Case Number: TC09568
Taylor House, London
Appeal reference: TC/2024/01662
JURISDICTION OF THE TRIBUNAL – application to strike out ground of appeal for want of jurisdiction – rule 8(2)(a) of The Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 - whether Tribunal has jurisdiction to consider public and EU law issues in an appeal against HMRC’s decision that importer did not hold the document required by regulation 29(1)(c) of The Value Added Tax Regulations 1995 – yes – application dismissed
Judgment date: 31 July 2025
Before
TRIBUNAL JUDGE MARK BALDWIN
Between
ICL EUROPE COOPERATIEF U.A.
Appellant
and
THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS
Respondents
Representation:
For the Appellant: Valentina Sloane KC of counsel, instructed by Stewarts Law LLP
For the Respondents: Ben Hayhurst of counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs
DECISION
Introduction
The Appellant’s (“ICL”) appeal is about the formalities needed to reclaim VAT paid on the import of goods into the UK.
I am not concerned with the merits of ICL’s appeal overall, but only with an application made by HMRC on 12 December 2024 for the Tribunal to strike out one of ICL’s grounds of appeal under rule 8(2)(a) of The Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (“the Rules”) on the basis that the Tribunal does not have jurisdiction in relation to that issue.
The Facts in Outline
When goods are imported into the UK and VAT paid, HMRC issue an import VAT certificate known as a C79. The C79 provides evidence of VAT paid on import and is required for reclaiming input tax. However, a C79 is only issued in circumstances whereby a taxpayer’s UK Economic Operator Registration and Identification (“EORI”) number is declared.
ICL is a global minerals manufacturer established in the Netherlands. It imports and exports products all around the world.
On 1 October 2015 ICL was registered for VAT in the UK with VAT registration number 220815932.
On 12 October 2015 ICL applied to link its UK VAT registration number with its Dutch EORI number.
On 13 October 2015 the link of ICL’s UK VAT registration number with its Dutch EORI number took effect.
On 14 October 2015, ICL applied for a UK EORI number (“the UK EORI number”). When applying for the UK EORI number, ICL incorrectly filled out the HMRC form to say they did not already have an EORI number. On the application form, ICL gave its UK VAT number and quoted its Dutch VAT number.
On 15 October 2015, HMRC emailed ICL to inform them that their UK EORI would become active from the next day (16 October 2015) and “should be advised to any freight/clearing agents or couriers you have acting on your behalf.”
From October 2015 onwards, ICL made a number of imports and used its UK EORI number. C79s were successfully issued in respect of those imports.
On 6 April 2017, ICL imported “muriate of potash granular grade 60% in bulk” from Israel into the UK (“the April 2017 Import”). When making the April 2017 Import, ICL used the services of a customs agent, and the customs agent quoted ICL’s Dutch EORI number.
ICL paid £1,194,908.65 import VAT to HMRC in respect of the April 2017 Import.
.It is not in dispute that following the April 2017 Import, no C79 was issued by HMRC to ICL.
On 21 December 2021, ICL emailed HMRC about the absence of a C79 certificate for the April 2017 Import and the fact they had not been refunded input VAT in respect of it. HMRC agreed to investigate.
On 9 March 2021 HMRC wrote to ICL to explain that no C79 certificate had been issued for the April 2017 Import because, at the time of import, ICL had declared an incorrect EORI number. HMRC asked for further information to be provided by the end of the month.
On 22 September 2021, ICL provided a substantive reply.
On 21 December 2022, following further correspondence, HMRC wrote to ICL and pointed out that, as more than 3 years had passed, the import declaration for the April 2017 Import could no longer be amended. HMRC decided that ICL could not recover input tax in relation to the April 2017 Import. The reason given for that decision was that “you have not provided the necessary evidence in the necessary timeframe to support [the] claim”. That decision was upheld in a review conclusion letter (“the Review Conclusion”) dated 31 January 2024.
On 1 March 2024 ICL lodged notice of appeal against the Review Conclusion. The notice of appeal was accompanied by a document setting out ICL’s grounds of appeal (“the Grounds of Appeal”) prepared by Stewarts Law LLP. HMRC criticised this document on the basis that the grounds “are not clearly set out, numerated or easy to specifically identify”.
On 30 April 2024 ICL issued a claim for permission to apply for Judicial Review. ICL requested that the judicial review proceedings be stayed pending the outcome of this appeal. HMRC did not object and a consent order signed by the parties has been approved by the High Court.
