Dollar Financial UK Ltd v The Commissioners for HMRC

A VAT-group member cannot use Value Added Tax Act 1994, section 43B, to amend retrospectively the date on which it joined an existing VAT group. Section 43B(2)(a) concerns an application for an additional body corporate to join an existing group. It does not permit an existing member to alter its historical admission date. The statutory scheme is comprehensive and designed to simplify the administration of single-taxable-person status. A refusal or deemed grant under section 43B cannot create a retrospective effect that the statute does not provide. Liability to register for VAT and eligibility for VAT grouping are distinct matters. A tribunal appeal concerning registration requires a notification or application and a decision relating to registration or cancellation of registration. Where the statutory requirements are absent, the First-tier Tribunal has no jurisdiction and must strike out the appeal.

Dollar Financial UK Ltd was the representative member of a VAT group. Its parent, Dollar Financial Group Inc, joined the group with effect from 27 June 2013.

In 2016, Dollar Financial UK Ltd asked HMRC to amend that date retrospectively to 1 July 2012, relying on an asserted earlier fixed establishment and VAT registration liability. HMRC refused the request. Following statutory review, the company appealed to the First-tier Tribunal.

The First-tier Tribunal struck out the appeal under rule 8(2)(a) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, holding that there was no valid application under section 43B and no appealable decision under section 83 of the Value Added Tax Act 1994. The central issues before the Upper Tribunal were whether the application was valid and whether HMRC had made a decision carrying a right of appeal.

1. Appeal dismissed. The First-tier Tribunal correctly concluded that it lacked jurisdiction and struck out the appeal.
2. Section 43B of the Value Added Tax Act 1994 establishes a carefully defined and comprehensive regime for bringing into being and ending single-taxable-person status. Under section 43B(2)(a), the word “another” means an additional body corporate which is not already one of the bodies corporate treated as members of the group. An existing member cannot apply under that provision to be treated as a member from an earlier date.
3. The statutory scheme does not provide for retrospective alteration of an existing member’s admission date. Section 43B(4)(a) ordinarily gives a valid application effect from the date received. An earlier effective date can arise only where HMRC allows it under section 43B(4)(b). The contrary construction would undermine the statutory objective of administrative simplification and increase uncertainty concerning historic liabilities.
4. The authorities concerning predecessor legislation or different applications did not alter that conclusion. Save and Prosper Group Ltd concerned the scope of a discretion under predecessor legislation. University of Essex v HMRC and Copthorn Holdings Ltd v HMRC concerned valid applications made within the statutory scheme. They were materially distinguishable.
5. VAT registration and VAT grouping are separate matters. The company’s letter was, properly read, an application to backdate group membership, not notification of DFGI’s liability to register under Schedule 1. No prescribed VAT registration form was completed and HMRC made no decision concerning DFGI’s registration. Section 83(1)(a) therefore provided no alternative right of appeal.
6. A taxpayer may invite HMRC to act under its care and management responsibilities and may challenge such a decision by judicial review, but that route does not confer jurisdiction on the First-tier Tribunal.

• Upper Tribunal (Tax and Chancery Chamber): appeal dismissed. The tribunal upheld the First-tier Tribunal’s decision to strike out the appeal for want of jurisdiction.
• First-tier Tribunal (Tax Chamber): in [2021] UKFTT 253 (TC), as amended and re-issued, the appeal was struck out under rule 8(2)(a) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.