Cambria Automobiles (South East) Limited & Anor v The Commissioners for HMRC

Mr Mantle argued, in outline, as follows.

The key question was whether, on a correct interpretation of the Section 85 Agreement, its effect was to settle the 2009 claims or, to put it another way, whether the Section 85 Agreement was a full and final settlement of all Italian margin claims in respect of the vehicles and for the periods covered by the 2003 claims.

He submitted that the question gave rise to a straightforward exercise of contractual interpretation of the Section 85 Agreement, and the FTT had made six errors of law in addressing it.

First, he argued that the word “claim” in the Section 85 Agreement had a natural and ordinary meaning, referring to the 2003 claims, as amended up to the time of the Section 85 Agreement. He argued that the FTT had not appreciated that “claim” had a natural and ordinary meaning, nor had it established what it was. Alternatively, if the Decision could be read as implying the FTT had found such a meaning, it had not attached proper significance to it, and in particular it had not followed the guidance given by the Supreme Court in Arnold v Britton [2015] AC 1619, [2015] UKSC 36, particularly paragraphs [15] to [20].

Second, he argued that the FTT had failed to have regard to the relevant legal background (especially the scheme of section 80 VATA), and the impact that a proper understanding of that background would have had upon any reasonable person seeking to identify the intentions of the parties to the Section 85 Agreement when interpreting it in accordance with the guidance in Arnold; in particular, it had failed to take into account the difference between the 2003 claims and the 2009 claims, the latter now being accepted as being, in principle, second and permissible claims with “something new to say” under the unchallenged authority of Hayward Gill v CCE [1988] VATDT15634 (subsequently acknowledged, without disapproval, by the Court of Appeal in John Wilkins (Motor Engineers) Ltd v HMRC [2010] EWCA Civ 923, [2010] STC 2418).

Third, he argued that the FTT had incorrectly taken the view that certain elements of the pre-contract correspondence supported the argument that the Section 85 Agreement was intended to settle all potential Italian Republic claims for the vehicles and periods under discussion.

Fourth, he argued that the FTT had failed to take account of HMRC’s particular status as a tax collecting agency charged with collecting the correct amount of tax (rather than a normal commercial party) and in seeking to establish whether the 2009 claims were compromised by the Section 85 Agreement it had failed to recognise and take account of the opposing interests of the two parties.

Fifth, on a fair reading of the Decision, the FTT appeared to have reached the view that the burden lay on the Companies to reserve the right to make further claims if they wanted to preserve that right, rather than the view that the burden lay on HMRC to preclude any such further claims. He argued this was an error of law, given the legal background.

Sixth, the FTT had wrongly placed reliance on the insertion into the Section 85 Agreement of specific reference to a potential section 29 claim, seemingly considering this to support the argument that as no reference was included to the possibility of additional claims if the Italian tables turned out to be wrong, such potential claims were implicitly included in the “claim” being settled as part of the Section 85 Agreement.

Taking these points in turn, Mr Mantle developed his submissions as follows.

He argued that the case law required a “single process of interpretation” of any agreement which combined the five factors identified by Lord Neuberger (giving the majority decision of the Court) in Arnold at [15]:

The FTT had, he acknowledged, correctly directed itself to take account of the five factors set out above (the sixth listed factor being a matter to be disregarded, rather than taken account of). However, it had not then gone on to consider, as a first step, the “natural and ordinary meaning” of the word “claim” in the Section 85 Agreement. It was inherent in Lord Neuberger’s subsequent consideration of the matters set out above that it should have done so, as could be seen from his comments at [17] and [18] in particular:

The FTT had not grappled at all with the issue of the clarity of the language used in the Section 85 Agreement, in spite of that being the first key issue. It had failed to address the point, instead simply jumping to a final conclusion as to its meaning as being “all Italian margin claims in respect of the vehicles for the periods set out in the 2003 claims”.

In doing so, it acknowledged at 31(5) of the Decision that “the 2003 claims were claims under section 80 and the decisions against which the appellant appealed related to those claims”, which appeared to imply it accepted that this was the “natural and ordinary meaning” of “claim” in the Section 85 Agreement, which then left one asking how it had reached the opposite conclusion as to its actual meaning in the context of that agreement.