On 17 January 2025 ICL served a document (signed by leading counsel) described as “Voluntary Further Particulars of Grounds of Appeal” (“the Further Grounds of Appeal”) which set out four grounds of appeal, as follows:
HMRC should have issued a C79 document in respect of the April 2017 Import but failed to do so. ICL also contends that HMRC have wrongly failed to exercise their discretion under regulation 29 of The Value Added Tax Regulations 1995 (“the Regulations”) by not issuing a C79 certificate (“the C79 issue”);
ICL is not out of time to claim for input VAT under regulation 29(2) of the Regulations (“the time limit issue”);
HMRC should have exercised their discretion to waive the usual time limits under regulation 35 of the Regulations (“the regulation 35 discretion issue”).
HMRC wrongly exercised, or failed to exercise, their discretion under regulation 29(1) and (2) to consider alternative evidence of the charge to VAT (“the failure to consider alternative evidence issue”).
HMRC accept that Grounds (2) and (4) fall within the Tribunal’s jurisdiction and ICL concedes Ground (3) should be dealt with by way of judicial review. As a result, this application to strike out relates to Ground (1) only.
As we are concerned with Ground (1), I set it out in full below:
“By Ground 1 (paragraphs 14-16 and 19 of the Grounds of Appeal), the Appellant challenges HMRC’s refusal to permit its entitlement to deduct input VAT on the basis that it does not “hold a document authenticated or issued by the proper officer”. In taking that decision, HMRC have wrongly exercised their discretion and/or have failed to exercise their discretion in relation to whether to issue or authenticate the document required by regulation 29(2) of the 1995 Regulations. By refusing to issue a C79 or equivalent document for reasons which are irrational and in breach of obligations of proportionality, neutrality and effectiveness, HMRC have unlawfully denied or prevented the Appellant from exercising its right to deduct. Paragraphs 15 and 16 set out why the reasons relied upon by HMRC are wrong.”
The Legal Framework
So far as relevant to us, section 24 of the Value Added Tax Act 1994 (“VATA”) defines input tax to include VAT paid or payable on the importation by a taxable person of any goods from a place outside the member States, and section 24(6) provides as follows:
“(6) Regulations may provide—
(a) for VAT on the supply of goods or services to a taxable person, VAT on the acquisition of goods by a taxable person from other member States and VAT paid or payable by a taxable person on the importation of goods from places outside the member States to be treated as his input tax only if and to the extent that the charge to VAT is evidenced and quantified by reference to such documents or other information as may be specified in the regulations or the Commissioners may direct either generally or in particular cases or classes of cases;”
Regulation 29 of the Regulations provides as follows:
“(2) At the time of claiming deduction of input tax in accordance with paragraph (1) above, a person shall, if the claim is in respect of—
…
(c) an importation of goods, hold a document authenticated or issued by the proper officer, showing the claimant as importer, consignee or owner and showing the amount of VAT charged on the goods;
…
provided that where the Commissioners so direct, either generally or in relation to particular cases or classes of cases, a claimant shall hold or provide such other ... evidence of the charge to VAT as the Commissioners may direct.”
So far as the underlying EU law is concerned, Article 168 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (“the PVD”) provides as follows:
“In so far as the goods and services are used for the purposes of the taxed transactions of a taxable person, the taxable person shall be entitled, in the Member State in which he carries out these transactions, to deduct the following from the VAT which he is liable to pay:
…
(e) the VAT due or paid in respect of the importation of goods into that Member State.”
So far as evidence of input tax is concerned, Article 178 of the PVD provides:
“In order to exercise the right of deduction, a taxable person must meet the following conditions:
…
(e) for the purposes of deductions pursuant to Article 168(e), in respect of the importation of goods, he must hold an import document specifying him as consignee or importer, and stating the amount of VAT due or enabling that amount to be calculated;”
The Union Customs Code (“UCC”) was in force in the UK at the time of the imports we are concerned with; it ceased to be in force in the UK after 31 December 2020. Article 173 of the UCC dealt with amending customs declarations, and it provided:
“1. The declarant shall, upon application, be permitted to amend one or more of the particulars of the customs declaration after that declaration has been accepted by customs. The amendment shall not render the customs declaration applicable to goods other than those which it originally covered.
2. No such amendment shall be permitted where it is applied for after any of the following events:
(a) the customs authorities have informed the declarant that they intend to examine the goods;
(b) the customs authorities have established that the particulars of the customs declaration are incorrect;
(c) the customs authorities have released the goods.
3. Upon application by the declarant, within three years of the date of acceptance of the customs declaration, the amendment of the customs declaration may be permitted after release of the goods in order for the declarant to comply with his or her obligations relating to the placing of the goods under the customs procedure concerned.”
The Taxation Cross-border Trade Act 2018 (“TCBTA”) sets out the post-Brexit customs duty regime and came into force on 31 December 2020. Paragraph 15 of Schedule 1 TCBTA provides:
“(1) A person who has made a Customs declaration is entitled to amend or withdraw it at any time before a relevant event occurs.
