of the assessment provisions.

• High Court (Chancery Division): on appeal from the VAT and Duties Tribunal’s decision of 26 September 2002, the Vice-Chancellor allowed the Commissioners’ appeal and set aside the Tribunal’s order.