Solicitors In - Charity and VAT Problems

VAT tribunal can hear point on legitimate expectation

Chancery Division

Published December 31, 2009

Oxfam v Commissioners for Revenue and Customs

Before Mr Justice Sales

Judgment November 27, 2009

An argument by a taxpayer based on the doctrine of legitimate expectation was one which could properly be raised on an appeal to the VAT and Duties Tribunal for recovery of input value-added tax.

Mr Justice Sales so stated in the Chancery Division when dismissing an appeal by the taxpayer, Oxfam, from a decision of a VAT and Duties Tribunal, dated July 30, 2008, whereby it upheld the refusal by the Commissioners for Revenue and Customs to allow in full a claim by Oxfam for repayment of certain input tax under section 83(1)(c) of the Value Added Tax Act 1994.

Mr David Milne, QC and Mr Richard Vallat, instructed by Saffery Champness, chartered accountants, for Oxfam; Ms Sarah Moore for the commissioners.

MR JUSTICE SALES said that issues of contract law, under rules of general private law, legitimate expectation, under rules of general public law, and application of general rules of tax law all arose.

The parties and the tribunal agreed that the tribunal had jurisdiction to deal with the contract law; that was correct. However, the parties thought that the tribunal did not have jurisdiction to consider Oxfam's alternative legitimate expectation argument.

His Lordship's view was that that was not correct. There was no good reason for adopting a different approach to the interpretation of the jurisdiction of the tribunal in section 83.

Therefore, apart from any authority on the question, his Lordship would hold that section 83(1)(c) bore its ordinary and natural meaning, so that resolution of the issue of legitimate expectation which arose between Oxfam and the Revenue fell within the tribunal's jurisdiction.

His Lordship referred to cases at the level of the tribunal and in the High Court, including Customs and Excise Commissioners v National Westminster Bank plc ([2003] STC 1072 paragraphs 46-56) and held that he was not bound by authority to reach a contrary conclusion.

His Lordship was conscious that a procedural point of importance was involved and that he was departing from a widely held view that the tribunal's jurisdiction was more limited.

Until the issue was authoritatively ruled upon at a high level the prudent course for a taxpayer who wished on public law grounds to challenge a decision of the Revenue falling within the scope of one of the headings in section 83 might be to seek to put forward such grounds in the course of an appeal to the tribunal, but at the same time to issue a protective judicial review claim within time in case it was later determined that the tribunal had no jurisdiction in the matter.

Solicitor: Solicitor, Revenue and Customs.

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Article Reference: business.timesonline .co.uk/tol/business/law/reports/article6965317.ece

Photo: static.guim .co.uk/Guardian/lifeandstyle/gallery/2008/may/08/ethicalfashion.fashion/oxfam3-2027.jpg