VIC GLO Court Of Appeal Hearing

The Court of Appeal (the "Court") stage of the VIC GLO was heard over three days from 13 January before Mummery, Etherton and Patten LJJ.  The Court heard oral submissions from both parties on whether the High Court was right to decide that:

• the Appellants are entitled to compound interest on amounts of overpaid VAT as a matter of Community law;

• the limitation period for bringing restitutionary claims for overpaid VAT arising from Elida Gibbs and Italian Republic had expired is correct as a matter of domestic law; and

• the application of this domestic limitation period to such cases is not in breach of Community law.

Because of the way in which Court procedure works, the first point was only dealt with after the second and third points.   

Having heard full argument the Court reserved its judgment in VIC GLO until after the release of its pending decision in the FII Litigation (a case about corporation tax).  This was on the basis that certain limitation arguments advanced in VIC GLO are identical to those considered by the Court in the FII Litigation. 

Possible referral to the ECJ

HMRC had said to the court that if it was not persuaded by its arguments, the court should consider making a reference to the ECJ.  The court invited the parties, without making any indication as to its final decision, to submit drafts of proposed questions for referral to the ECJ by 25 January 2010.  The taxpayer's draft included questions around whether, given the unusual circumstances of the case, including the impact of the three year cap, the domestic time limits, if they have expired, should be suspended for a period in order to make the claim good.

CIP Litigation

As you will be aware, the Upper Tribunal decided the case against the taxpayers by finding:

• that time limits to appeal to the Tax Tribunal had started to run against the taxpayers when simple interest was paid, not from when HMRC refused an explicit request, some time later, for compound interest ("the procedural issue"); and

• that, in any event, no entitlement to compound interest can be made out of the statutory interest provisions and the correct place to claim a remedy is in the High Court (notwithstanding that the claims there were also found to be out of time) ("the substantive issue").

On 15 December 2009, the Court granted permission to appeal, stating that the taxpayers also have an arguable case on the procedural issue. The Court ordered that the procedural issue be tried separately first – on the basis that a hearing on the substantive issue would only become necessary if the taxpayer is successful on that preliminary point.  The hearing of the preliminary points CIP has not yet been listed for hearing.

Should you wish to discuss any of the above issues, please contact the members of the McGrigors Tax Disputes and Investigations team listed below

Jason Collins
Partner, Tax Disputes and Investigations
Tel +44 (0) 20 7054 2727
Email jason.collins@mcgrigors.com

David Anderson
Partner, Tax Disputes and Investigations
Tel +44 (0) 20 7054 2725/+44 (0) 161 662 8014
Email david.anderson@mcgrigors.com

Stuart Walsh
Senior Associate, Tax Disputes and Investigations
Tel +44 (0) 20 7054 2797
Email stuart.walsh@mcgrigors.com