In his submission, the natural and ordinary meaning of the word “claim” in the Section 85 Agreement was to refer to the claim that had actually been made by each Appellant and subsequently varied by partial agreement with HMRC. He referred to Regulation 37 of the VAT Regulations 1995, which provides that “any claim under section 80 of the Act shall be made in writing to the Commissioners and shall, by reference to such documentary evidence as is in the possession of the claimant, state the amount of the claim and the method by which that amount was calculated.” It was a matter of fact that the claims were based on a specific methodology accepted by HMRC, and he argued that the methodology (in particular the use of the Italian tables current at the time) should be regarded as an inherent part of each claim, such that the use of a different methodology (in particular, amended Italian tables) should properly be regarded as an entirely different claim, even though it related to the same vehicles and the same VAT accounting periods.

Mr Mantle argued that when considering the “background knowledge which would have been available to the parties”, as referred to by Lord Neuberger in the passage from Arnold quoted at [32] above, the legal background was clearly part of that picture.

As the parties would (or should) have been aware, it was established by the date of the Section 85 Agreement that it was permissible for a taxpayer to bring a second or subsequent claim for repayment of overpaid VAT which arose in relation to the same supplies made in the same period(s) as a previous claim, unless it was simply a repeat claim “with nothing new to say”. Furthermore, the subsequent acceptance by HMRC of different methods which they would accept for the calculation of a claim was sufficient to provide a legitimate basis for a valid second or subsequent claim. This was made clear by the VAT and Duties Tribunal in Hayward Gill, which was effectively endorsed by the Court of Appeal in John Wilkins.

After examining these authorities, the FTT reached the view that the 2009 claims did “say something new”, and were therefore valid claims, subject only to the question of whether they were settled by the Section 85 Agreement.

Having reached that view, the FTT had failed, in Mr Mantle’s submission, to take account of it properly or at all in construing the Section 85 Agreement. In short, having decided that the possibility of a further valid claim existed, the failure of the Section 85 Agreement to address the matter should have led the FTT inexorably to the conclusion that it was not intended to affect the validity of any such further claim or, at the very least, to explain why it had not reached that conclusion.

Mr Mantle argued that at various points in the FTT’s analysis, it had placed considerable emphasis on the pre-contract correspondence between the parties. It was well settled (see Chartbrook v Persimmon Homes Ltd [2009] UKHL 38 per Lord Hoffmann at [41] – [42]) that pre-contract negotiations are generally inadmissible “for the purpose of drawing inferences about what the contract meant”. They might be admissible for other reasons, such as “to establish that a fact which may be relevant as background was known to the parties, or to support a claim for rectification or estoppel”, but that was not the case here. In his submission, the FTT had failed to observe this requirement, by referring to various aspects of the pre-contract correspondence in support of the view that the “claims” intended to be settled by the Section 85 Agreement included any potential future claims arising in relation to the same vehicles and the same periods.

Then in doing so, it had missed the point that the correspondence leading up to the Section 85 Agreement focused on particular features of the 2003 claims (i.e. the claims as originally made and as adjusted over time), never addressing the accuracy of the Italian tables. The various points referred to by the FTT in the pre-contract correspondence, even if it were legitimate to refer to them, did not give rise to any suggestion that what was being agreed to be settled was not just the 2003 claims but also any potential further claims that might be raised under the Hayward Gill principle.

Mr Mantle submitted that the FTT had approached the process of interpretation incorrectly by failing to take into account that HMRC were not acting as a party to a normal arm’s length commercial negotiation, they were acting as a tax authority which had a primary function of ascertaining and repaying the correct amount of tax due under the claims advanced by the Companies – the 2003 claims. From this erroneous starting point, the FTT had reached the conclusion at [31(5)] that “the parties simply wanted to conclude a deal on the best possible terms for each of them”, and that “a reasonable person looking at that agreement now, would have understood it to mean all the Italian margin claims which related to the vehicles for the periods.” This last statement appeared to conflict with the immediately preceding observation that “when they used the word claim in the Section 85 Agreement, they did so in a commercial sense, in the context, of course, that the 2003 claims were claims under section 80 and the decisions against which the appellant appealed related to those claims.”

Furthermore, he pointed to Lord Hoffmann’s comment in Arnold at [17] that “reliance… on commercial common sense and surrounding circumstances… should not be invoked to undervalue the importance of the language of the provision which is to be construed. The exercise of interpreting a provision involves identifying what the parties meant through the eyes of a reasonable reader, and, save perhaps in a very unusual case, that meaning is most obviously to be gleaned from the language of the provision. Unlike commercial common sense and the surrounding circumstances, the parties have control over the language they use in a contract.”

