In Iveco Limited v HMRC [2017] EWCA Civ 1982 the Court of Appeal upheld the Upper Tribunal decision, that Iveco were out of time to reclaim output VAT overpaid before January 1990.
- Iveco charged and accounted for output VAT on the sale of commercial vehicles between January 1978 and December 1989.
- Iveco also paid rebates to the purchasers of the vehicles but did not adjust the output VAT.
- In November 2011 Iveco submitted a VAT reclaim for £73 million to reflect the rebates paid.
- HMRC denied the claim on the basis that it was made outside the four year time limit in VATA 1994 section 80(4).
- Iveco successfully appealed to the First Tier Tribunal and HMRC appealed to the Upper Tribunal.
- The Upper Tribunal reversed the decision, which was then upheld by the Court of Appeal.
- The Supreme Court refused Iveco permission to appeal.
Legislation
- Prior to January 1990 Article 11C(1) of the sixth VAT directive provided that where the price of the supply is reduced after the supply has taken place the value of the supply must be reduced accordingly.
- This was implemented in UK legislation with effect from January 1990. This was regulation 7, later replaced by regulation 38 with identical terms.
- Regulation 38 only allows adjustments relating to rebates paid after January 1990.
- FA 1989 section 24 became effective from January 1990, allowing persons who had overpaid VAT to claim a repayment subject to a time limit of six years from the date of overpayment.
- FA 1989 section 24 later became VATA 1994 section 80 and with effect from April 2009 the time limit was reduced to 4 years.
Iveco argued, and the FTT agreed, that
- There was no domestic legislation requiring the taxpayer to reduce its tax liability.
- Section 80 did not apply and nor did the associated time limit.
- Iveco were therefore not out of time to make the claim.
The Upper Tribunal disagreed, finding that
- Member states were required to implement Article 11C into legislation
- As a result the taxpayer had a directly effective right to reduce its output liability
- Section 80 could be interpreted to give effect to directly effective rights for periods before 1990
- VAT adjustments should have been made in the period that the bonuses were paid
- The 2011 claim was therefore out of time.
The Court of appeal agreed with the Upper Tribunal:
- The claim is time-barred in entirety.
- The claim had to be brought by the end of the April 2009 'Fleming claim' window, at the very latest.
- The pre-January 1984 claims were time-barred from January 1990.
Links
Reclaims and unjust enrichment
Court of Appeal: Iveco Limited v HMRC [2017] EWCA Civ 1982
Upper Tribunal Decision: HMRC v Iveco Limited [2016] UKUT 0263 (TCC)
First Tier Tribunal Decision: Iveco Limited v HMRC [2013] UKFTT TC03141