(2) For this purpose “a relevant event occurs” on the first occurrence of any of the following—
(a) an HMRC officer indicating to the person that the officer intends to take steps to verify the declaration,
(b) an HMRC officer taking steps to verify the declaration, and
(c) HMRC accepting the declaration.”
Paragraph 16 of Schedule 1 provides:
“Once a relevant event occurs, the person making the declaration may amend or withdraw it only if—
(a) a notification to amend or withdraw the declaration is given to an HMRC officer before the end of a period specified in a public notice given by HMRC Commissioners, and
(b) an HMRC officer consents to the making of the amendment or the withdrawal.”
The relevant public notice (entitled “Notice made under the Taxation (Cross-border Trade) Act 2018”) says that “A declarant may send a notification to HMRC asking to amend a declaration up to three years after a relevant event.”
HMRC provided guidance on the VAT regime applicable to imported gods in VAT Notice 702. Two relevant passages are:
“2.3 Who can reclaim import VAT as input tax
Subject to the normal rules, you can claim as input tax any import VAT you pay on goods, provided those goods are imported for the purpose of your business. Your claim must normally be made on the VAT Return for the accounting period during which the importation took place.
The normal evidence of payment of import VAT is the import VAT certificate (form C79), which is issued monthly. Section 8 gives more information about the C79, as well as the acceptable evidence for those types of importation that at present do not appear on a C79. It also explains what to do if you lose a certificate or have any queries about items missing from certificates.
….
8.2 What an import VAT certificate is
You need to hold official evidence of VAT paid on imported goods before you can recover the VAT as input tax. The normal evidence is the monthly certificate, known as form C79. It does not in itself allow you to claim back the VAT you have paid which must, in all cases, be deductible under the normal input tax rules.
We send the certificates (form C79) to the VAT, EORI-registered person whose VAT registration number is shown in box 8 of the import declaration. You must take great care to use the correct EORI number. If not, the VAT you have paid may not appear on your certificate and may even end up on another person’s certificate. Similarly, you may find someone else’s import VAT on your certificate.
We will take action against agents, importers who persistently quote incorrect EORI numbers. This may include prosecution.”
So far as appeals are concerned, section 83(1) of VATA provides that an appeal shall lie to the tribunal with respect to the matters listed in that subsection. So far as relevant for us, these matters include (item (c)) “the amount of any input tax which may be credited to a person.”
Section 84 of VATA makes further provision in relation to appeals and at subsection (10) it provides:
“Where an appeal is against an HMRC decision which depended upon a prior decision taken ... in relation to the appellant, the fact that the prior decision is not within section 83 shall not prevent the tribunal from allowing the appeal on the ground that it would have allowed an appeal against the prior decision.”
So far as striking out a party’s case, rule 8(2)(a) of the Rules provides as follows:
“(2) The Tribunal must strike out the whole or a part of the proceedings if the Tribunal—
(a) does not have jurisdiction in relation to the proceedings or that part of them;”
HMRC’s arguments as to why the Tribunal does not have jurisdiction to entertain Ground (1)
HMRC say:
The authorities make it clear that I must decide whether the Tribunal has jurisdiction, not whether ICL’s Ground (1) is arguable. As the Upper Tribunal put the point in Woodstream Europe Limited v HMRC, [2018] UKUT 398 (TCC) at [18]:
“The proper task before the FTT was not to identify potentially non-fanciful arguments that jurisdiction might exist. The task was to determine whether jurisdiction did or did not exist; if it did, the application on that ground would inevitably be refused, and if it did not it would inevitably be granted.”
It would be wrong to investigate the underlying facts and merits of Ground (1) and the reasons why a C79 import certificate was not issued. The question for the tribunal is whether section 83(1) VATA allows a taxpayer to appeal the fact that a C79 was not issued to it by HMRC. The reasons why a C79 were not issued in this, or any other case, are irrelevant to the question of jurisdiction.
The Tribunal is a creature of statute. Section 83(1) VATA contains an exhaustive list of the Tribunal’s jurisdiction and does not allow ICL to challenge the fact a C79 import certificate was not issued to it by HMRC.
As a general rule, the Tribunal does not have a supervisory jurisdiction. Even though section 83(1)(c) refers to decisions “with respect to” the amount of input tax, HMRC v Noor, [2013] UKUT 71 (TCC) at [91]-[93], makes it clear that those words do not cover any legal question capable of being determinative of the issue of the amount of input tax which should be attributed to a taxpayer; it is focused on the large number of decisions on rights and obligations under the VAT legislation which HMRC have to make.