Mr Mantle argued that at [32 (8) and (9)] of its decision, the FTT referred to the fact that the Appellants could have sought to include a provision in the Section 85 Agreement expressly reserving the right to bring further claims, if admissible, under the Hayward Gill approach, and failed to do so. It appeared to consider that the absence of any such provision (or attempt to include it) added weight to the wider interpretation of “claim” contended for by HMRC. But there was no basis for this, as it effectively assumed what it sought to prove, namely that the word “claim” in the context of the Section 85 Agreement had the wider meaning contended for by HMRC. On that basis, if the word “claim” had the narrower meaning contended for by the Appellants, the absence of any provision seeking to widen it to encompass any subsequent claims in respect of the same vehicles and periods (or attempt by HMRC to include such a provision) could just as easily be interpreted as supporting the Appellants’ case. This showed clearly that this particular aspect of the FTT’s reasoning was entirely circular, contributing to the overall error of law in its interpretation of the Section 85 Agreement.

Mr Mantle argued that the FTT made a further error of law in referring (at [31(8) and (9)] of the Decision) to the “Regulation 29” provision inserted into the Section 85 Agreement at the instance of the Companies as showing that the parties had specifically addressed a particular type of potential future claim, supporting the interpretation that a failure to include a similar reservation in respect of any other potential future claims meant that such claims were intended to be covered by that agreement. The Regulation 29 issue was an entirely separate technical point on the 2003 claims as they stood at the time, and had no relevance to the question of whether future potential claims were intended to be covered by the Section 85 Agreement.

Finally, Mr Mantle made two further points:

Mr Puzey argued, in outline, as follows. There was a superficial attraction to the argument that the 2009 claims must be new claims, not covered by the Section 85 Agreement, because they were for new amounts. The Companies had not explained what the features of the 2009 claims were that defined them as “new”, so they had taken the simple route of arguing that because the 2009 claims were for additional amounts, they must be new claims, distinct from the 2003 claims. But this focus on the numbers was misleading as it did take into account what was actually being claimed for, in both the 2003 and 2009 claims. It was common ground that each claim was in respect of the same specific supplies of specific vehicles in specific periods. The Companies’ heavy reliance on John Wilkins was unjustified because there was no s.85 agreement in that case, therefore it did not consider the effects of that section. The Court of Appeal did not get to the bottom of what was meant by “something new to say” and the case was decided before all the other cases which considered the meaning of “claim”. Also, it appeared never to have been followed on any case involving repeat claims under section 80 VATA.

Mr Puzey went on to argue that the FTT’s approach of interpreting the word “claim” as a simple common law contractual matter perhaps did not pay enough attention to the VAT law background, however the effect of the Section 85 Agreement was clear – it was to decide all the matters that would have been decided by the VAT Tribunal if it had adjudicated on the case (which Mr Puzey, following what the FTT had said at [31(5)] of the Decision, characterised as “all the Italian margin claims which related to the vehicles for the periods”). In doing so, the tribunal could have determined for itself how much VAT was overpaid; it was not bound by the Italian tables or the methodology used by either side. It would have been open to the tribunal (or either side) to use different methodology (as had happened in HMRC v General Motors (UK) Limited [2015] UKUT 605 (TCC)), including different margin figures from those contained in the Italian tables – anyone could have carried out at that time the analysis which was later carried out which showed the unreliability of those tables. This was clearly inconsistent with any suggestion that the “claim” which subject to the deemed determination under section 85 VATA was confined to the basis upon which it had been calculated.

As to the FTT’s unchallenged acceptance that the 2009 claims had “something new to say”, Mr Puzey argued this left unanswered the question of whether they amounted to new claims or simply an amendment to the original claims. To consider that question required reference to the authorities, in particular Reed Employment Limited v HMRC [2013] UKUT 109 (TCC), HMRC v Vodafone Group Services Limited [2016] UKUT 89 (TCC) (especially at [47] and [51]) and Wheels Common Investment Fund Trustees and others v HMRC [2017] UKFTT 830 (TC). In his submission, by reference to these authorities, the 2009 claims were simply an attempt to amend the 2003 claims; since the 2003 claims had been settled, it was not open to the Companies to attempt to resuscitate them by arguing that the 2009 claims were entirely new.

It is common ground that the Companies made their initial claims on 26 June 2003. At that stage, the Italian Republic element of the claims totalled approximately £900,000. Initially, HMRC rejected them entirely as invalid, but (following appeals to the VAT Tribunal against that rejection and the provision of further evidence by the Companies) they accepted them as valid in January 2005, but disagreed with the amounts claimed.

As a result of further information supplied, on 22 June 2005 HMRC provided their own recalculation of the claims, totalling some £577,000.

The Companies then appealed again to the Tribunal on 19 July 2005, on the grounds that higher amounts claimed by them in a letter dated 3 June 2005 should be paid (the shortfall being identified in the notices of appeal as approximately £284,000 in total).

