Claimants In the Royal Mail Group Litigation v Royal Mail Group Ltd

A breach of the statutory obligation to issue a VAT invoice does not, without more, create a private law cause of action for the customer. The statutory scheme’s enforcement mechanisms, HMRC’s control over invoice requirements, and the discretion to accept alternative evidence indicated that Parliament intended administrative enforcement rather than individual enforcement.

The contractual documents likewise created no express or implied obligation to issue VAT invoices where the parties understood the supplies to be exempt. If such a duty had existed, the breach would have occurred once, when the invoice was due, rather than continuously. Claims based on the assumed statutory or EU duties were actions in tort for limitation purposes.

The claimants, including businesses and public bodies, sought VAT invoices from Royal Mail for historic postal services. They alleged statutory, contractual and EU-law duties to issue invoices so that input tax could be reclaimed.

The trial concerned preliminary issues, principally whether those duties existed, whether any breach was continuing, and which limitation provisions applied. The court proceeded on specified assumptions, including that the services were taxable under EU law and that Royal Mail could be directly liable under the relevant Directives. The central questions were whether customers had enforceable rights to VAT invoices and how any resulting claims should be classified for limitation purposes.

1. Statutory duty. Regulation 13 of the 1995 Regulations and its predecessors did not create a private law right enforceable by an individual customer. The relevant considerations were the alternative HMRC discretion to accept other evidence, HMRC’s powers over the timing and content of invoices, the statutory penalty regime, and the absence of any provision conferring a civil remedy. The court rejected the submission that the discretion was practically unavailable because of Zipvit Ltd v HMRC [2018] STC 1502.
2. Contract. None of the sample contracts required Royal Mail to issue a VAT invoice. References to invoices described expected procedures or payment arrangements. Against the agreed background that the parties believed the supplies were exempt, it was impossible to construe or imply a term requiring VAT invoices. The franking schemes were statutory schemes rather than contracts and contained no such obligation.
3. Limitation. On the assumption that a statutory or EU duty existed, the obligation was a one-off obligation. For the domestic statutory duty, breach occurred when the 30-day period for issuing the invoice expired. Any resulting claim was an action founded in tort under section 2 of the Limitation Act 1980, not an action on a specialty under section 8. A declaration took its limitation character from the underlying claim.
4. EU duty. The court accepted, by concession for this hearing, that the assumed direct EU obligation existed. It held that the cause of action accrued when damage was suffered through inability to claim input tax in the appropriate return, and that the breach was not continuing. The questions concerning injunctive and specific-performance relief were answered affirmatively by concession.