Mobile Export/Shelford IT Ltd v HM Revenue & Customs

An appellate court should interfere with an interlocutory case-management decision of a tribunal only where the decision is plainly or clearly wrong. It should not substitute its own view merely because it would have exercised the discretion differently.

A VAT tribunal has broad control over the admission of evidence. Under paragraph 28 of the Value Added Tax Tribunal Rules 1986, evidence may be admitted in any manner the tribunal considers appropriate, and technical disputes about expert status do not necessarily justify exclusion. Evidence of foreign tax-administration practice is not generally relevant to the domestic interpretation of an ECJ decision, although it may be relevant to an application for an ECJ reference demonstrating conflicting approaches.

The appellant companies appealed from two interlocutory decisions of the VAT and Duties Tribunal concerning their VAT claims for repayment of input tax. The underlying claims related to exports of mobile telephones and were opposed by HMRC on the basis of alleged missing trader intra-community fraud and the principles in Kittel v Belgium, Case C-439/04.

The first appeal challenged the admission of a witness statement from Mr Taylor, including objections based on relevance, expert status, rebuttal, and late service. The second challenged the refusal to admit material concerning the implementation of Kittel v Belgium by the French VAT authorities. The central questions were whether the Tribunal’s interlocutory decisions were plainly wrong and whether the French material was relevant to interpreting the ECJ decision.

1. Standard of appellate intervention. The court adopted the approach in CCE v Gil Insurance Ltd and CCE v Young. An appellate court should not rehear the interlocutory arguments or substitute its own discretion. Intervention is justified only where the tribunal’s decision was plainly or clearly wrong, or where its discretion was not exercised reasonably and judicially. Minor uncertainty or inadequacy in the tribunal’s reasons is insufficient.
2. Taylor evidence. The Tribunal was entitled to admit the witness statement as a whole. The distinction between rebuttal and non-rebuttal evidence was not decisive, since the evidence was potentially relevant to factual issues concerning mobile-telephone markets. The Tribunal could admit it without conferring special expert status. Paragraph 28(1) of the Value Added Tax Tribunal Rules 1986 permitted evidence to be given in any manner the Tribunal considered appropriate and prevented exclusion solely on technical evidential grounds. The evidence was relevant, and the Tribunal had considered the alleged prejudice caused by its late admission. The appeal on this issue was dismissed.
3. French law evidence. The Tribunal was correct to exclude evidence of the French VAT administration’s opinion about the meaning of Kittel v Belgium. A United Kingdom tribunal determining the ambit of an ECJ decision should examine the ECJ decision itself, including its text in other languages if appropriate. It may consider judicial decisions from other member states without being bound by them, but an administrative authority’s opinion in another member state is not legitimate interpretative assistance on that issue.
4. The court made a tentative observation that the position could differ if the French material were adduced to support an application for a reference to the ECJ, by demonstrating an actual conflict between member-state approaches requiring consistent treatment. That was not the purpose for which the evidence had been offered. The appeal on the French law issue was therefore dismissed, and both appeals were dismissed.

• High Court (Chancery Division): The appeals from the VAT and Duties Tribunal’s interlocutory decisions were dismissed.
• VAT and Duties Tribunal: The Tribunal admitted Mr Taylor’s evidence and refused to admit the French law material. The underlying VAT appeals remained adjourned.