That said, HMRC accept that the FTT has jurisdiction under section 83(1)(c) to hear an appeal against the exercise of HMRC’s discretion under regulation 29. This is acknowledged in a number of cases, including Noor (at [87]), which comments that:
“The FTT has no general supervisory jurisdiction over the decisions of HMRC. That does not mean that under s 83(1)(c) the FTT cannot examine the exercise of a discretion, given to HMRC under primary or subordinate VAT legislation relating to the entitlement to input tax credit, and adjudicate on whether the discretion had been exercised reasonably (see eg Best Buys Supplies Ltd v Customs and Excise Comrs [2011] UKUT 497 (TCC) at [48]–[53], [2012] STC 885 at [48]–[53]—a discretion under reg 29(2) of the VAT Regulations). Although that jurisdiction can be described as supervisory, it relates to the exercise of a discretion which the legislation clearly confers on HMRC. That is to be contrasted with the case of an ultra vires contract or a claim based on legitimate expectation where HMRC are acting altogether outside their powers.”
There are two categories of discretion contained in regulation 29. First, subject to the four-year time limit in regulation 291(A), regulation 29(1) provides a discretion to allow late claims for input tax. Second, regulation 29(2) gives HMRC a discretion as to whether to entertain an application to establish the right to deduct otherwise than by a compliant invoice and, if this discretion is exercised in a person’s favour, HMRC has discretion to specify the documentary evidence they require to prove that the input tax has been incurred. Here, however, HMRC does not have any relevant discretion as whether to issue a C79.
The issuing of C79 import certificate is an administrative process and there is no discretion contained within regulation 29 as to whether HMRC issues a C79 import certificate or not. The correct venue to challenge dissatisfaction with the exercise of such an administrative process is by way of judicial review. Albeit out of time, this is what ICL have correctly done by way of their claim dated 29 May 2024, challenging the non-issue a C79 certificate on the established judicial review grounds of unlawfulness and irrationality.
Considering section 83(1)(c) VATA more generally, the fact it allows for an appeal relating to “the amount of any input tax which may be credited” does not mean it confers jurisdiction to challenge the reasons why a trader does not have the evidence or document required to make a claim for input tax in the first place. The fact that section 83(1)(c) VATA 1994 does not confer jurisdiction with respect to such evidence is underscored by the fact many of the other documents required to claim input tax under Regulation 29(2)(a-f) are not within HMRC’s gift to provide.
There has been no decision by HMRC, let alone an appealable one, not to issue ICL with a C79 import certificate. Mr Hayhurst says that it is “trite law” that no appeal can be made unless HMRC has made a decision in relation to it, citing the FtT’s comment in Donsaw Ltd v HMRC, [2016] UKFTT 471 (TC) at [35] that:
“We respectfully agree with both judgments [in Marks & Spencer Plc v CCE [1997] VATTR 15302 and Olympia Technology Ltd v HMRC [2006] VATTR 19984], and find that the Tribunal only has jurisdiction if HMRC has made a decision.”
A consequence of regulation 29 not conferring any discretion as to whether to issue a C79 import certificate is that no actual decision was made (or could have been made) by HMRC under regulation 29 not to issue ICL with a C79 import certificate. There has thus been no appealable decision falling within section 83(1)(c) VATA 1994 by HMRC not to issue ICL with a C79 import certificate. The appealable decision contained in HMRC’s decision letter dated 21 December 2022 was that ICL was out of time to provide the necessary evidence to support a claim for input tax. That appealable decision (that ICL was out of time to provide the necessary evidence to support a claim for input tax) should not be confused with why ICL was not in possession of the evidence that it needed to claim input tax.
As ICL has conceded, the Tribunal has no power to order HMRC issue a C79 import certificate and so even if the Tribunal were to decide HMRC were wrong not to have issued one, ICL would still not be able to claim input tax under regulation 29(1)(c). This underscores the lack of jurisdiction. The correct forum to challenge this administrative process (leading to the non-issue of a C79 import certificate) is by way of judicial review where the High Court can make a mandatory order that HMRC issues one.
ICL was not without alternative remedy and did not have to resort to judicial review. Notwithstanding the non-issue of a C79 import certificate, ICL had four years to provide “other evidence of the charge to VAT” but failed to do so. HMRC fully accept the Tribunal has jurisdiction to hear the Grounds (2) and (4), which relate to whether ICL is out of time to present such alternative evidence and the exercise of HMRC’s discretion in relation to the same.
