Bratt Autoservices Company Ltd v HM Revenue and Customs

A claim for repayment of overpaid output tax under the Value Added Tax Act 1994 must identify the prescribed accounting period to which each amount relates. The formal requirements in regulation 37 of the Value Added Tax Regulations 1995 must be read with section 80. A claim stated only for a calendar year, without allocating the amount to individual prescribed accounting periods, is insufficient. This remains so even where the claimant provides a calculation method and the claim may later be amended. The requirement reflects the structure of the VAT scheme and enables statutory time limits to be assessed by reference to the end of the relevant accounting period.

The taxpayer’s solicitors sent HMRC a letter dated 30 March 2009 purporting to claim repayment of overpaid output tax. The letter calculated an amount for the calendar year 1989 and suggested that comparable calculations could be made for other years, but did not allocate the claim to individual prescribed accounting periods.

The First-tier Tribunal accepted the claim for 1989 and earlier years. The Upper Tribunal, in [2016] UKUT 0090 (TCC), allowed HMRC’s appeal and held that a section 80 claim had to be linked to individual prescribed accounting periods. The central issue before the Court of Appeal was whether that period-specific requirement arose from section 80 and regulation 37.

Lord Justice Floyd delivered the judgment, with Lord Justices Sales and McFarlane agreeing. The appeal was unanimously dismissed.

1. Statutory construction. Section 80 of the Value Added Tax Act 1994 imposes liability on HMRC where output tax was accounted for in a prescribed accounting period but was not due. The amount recoverable is the amount relating to that period.
2. Requirements for a claim. Regulation 37 of the Value Added Tax Regulations 1995 requires a written claim supported by documentary evidence, stating the amount claimed and the method of calculation. Those formal requirements must be read with section 80. A claim must therefore be made by reference to the relevant prescribed accounting period. Separate period-specific claims may be made in one letter, but a single undifferentiated claim covering several periods is not a claim under section 80.
3. Time limits and purpose. Section 80(4) and (4ZA) reinforce that construction because the limitation period runs from the end of the relevant prescribed accounting period. The claim must identify the period at the outset so that HMRC can determine whether it is wholly or partly time-barred. A claim need not be sufficiently particularised for HMRC to decide it immediately, but it must be sufficiently particularised for HMRC to engage with it.
4. Authorities. The court agreed with the formal-requirements analysis in Reed Employment v Revenue and Customs Commissioners [2013] UKUT 109, but did not follow its broader suggestion that one section 80 claim may relate to several accounting periods. The discussion in Revenue & Customs Commissioners v General Motors (UK) Limited [2015] UKUT 605 was explained consistently with the need for sufficient particularity.
5. Application. The taxpayer’s letter stated an amount and calculation method for a calendar year, but made no attempt to allocate the amount to individual prescribed accounting periods. It therefore failed to satisfy the statutory requirements.

• Court of Appeal (Civil Division): appeal dismissed.
• Upper Tribunal, Tax and Chancery Chamber: in [2016] UKUT 0090 (TCC), HMRC’s appeal from the First-tier Tribunal was allowed.
• First-tier Tribunal, Tax Chamber: the taxpayer’s appeal was allowed for 1989 and earlier years, subject to amendment of the amounts claimed.