Silicon Graphics Finance SA v HM Revenue & Customs

A concession disapplying the three-year limit for VAT repayment claims applies only where the overpayment is caused by a simple duplication of output tax. The court must identify the errors which caused the overpayment and consider them together. Duplication means payment twice, not merely an overpayment or an unmatched positive entry. The duplication must also be by the same taxable person claiming repayment. A transposition of figures between VAT returns for separate entities is not a simple duplication. The relevant overpayment is assessed by reference to the claimant’s VAT return. A proposed correction cannot assist a judicial review claim where it had not been made before the decision under challenge.

Silicon Graphics Finance SA sought judicial review of HMRC’s refusal to repay £317,789.93 said to represent over-declared VAT for the period ending December 1999. The claim was time-barred unless the claim fell within an HMRC concession concerning simple duplications of output tax.

The claimant had made two errors: a bookkeeping error in accounting for agency commission and a transposition error under which figures belonging to a United Kingdom company were entered on the claimant’s VAT return. The issues were whether the errors should be considered separately, whether the overpayment was a simple duplication of output tax, and whether corrected or duplicate returns could be submitted after the relevant time limit.

1. The claim was refused. The claimant’s overpayment did not fall within the concession.
2. The causative errors had to be considered together. It was wrong to isolate the bookkeeping error while disregarding the later transposition error. The claimant’s VAT return contained figures attributable to the United Kingdom company, and that transposition error caused the over-declaration.
3. The court adopted the approach in R (on the application of British Telecommunications plc) v HMRC, [2005] STC 1148. A simple duplication requires duplication of output tax and nothing else. The essential feature is payment twice, rather than an ordinary overpayment.
4. The concession did not apply because the relevant entities were separate taxable persons. There had been no doubling-up of payment by the claimant itself. Further, the bookkeeping adjustment created an unmatched positive entry rather than repeating an earlier payment.
5. The claimant could not rely on proposed new or duplicate returns. The judicial review concerned HMRC’s decision of 10 March 2005, and no additional returns had been filed by that date. In any event, the applicable correction procedure retained the same three-year limit and its exception for simple duplications did not cover the transposition error.
6. Any discretion HMRC might have had to accept duplicate returns would have been challengeable only on ordinary public law grounds. No concluded view was required because no duplicate returns had been relied upon before the challenged decision.

Permission to apply for judicial review was granted by Richards J. The Administrative Court then determined the substantive claim and refused it.