APPEALS UNDER SECTION 13 OF THE TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007 BY DCM (HOLDINGS) LTD AND THE COMMISSIONERS FOR HER MAJESTY'S REVENUE AND CUSTOMS [2020] ScotCS CSIH_60 (08 September 2020)

APPEALS UNDER SECTION 13 OF THE TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007 BY DCM (HOLDINGS) LTD AND THE COMMISSIONERS FOR HER MAJESTY'S REVENUE AND CUSTOMS [2020] ScotCS CSIH_60 (08 September 2020)

The Court held that the First-tier Tribunal was entitled to find that HMRC did not have knowledge of all material facts sufficient to justify the VAT assessments until 31 August 2005, so the assessments were not time-barred. HMRC has an implicit statutory power to refuse or reduce repayment claims without assessment, provided the process is reasonable and proportionate. The allocation of discounts must be objectively justified, and DCM failed to provide sufficient evidence to displace HMRC's allocation.

Citation
[2020] ScotCS CSIH_60
Parties
Appellant and Respondent: DCM (Optical Holdings) Limited; Respondent and Appellant: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
Scotland
Judgment Date
08 September 2020
Procedural Posture
Appeals Under Section 13 of the Tribunals, Courts and Enforcement Act 2007 / Court of Session (inner House, First Division) Appellate Review of Upper Tribunal (tax and Chancery Chamber) Decision
Outcome
HMRC's appeal allowed; DCM's appeals dismissed.
Legal Topics
Value Added Tax (vat), Statutory Interpretation, Time Limits for Tax Assessments, Input and Output Tax Apportionment, Repayment Returns, HMRC Powers and Duties
Tax Law Administrative Law Value Added Tax (vat) Statutory Interpretation Time Limits for Tax Assessments Input and Output Tax Apportionment Repayment Returns HMRC Powers and Duties

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Parties

DCM (Optical Holdings) Limited

Appellant and Respondent

The Commissioners for Her Majesty’s Revenue and Customs

Respondent and Appellant

Procedural Posture

Appeals Under Section 13 of the Tribunals, Courts and Enforcement Act 2007 / Court of Session (inner House, First Division) Appellate Review of Upper Tribunal (tax and Chancery Chamber) Decision

Legal Issues

  1. 1 Whether HMRC's VAT assessments were time-barred under s 73(6) VATA 1994 (the timebar issue)
  2. 2 Whether HMRC had statutory power to amend or reduce repayment returns without assessment (the amendment issue)
  3. 3 Whether HMRC's allocation of discounts between chargeable and exempt supplies was correct (the discounts issue)

Ratio Decidendi

The Court held that the First-tier Tribunal was entitled to find that HMRC did not have knowledge of all material facts sufficient to justify the VAT assessments until 31 August 2005, so the assessments were not time-barred. HMRC has an implicit statutory power to refuse or reduce repayment claims without assessment, provided the process is reasonable and proportionate. The allocation of discounts must be objectively justified, and DCM failed to provide sufficient evidence to displace HMRC's allocation.

Court Disposition

HMRC's appeal allowed; DCM's appeals dismissed.

Orders

  • The Upper Tribunal's decision on the timebar issue is reversed; the assessments are not time-barred.
  • The appeals by DCM on the amendment and discounts issues are refused.