There followed further contact between the parties, ultimately resulting in agreement on a total amount (in respect of the Italian Republic claims) of just over £1 million, which was included in the Section 85 Agreement.

The effect of that agreement, under section 85 VATA, was to vary HMRC’s initial decision of 22 June 2005 by setting a final agreed amount for the claims; accordingly, “the like consequences shall ensue for all purposes as would have ensued if, at the time when the agreement was come to, a tribunal had determined the appeal in accordance with the terms of the agreement”.

If the VAT Tribunal had determined the appeals in March 2006 “in accordance with the terms of the agreement”, it is clear that it would have decided the amount to be paid (in the amount agreed between the parties); but the question around which this appeal revolves is whether:

This question must be answered by deciding the correct meaning and effect of the Section 85 Agreement.

It is true that the FTT directed itself at [26] by reference to the statements made by Lord Neuberger in Arnold, however when it came to give the reasons for its decision, at [31] of the Decision, it is difficult to see how it followed its own direction. At [31(1) to (3)] it recounted some of the history leading up to the settlement, then at [31(4)] it drew the following conclusions from that history:

Then at [31(5)] it expressed the conclusion that:

It then added some additional observations:

It is therefore somewhat difficult to discern precisely how the FTT has gone about complying with its own direction at [26], and how it has arrived at the conclusion that it has.

As such, we consider that there are errors of law in the Decision.

In the circumstances, we consider that we should set aside and remake the Decision, applying our own analysis on the basis of the facts found by the FTT.

The Companies’ argument proceeds on the basis that, properly construed, the “terms of the agreement” (and therefore the tribunal’s deemed determination under section 85 VATA) should be regarded as permitting further claims, in respect of the same underlying subject matter, which had “something new to say (Footnote: ²)” – as their 2009 claims did.

This then leads on to an examination, on general principles of interpretation, of the meaning of the phrase “the Appellants’ claim for overpaid VAT” in the Section 85 Agreement. Should this phrase be interpreted as meaning that the agreement between the parties (and consequently the deemed determination of the Tribunal) only extended to the claim as formulated up to that time (or, as Mr Mantle put it, did not go “beyond the parameters of the 2003 claims as actually originally made or as actually amended”, and did not cover “section 80 claims which, although accrued, had not been made”)? Or should it be interpreted as meaning that the Section 85 Agreement (and therefore the deemed determination of the Tribunal) extended to cover the whole of any overpayment which had arisen in respect of the relevant supplies of vehicles by the Companies over the relevant period?

We adopt the approach set out in Arnold at [15] to [23] in considering this question, bearing in mind that the context is an agreement entered into to settle an appeal under a statutory provision.

We therefore ask ourselves “what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean”, and we do so by focussing on the meaning of the words “the Appellants’ claim for overpaid VAT” in their documentary, factual and commercial context, in the light of the six elements identified by Lord Neuberger in Arnold at [15(i) to (vi)].

First (considering element [15(i)] from Arnold), as to the “natural and ordinary meaning” of the phrase “in settlement of the Appellants’ claim for overpaid VAT” in the Section 85 Agreement (when considered purely on the basis of the wording of the Section 85 Agreement itself), we regard it as referring to the fact that the Appellants had made a claim for overpaid VAT under section 80 VATA, HMRC had rejected that claim by letter dated 21 July 2005, the Appellants had appealed against that decision to the Tribunal, and the settlement was intended to settle the quantum of that claim and the appeal. The phrase makes no mention of any particular basis of the claim, nor does it even refer specifically to the nature of the claim, the periods in respect of which it was made or the vehicles with which it was concerned, still less does it refer to any particular method of calculation. The use of the singular word “claim” (when in fact there were four separate detailed “claims”) connotes reference to a single umbrella concept of “claim”, rather than to the specific individual claims made by the Companies. In the light of this, we consider the natural and ordinary meaning of the phrase as it stands refers to that wider concept of “claim”. This militates somewhat against the suggestion that “claim” should be interpreted as referring to the specific details of the claim by each of the Companies, including its method of calculation.

Turning to element [15(ii)] of Arnold, the only other part of the Section 85 Agreement which either side argued might cast light on the meaning of the key phrase was the specific provision in relation to the “Regulation 29 claim”. We do not consider this to be of any assistance at all. The most that could be said of the provision is that it showed the agreement to have been a thoughtfully negotiated document, but that does not provide any assistance in interpreting the key phrase in it.

