British Communications Plc v Revenue & Customs

A stay of protective restitution proceedings may be lifted where the statutory proceedings have become substantially protracted and the claimant wishes to pursue the common-law claim. The court should focus on practical case management and the overriding objective. Concurrent proceedings should generally be avoided where they concern overlapping issues. Where the defendant confirms that it will not rely on the statutory remedy as a defence, it may be appropriate to reactivate the common-law claim while leaving the statutory appeal stayed. The court may lift the stay generally, while preserving the parties’ ability to seek further directions if circumstances change.

HMRC rejected British Telecommunications plc’s claim for repayment of overpaid VAT. BT brought a statutory appeal in the First-tier Tribunal and, as a protective fallback, commenced a restitution claim in the Chancery Division. The restitution claim was stayed pending determination of the statutory appeal because a successful claim under Value Added Tax Act 1994, section 80 would exclude a common-law claim.

After prolonged procedural delay, BT applied to lift the stay and proceed with the restitution claim. HMRC opposed the application, principally on case-management grounds and because BT continued to contend in the FTT that section 80 supplied a valid remedy. The central issue was whether the stay should remain until the FTT proceedings and related strike-out application had been resolved.

1. Application granted. The stay on BT’s restitution claim was lifted generally. The statutory appeal remained a matter for the FTT, and either party could apply for the stay to be re-imposed if circumstances changed.
2. The purpose of the original stay was to avoid unnecessary parallel proceedings. That purpose did not require the restitution claim to remain stayed where BT wished to pursue it and HMRC confirmed that it would not rely on Value Added Tax Act 1994, section 80 as a defence.
3. The appropriate approach was practical case management consistent with the overriding objective. The court should seek to reach, as soon as possible, a position in which it is clear whether the statutory appeal remains necessary. A formal requirement that both proceedings remain active, with alternating stays, would depart unnecessarily from the practical reality.
4. HMRC’s written confirmation, read in context, made it reasonably clear that it would not plead section 80 in defence of the restitution claim. BT was therefore entitled to proceed with the claim. Any further defence could be addressed through ordinary pleadings.
5. There was little prejudice to HMRC in requiring it to plead to the short draft Particulars of Claim. Any compensable prejudice could be dealt with by an appropriate costs order. There was no good reason to await the FTT judge’s decision on HMRC’s strike-out application: whether the appeal was struck out or continued, the more convenient course was to lift the stay on the claim.

The judgment was a first-instance decision on BT’s application to lift the stay. The judgment records that preliminary legal issues had previously been determined by the Upper Tribunal and that the Court of Appeal had reversed one aspect of that decision and upheld another. No citation for those decisions is stated in the judgment.