John Wilkins (Motor Engineers) Ltd & Ors v HM Revenue & Customs

Section 78 of the Value Added Tax Act 1994 permits successive written claims for interest on the same VAT overpayment. A later claim may rely on a newly decided legal authority or developed legal analysis. A refusal of that claim is a fresh disputed decision for appeal purposes. A claim that merely repeats the same case without anything new may be rejected as abusive, but the statute does not impose a once-and-for-all rule. The 30-day appeal period therefore runs from the later decision where the repeat claim is properly made. The appeals were allowed by a majority.

Five appellants had received repayment of VAT overpayments and simple statutory interest. They later claimed compound interest, relying particularly on the developing law concerning restitution and interest, including the Court of Appeal’s decision in Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2005] EWCA Civ 389.

The Upper Tribunal held that the relevant disputed decisions were the earlier decisions awarding simple interest. It concluded that the appeals were out of time and refused to extend time under Rule 19 of the Value Added Tax Tribunal Rules 1986. The central issue was whether the later claims were permissible successive claims under section 78 of the Value Added Tax Act 1994, producing fresh appealable decisions.

Majority (Laws LJ and Sullivan LJ). The appeals were allowed.

1. Section 78 of the Value Added Tax Act 1994 contains no express restriction to one claim for interest. Its procedure is informal: a claim need only be made in writing, and claims are ordinarily made and determined through correspondence. A first claim and payment of simple interest therefore do not automatically prevent a later claim for further interest.
2. A later claim may be based on a newly decided legal authority or a developed legal analysis, even where no new fact has emerged. Where such a claim is properly made, the Commissioners’ response is a fresh disputed decision under the 1986 Rules. The 30-day appeal period runs from that later decision. The three-year limitation period in section 78(11) is distinct from the procedural appeal period.
3. A repeat claim with nothing new to say factually or legally may be rejected as abusive. That issue concerns the merits or remedy, rather than the jurisdiction to make a further claim. A general statutory prohibition on successive claims cannot be implied merely to achieve administrative finality.
4. Whether correspondence constitutes a disputed decision is a question of law. It depends on the proper interpretation of the correspondence and Rule 4, not merely on a factual evaluation. This was therefore a point of law within the appellate jurisdiction conferred by section 13(1) of the Tribunals, Courts and Enforcement Act 2007.
5. In the alternative, if the later claims had not produced fresh disputed decisions, Laws LJ agreed with Etherton LJ that there was no sufficient basis to interfere with the Tribunal’s refusal to extend time under Rule 19.

Dissenting judgment (Etherton LJ). The original claims sought all statutory interest legally due on the relevant overpayments. The later claims for compound interest therefore challenged the original decisions rather than creating fresh disputed decisions. Hayward Gill was distinguishable because it concerned new facts. The Tribunal had lawfully refused an extension of time. Etherton LJ would have dismissed the appeals.

• Court of Appeal (Civil Division): By a majority, Laws LJ and Sullivan LJ allowed the appeals. Etherton LJ dissented and would have dismissed them.
• Upper Tribunal, Tax and Chancery Chamber: On 15 September 2009, the Tribunal held that the appeals were out of time and refused to extend time under Rule 19 of the Value Added Tax Tribunal Rules 1986.