British Telecommunications Plc, R (on the application of) v Revenue and Customs

A published tax concession operates only for taxpayers who fall clearly within its terms. The phrase “simple duplication of output tax” requires a doubling-up of payment of output tax, and “simple” means that the overpayment consists only of that duplication. A judicial review challenge cannot succeed on a materially different factual basis from that presented to the public authority, although a fresh application may be made on the new facts. European Union law requires repayment and redress for taxes improperly levied in breach of European law, but does not itself confer a right to interest on taxes voluntarily paid by mistake where the issue is governed by national law.

British Telecommunications Plc sought judicial review of two decisions of the Commissioners of Customs and Excise, whose functions had passed to HM Revenue and Customs. BT had overpaid VAT because of an accounting-software error and received repayment of the amount falling within the statutory limitation period.

The first claim concerned the Revenue’s refusal to apply a published concession for certain errors, including simple duplication of output tax. The second concerned BT’s claim to interest, including compound interest, under European law. The applications were heard together.

1. The claim concerning the concession was dismissed. The concession was lawfully published under the Revenue’s managerial discretion under paragraph 1(1) of Schedule 11 to the Value Added Tax Act 1994. Such a concession was available only to persons falling clearly within its terms.

2. “Simple duplication of output tax” required three elements: duplication, output tax, and simplicity. “Duplication” meant doubling-up of payment. “Output tax” meant tax payable on a taxable supply of goods or services. “Simple” meant that the overpayment was only a duplication, rather than requiring an assessment of how complicated the underlying exercise was.

3. On the facts presented to the Revenue, BT’s erroneous payment had been calculated by reference to the amount refunded to customers on termination of their accounts, not by reference to a taxable supply. BT could not challenge the decision on a newly raised factual basis inconsistent with the case presented to the Revenue. A fresh application to the Revenue on the asserted new facts remained possible.

4. The claim for interest was also dismissed. European authorities, including Metallgesellschaft v CIR [2001] ECR 1-1727, established repayment and redress where taxes had been improperly levied in breach of European law. They did not establish a European-law entitlement to interest for payments voluntarily made, albeit mistakenly. Dilexport v Amministrazione delle Finanze dello Stato [1999] ECR I-579 did not extend the principle beyond unlawful levies; any remedy for voluntary mistaken payment was primarily a matter of national law.

5. The Revenue was awarded the costs of both applications. The costs in claim CO/1355/2004 were to be assessed on the indemnity basis and those in claim CO/3503/2004 on the standard basis.