So far as section 84(10) is concerned HMRC point to Metropolitan International Schools Ltd v HMRC, [2019] EWCA Civ 156, where the Court of Appeal held that section 84(10) is of a relatively limited scope, being designed as a statutory response to the decision in Customs and Excise Comrs v J H Corbitt (Numismatists) Ltd, [1981] AC 22, where the House of Lords held that the Tribunal had no power to review HMRC’s exercise of a discretion (not to allow a trader to use a margin scheme) in a way which resulted in the VAT liability against which the trader appealed. Newey LJ (with whom David Richards and McCombe LJJ agreed) observed:
“22. In my view, the UT was right that section 84(10) of the VATA is of relatively limited scope. For section 84(10) to apply, the decision under appeal must have “depended upon a prior decision”. The provision thus requires both a “prior decision” and that the appealed decision “depended” on it. The need for a “prior decision” implies, I think, that section 84(10) cannot be invoked to challenge something that amounted to no more than a factor in the subject of the appeal, not a distinct “prior decision”. The subsection would not, therefore, be in point merely because, for instance, HMRC had chosen to take a particular matter into account in making the decision under appeal, even if they had resolved on their attitude to the matter in question in advance of the appealed decision. Any challenge to what HMRC had done would have to be mounted under section 83, as part of the appeal against the (final) decision, or perhaps by way of judicial review, not under section 84(10).
23 Turning to the significance of the word “depended”, the UT considered that it “connotes a decision A which has to be taken before decision B both as a matter of fact and as a matter of legal necessity or requirement”. This formulation seems to me to capture the sense of section 84(10) of the VATA. In the context, “depended” signifies that decision B (i e that under appeal) could not have been taken but for decision A. Parliament had in mind a “prior decision” comparable to the “necessary legal precursor” in Corbitt [1981] AC 22.”
HMRC have not exercised a discretion to make a “prior decision” (not to issue a C79) here. They simply decided that ICL’s input tax claim was out of time, and that did not depend on a prior non-issue of a C79; it depended on ICL not having amended its customs declaration in time ad there was no evaluative decision by HMRC. ICL could not be issued a C79 because it had not submitted a customs declaration with a UK EORI.
ICL’s arguments as to why the Tribunal has jurisdiction to entertain Ground (1)
ICL submits:
By refusing to provide ICL with a “document authenticated or issued by the proper officer” and thereby denying it the evidence required by regulation 29(2)(1)(c), HMRC have acted perversely and in breach of EU law. Neither VATA nor the 1995 Regulations specify the document that HMRC can issue or authenticate for the purposes of regulation 29(1)(c). It could be a C79 or any equivalent document. ICL’s challenge does not depend upon the specifics of the C79 procedure.
It is well-established that the Tribunal has a specific supervisory jurisdiction, under section 83(1)(c) VATA, in respect of HMRC’s exercise of discretion under regulation 29, as explained by the Upper Tribunal in Noor [2013] UKUT 071 (TCC) at [87]. In the case of an appeal under section 83(1)(c) VATA, that jurisdiction extends to a challenge to the exercise of discretion “which the legislation clearly confers on HMRC”; it is clear that the Tribunal has a supervisory jurisdiction in cases where HMRC has refused to allow a taxpayer to recover input tax where it does not hold a VAT invoice but holds other evidence of input tax.
The correct interpretation of Noor, and whether/how it could be reconciled with another decision (Oxfam v HMRC, [2010] STC 686), was considered by the FtT in Rotberg v HMRC, [2014] UKFTT 657 (TC).
“103. We are bound to say that we do not consider Oxfam and Noor to be irreconcilable. In our view the different approaches adopted can be explained by the different substantive issues before the High Court in Oxfam and the Upper Tribunal in Noor . In Oxfam , the issue before the VAT Tribunal concerned the attribution of what was clearly input tax to taxable supplies on the one hand and exempt or non-business supplies on the other. The effect of the claim to a legitimate expectation was therefore to alter that apportionment. In Noor, as the Upper Tribunal emphasised, the claim was for something that was neither input tax, nor something that could be treated, under the legislation, as input tax.”
A similar analysis can be seen in the recent FtT decision in Chelsea Cloisters Management Ltd v HMRC, [2025] UKFTT 205 (TC) at [65]. Clearly, the Tribunal can review how HMRC exercise their powers in relation to input tax. Here, they have refused to authenticate a C79 because ICL did not quote a UK EORI number on the customs declaration and did not amend the customs declaration within the required 3 years.
HMRC rely on the fact that the Tribunal does not have jurisdiction to mandate HMRC to issue a C79 certificate and claim that this serves to underline that this is a “public law argument” [24]. However, the inability of the Tribunal to mandate a particular remedy is true of its supervisory jurisdiction generally; GB Housley Ltd v HMRC, [2016] EWCA Civ 1299 at [69].
