Save content
Have you found this content useful? Use the button above to save it to your profile.

You can’t just keep appealing!

17th Jan 2020
Save content
Have you found this content useful? Use the button above to save it to your profile.

An education provider, Metropolitan International Schools Ltd, has sought permission to apply for a Judicial Review in relation to a decision by HMRC. I understand that the School has made numerous appeals and applications over several years. You can find the substantive FTT decision at [2015] UKFTT 517. The decision considered the question as to whether its supplies were wholly standard rated or partly zero rated. (Exemption did not apply, as the School is not an ‘eligible body’ under Sch 9, Group 6. Other subsidiary matters were also addressed. The Upper Tier opened by commenting that this is not a straightforward VAT issue (para 3).

The decision is carefully written and addresses other issues of interest.

One footnote comments:

The assessments have not been “withdrawn” as HMRC’s practice is to withdraw assessments only when they are shown to be wrong in law. Rather, by “remitting” them, HMRC are recording their view that the assessments were correctly made as a matter of law, but should not be enforced. I confess that I do not follow the logic of this.”

I wonder if this is formal HMRC policy, and where it is published. One lesson is that taxpayers (and advisors) must ensure they read HMRC correspondence carefully. Is an assessment actually being withdrawn, or are HMRC merely choosing not to enforce it?

Moving on:

HMCR’s winding up petition was struck out as an abuse of process. The Court had held that it was an abuse of power since the debt was in dispute. MAKE A NOTE! (The High Court has recently heard a number of cases in relation to this issue; see [2019] EWHC 3063.)

Back to the application for JR.

The taxpayer’s application was that he should be allowed a ‘transition period’ to enable it to implement the revised agreement with HMRC in relation to its output tax calculation. This is put well in paras 16 A & B.

The Tribunal then considered whether the taxpayer could have a legitimate expectation that they should be allowed such a transition period. Paras 19-25 give a review of the JR case law. (If you ever wish to take such a case, this section is a useful reference.)

In reaching its decision, the Upper Tier takes pains to state that the previous agreement between HMRC and the taxpayer could be terminated. Once terminated by HMRC, the taxpayer could not argue that it was entitled to benefit from that same agreement AFTER the date of termination.

It clearly stated: “The 2000 Letter permitted HMRC to terminate “at any time”. That is inconsistent with a notice period since, if HMRC were required to give notice, there would always be some period during which HMRC could not terminate.”

In addressing the argument of ‘unfairness,’ the Tribunal commented: ”In any event, the “unfairness” to which the School refers is in reality no different from the commercial consequences that many businesses would face if HMRC decide, for whatever reason and on a prospective basis, that they have a greater VAT liability than was previously thought.”

Thus, the Upper Tier denied the School permission to apply for a Judicial Review.  

Back to my title. The School has spent huge sums pursuing various Appeals and Applications. This would appear to be the end of the road. It seems to me that they could have taken a more pragmatic view earlier and cut their losses instead of continuing with these applications!

You can read the Upper Tier decision here: http://www.bailii.org/uk/cases/UKUT/TCC/2019/407.html

 

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.