HMRC’s strike-out application is premised on the argument that HMRC’s decision whether to authenticate or issue a document required by the taxpayer to satisfy regulation 29(2)(1)(c) “is not part of the regulation 29 discretion”, but this plainly is a discretion conferred on HMRC by the VAT legislation and it plainly is explicitly part of regulation 29, which refers to a document being issued or authenticated “by the proper officer” and does not circumscribe how that power is exercised. HMRC’s discretion to authenticate or issue the document which is required to claim input tax entitlement under regulation 29(1)(c) is, very plainly, “a discretion, given to HMRC under primary or subordinate VAT legislation relating to the entitlement to input tax credit” to use the terminology of Noor at [87].
It is artificial to say that HMRC had not made a decision refusing to issue/authenticate the required document. Even if it is a purely administrative process, HMRC set that process up and decided how it should be operated by its officers.
HMRC decided that a C79 needed to be held as evidence of VAT paid on import, a UK EORI number needed to be quoted on the import declaration before a C79 would be issued and a customs declaration could only be amended (here to include a UK EORI number) within three years of the importation. No UK or EU provisions require HMRC to adopt this position, but this is what led to the review decision that ICL “had not claimed that amount and are out of time to make any claim for that import VAT or to amend the import entry”.
Even if one were to accept HMRC’s hypothesis, HMRC’s decision refusing to issue or authenticate the document required by regulation 29(2)(1)(c) would then necessAprily be a “prior decision” to the Decision refusing the input tax claim. The Decision was made on the clear basis that ICL does not have the evidence required by regulation 29(2)(1)(c). The only reason that ICL does not have that evidence is because HMRC have refused to issue or authenticate the required document. As such, the Tribunal would have jurisdiction in any event pursuant to section 84(10) VATA, which allows the Tribunal to consider the reasonableness of a “prior decision” upon which the appealed decision depends and where the exercise of discretion in the “prior decision” falls outside one of the appeal “gateways” in section 83(1).
Discussion
The jurisdiction of the FTT, in particular the question whether it has any general judicial review or supervisory jurisdiction, was summarised, in language I cannot improve on, by the FTT in Gallagher's Windows, Doors & Conservatories Ltd v HMRC, [2023] UKFTT 706 (TC) at [38], as follows:
"The First-tier Tribunal ('FtT') was created by s. 3(1) of the Tribunals, Courts and Enforcement Act 2007 (hereinafter referred to as 'TCEA'), "for the purpose of exercising the 9 functions conferred on it under or by virtue of this Act or any other Act". It follows that its jurisdiction is derived wholly from statute. The FtT has no judicial review function. That the FtT has no judicial review function is the only conclusion which can be drawn from the structure of the legislation which brought the FtT into being. The TCEA conferred a judicial review function on the Upper Tribunal, a function it would not have had (since it, too, is a creature of statute without any inherent jurisdiction) had the Act not done so; and it hedged the jurisdiction it did confer with some restrictions. It is perfectly plain, from perusal of the TCEA itself that parliament did not intend to, and did not, confer a judicial review jurisdiction on the FtT, and there is nothing in the Transfer of Tribunal Functions Order which points to a contrary conclusion. Furthermore, the FtT has no supervisory jurisdiction over the respondent."
However, it does not follow, from the FTT having no general judicial review function as such, that public law issues always fall to be ignored in determining tax appeals. As the FTT observed, the FTT is a creature of statute and it is always open to Parliament to draft a right of appeal which allows a taxpayer to raise, and the FTT to consider, a public law issue.
One question which arose in KSM Henryk Zeman SP Zoo v HMRC, [2021] UKUT 182 (TCC), was whether, when deciding whether a taxpayer can invoke public law grounds in a tax appeal, the tribunal should start on the basis that they can unless that entitlement is excluded by the statutory regime. At [34] the Upper Tribunal emphatically stated that it considered the answer to that question to be "Yes".
In Caerdav Limited v HMRC, [2023] UKUT 179 (TCC), the Upper Tribunal reached the conclusion (at [152]) that appeal grounds which concern public law arguments should generally be pursued in judicial review proceedings rather than before the FTT, but the FTT may have jurisdiction to consider appeal grounds based on public law arguments (such as legitimate expectation) depending on the statutory provisions under consideration. The Upper Tribunal approached the question of statutory interpretation in that case on a more open basis, without the presumption in favour of allowing public law arguments to be found in Zeman.
We have already discussed a number of authorities which make it clear that, when addressing an appeal brought under section 83(1)(c) VATA (as to the amount of any input tax which may be credited to a person) and at least where certain parts of regulation 29 are concerned, the Tribunal has a supervisory jurisdiction; it can decide whether HMRC has exercised a discretion that the statute undoubtedly gives it in accordance with public law principles. An example of a part of regulation 29 where this approach operates is HMRC’s ability to allow a taxpayer seeking to recover input tax to adduce other evidence (i.e. evidence not of a type in the list of primary evidence to be held by a person claiming input tax – here the C79, in a purely domestic context a VAT invoice). In line with those authorities, HMRC accept here that Ground (4), which engages these provisions, is an issue the Tribunal has jurisdiction to consider. Even here, the Tribunal’s jurisdiction is not unlimited. It can only take public law issues into account when deciding the amount of input tax that may be credited to a person; public (or other non-VAT) law considerations cannot result in an amount which is not input tax being treated as input tax.
Mr Hayhurst says that Ground (1) is quite different from Grounds (2) and (4) in that there is no decision by an individual HMRC officer here to do (or not do) anything in relation to ICL. All that HMRC did was tell ICL that it could not recover input tax as it did not hold the document (the C79) HMRC required a taxpayer relying on regulation 29(2)(c) to hold and that it was now too late for ICL to take the step (amending the import declaration) necessary for it to obtain a C79.
HMRC had previously taken, and clearly articulated (see [31] above), a policy decision of general application as to what an importer needed to do to recover as input tax VAT paid on importation. The link between the import declaration and the C79 and the importance of quoting a correct UK EORI number (so that import VAT was matched with the correct importer) on the import declaration were made very clear. All that has happened here is that this policy decision was applied to ICL.
Part of Ground (1) complains that “HMRC have wrongly exercised their discretion and/or have failed to exercise their discretion in relation to whether to issue or authenticate the document required by regulation 29(2) of the 1995 Regulations. By refusing to issue a C79 or equivalent document for reasons which are irrational and in breach of obligations of proportionality, neutrality and effectiveness, HMRC have unlawfully denied or prevented the Appellant from exercising its right to deduct.”
I cannot find, in the dealings between ICL and HMRC in the run-up to the Decision Letter, any request for HMRC to issue a C79, let alone any refusal by HMRC to do so. I agree with Mr Hayhurst that all HMRC seemed to be doing in the Decision Letter was telling ICL that it did not have a C79 and that it was now too late to get one.
However, during correspondence following the Decision Letter, KPMG (then acting for ICL) suggested to HMRC (in a letter dated 30 March 2023) that:
“[T]he original import declaration was completed correctly with ICL’s NL EORI number (NL823256753). We therefore believe that CHIEF should have automatically triggered the generation of the C79 certificate, as the entry was correctly accepted and cleared against entry number: 191-004626P, dated 06th April 2017.
…
As set out above, we do not believe the original import declaration requires amendment. Based on our previous experience, we understand that HMRC’s PCA team should be capable of generating a C79 certificate through CHIEF post clearance, without amending the original entry, which was finalised in CHIEF.”
In a letter dated 6 September 2023, KMPG went on to say that:
“In relation to the April 2017 and September 2020 import transactions, HMRC did not issue respective C79 certificates to ICL at the time of import. We understand that this is because ICL’s freight agents quoted ICL’s Dutch EORI number on the UK import declarations, and at that time (for the reason below) it was not linked to ICL’s UK VAT number.
In normal circumstances before Brexit, a Dutch established entity, such as ICL would only have a Dutch EORI number and the NETP’s UK VAT registration number would be linked to that EORI number. This would then result in C79 certificates being automatically issued by HMRC when the NETP (or its agent) completed the import declarations with its Dutch EORI number.
As per our letter of 30 March 2023, ICL had correctly linked its UK VAT registration number to its Dutch EORI number. However in October 2015, HMRC incorrectly issued a UK EORI number and linked ICL’s UK VAT registration number to this EORI number, meaning that the UK VAT registration was no longer linked to the Dutch EORI number. This resulted in HMRC not automatically issuing C79 certificates where ICL (or its agent) completed UK import declarations with the Dutch EORI number. ICL had also been issued with a second EORI number by HMRC, but the EU Customs regulations are very clear that a taxpayer can only have one EORI number.”
Given what they described as “unusual circumstances” leading to ICL not being issued a C79, KPMG asked HMRC to issue a C79 (or equivalent) or allow ICL to use alternative evidence to support its input tax claim.
In their Review Conclusion HMRC said that, as ICL did not have a C79, it could have asked HMRC to amend the import declaration, which would have allowed a C79 to be issued. However, the 3-year time limit in TCBTA would have prevented this. The author noted KPMG’s view that the import declaration did not need to be changed. In such a case, the author wrote, “the company could have used alternative evidence to support a claim of import VAT and if required the company could have asked HMRC to confirm this was acceptable.” That would have been subject to the four-year time limit in regulation 29(1A) of the Regulations. HMRC do not seem to have engaged with KPMG’s suggestion that HMRC should issue a C79 or equivalent given that the system’s failure to generate a C79 could be laid at HMRC’s door.
Ground (1), read in the light of this correspondence, can fairly be understood as challenging HMRC’s failure to give ICL credit for the input tax paid on the April 2017 Import on account of ICL’s failure to hold a C79 (or equivalent) as being a course of action which, notwithstanding HMRC’s published policy on the prerequisites for the issue of a C79, was not reasonably open to it given that (a) there was no challenge to the fact of ICL having imported the goods and incurred the VAT, (b) the system failure which led to the initial non-issue of the C79 was (at least to some extent) HMRC’s, and (c) issuing/authenticating a C79 (or equivalent) was a course of action within HMRC’s gift.
It seems to me that such a challenge would be just as relevant to the amount of input tax ICL can be credited with (which HMRC currently say is none at all due, inter alia, to ICL not having a C79) as a challenge to a decision by HMRC not to entertain alternative evidence and the resulting conclusion that no input tax credit is available. For myself, I cannot discern any meaningful difference between a decision by HMRC not to admit alternative evidence leading to a conclusion that no input tax credit is available and a decision not to authenticate or issue a document showing the amount of VAT charged on an import leading to an identical conclusion.
I do not consider that regulation 29(2)(c) not expressly referring to a discretion on HMRC’s part on this issue makes any difference to the Tribunal’s jurisdiction. If HMRC have a choice, which they clearly do here (even though it is not as explicitly articulated in discretionary terms as their “alternative evidence” choices), to do (or not to do) something which is relevant to the amount of VAT a trader can recover, a review of any decision they make is in principle within the Tribunal’s jurisdiction.
There is clearly a decision in HMRC’s (lack of) response to KPMG’s suggestion that HMRC should now issue a C79 (or equivalent). Whether that decision is a result of a considered review by an officer or simply an automatic operation by the officer of a settled HMRC policy, does not make any difference. HMRC as a body has made a decision which is relevant to the amount of VAT a trader can recover.
In terms of remedy, neither here nor in a case where the Tribunal accepts a challenge to a decision on alternative evidence leading to a particular conclusion on the amount of input tax credit available can the Tribunal tell HMRC what to do. That is not an obstacle to the Tribunal having jurisdiction in an “alternative evidence” case, nor should it be here.
I express no view as to whether such a challenge would succeed at a substantive hearing, but I consider that the Tribunal has jurisdiction to consider Ground (1) to the extent that it is an assertion that, in the particular circumstances of this case, HMRC were wrong (in the sense that their decision was not one which a public authority properly understanding the law could reasonably come to) to refuse to issue or authenticate the document required by regulation 29(1)(c) and in consequence refuse ICL credit for VAT incurred on the April 2017 Import because ICL did not hold such a document.
ICL has also referred to EU law arguments in relation to Ground (1); the Further Grounds of Appeal refer to an alleged “breach [by HMRC] of obligations of proportionality, neutrality and effectiveness, [which] have unlawfully denied or prevented the Appellant from exercising its right to deduct” and Ms Sloane referred to EU law arguments in the hearing.
We have seen that Article 178 of the PVD requires a trader in ICL’s position here to hold “an import document specifying him as consignee or importer and stating the amount of VAT due or enabling that amount to be calculated.” As with regulation 29, the PVD does not stipulate any form of document.
I can see how ICL might want to argue, generally (that HMRC’s policy requirement for a C79 and the process for issuing a C79 were too prescriptive and inflexible) or specifically (that the customs declaration that was completed here made it perfectly possible to identify ICL as the importer and HMRC were wrong to insist that a process of their own devising was followed), that HMRC’s application of regulation 29(1)(c) represented an unjustifiable restriction on its enforcement of its EU law right to recover as input tax the VAT it incurred on the April 2017 Import. Clearly if this argument were successful, ICL’s EU law rights would prevail.
Again, I express no view on the merits of such an argument, but the Tribunal clearly has jurisdiction to consider Ground (1) to the extent that it is an assertion that HMRC’s decision to refuse ICL credit for VAT incurred on the April 2017 Import, because ICL did not hold a C79 (or equivalent), amounted to a breach of ICL’s EU law right to recover as input tax the VAT incurred on the April 2017 Import.
Disposition
For the reasons set out above, I have concluded that the Tribunal has jurisdiction to consider Ground (1), and I refuse HMRC’s application to strike it out.
I have reached my conclusion without needing to consider the alternative arguments raised on section 84(10) VATA.
Right to apply for permission to appeal
This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.
Release date: 31st JULY 2025