As to element [15(iii)] of Arnold, the overall purpose of the key phrase and the Section 85 Agreement as a whole was clearly to settle the dispute between the parties as they understood it at the time. But that does not really assist in deciding the extent to which the settlement was intended to be final or to leave room for a potential future claim based on a different method of calculation which the parties did not foresee at the time.

As to element [15(iv)] of Arnold, the facts and circumstances known or assumed by the parties at the time clearly included all the background correspondence leading up to the agreement, which shows that the claim arose in respect of certain estimated numbers of different types of vehicles, supplied during specific VAT accounting periods. It also shows how the claim had been initially calculated, subsequently negotiated and then finalised, including by reference to the Italiantables in circulation at the time. We consider that in deciding on the natural and ordinary meaning of the phrase “the Appellants’ claim for overpaid VAT”, this background material demonstrates that the claims themselves evolved over the period from June 2003 to March 2006. Whether the claim of each of the Companies is viewed individually or they are viewed together as a composite “claim”, we consider it to have been the same “claim” over that period, and Mr Mantle did not argue otherwise. The common element throughout the period remained the fact that relief was being sought for all the overpayments made by the Companies in respect of their demonstrator vehicles in respect of the specific identified accounting periods. The method of arriving at the amounts of those overpayments (both in agreeing the numbers of vehicles involved and, in some cases, the applicable margins) changed over the period of negotiation, but the core objective of the claim remained the same, i.e. to recover a quantified amount of VAT that had been overpaid. The fact that one particular element of the negotiations throughout was reliance by both parties on the Italiantables as they stood at the time does not in our view mean that the phrase “the Appellants’ claim for overpaid VAT” should be limited to claims which were formulated on the basis of those tables, because those tables were simply a part of the method that was used to calculate the amounts of the claims. Further, as discussed below at [79], in the context of a Section 85 Agreement (where the appeal concerns quantum) the amounts set out in the Agreement are deemed to be, or have the effect of, a determination by a Tribunal of the correct amount of overpaid VAT. We consider this also militates against limiting the meaning of the phrase “the Appellants’ claim for overpaid VAT” to claims formulated on the basis of those tables.

Still addressing element [15(iv)] of Arnold, whilst Mr Mantle made much of the fact that as a matter of law when the Section 85 Agreement was signed, second or subsequent claims under section 80 VATA were permissible unless they had “nothing new to say” (based on Hayward Gill), there was no finding by the FTT that anyone at the Companies, their advisers or HMRC were aware of that fact, nor was there any reference to it in the witness statement or contemporaneous documents before the FTT. It might be argued that because knowledge of the Hayward Gill principle was “available” to the parties, such knowledge should be imputed to them (whether they actually had it or not) for the purposes of identifying their intention by reference to the overall objective identified at the start of [15] of Arnold: “what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean” [emphasis added]; but even if this is correct (which we doubt), given the limitations of the Hayward Gill principle referred to from [76] below, we do not consider it adds any great weight to Mr Mantle’s argument.

As to element [15(v)] of Arnold, attempting to apply “commercial common sense” to the Section 85 Agreement is fraught with difficulties. First, we are mindful of Lord Neuberger’s injunction in Arnold at [17] that reliance on commercial common sense and surrounding circumstances “should not be invoked to undervalue the importance of the language of the provision which is to be construed. The exercise of interpreting a provision involves identifying what the parties meant through the eyes of a reasonable reader, and, save perhaps in a very unusual case, that meaning is most obviously to be gleaned from the language of the provision.” Second, there is no objective “commercial common sense” which underpins the interpretation contended for by either party: for each party, the interpretation they now contend for would make perfect commercial common sense. This takes the matter no further forward.

In relation to Mr Mantle’s argument that “commercial common sense” should be qualified by reference to HMRC’s particular status as a tax collecting agency charged with collection the correct amount of tax, we consider that does not affect matters either. The legislation sets out a statutory basis for the settlement of appeals and it we consider it unlikely Parliament would have intended that an agreement under the statutory scheme should be interpreted to allow an appellant simply to ignore the agreement if it subsequently discovers new facts which, if known to it earlier, would have enabled it to reach a more advantageous settlement; such a suggestion would be inconsistent with the whole concept of final settlement of appeals by agreement. See also [76] to [79] below.

Finally (element [15(vi)] of Arnold), it is clear that the subjective evidence of either party’s intentions is to be disregarded; however, in a situation where both sides candidly accept that the eventuality which actually took place was not in the contemplation of either of them at the time, this is of limited relevance in any event.

Turning now in more detail to the Hayward Gill argument of Mr Mantle, quite apart from the fact (identified above) that there does not appear to be any evidence the Companies were aware at the time the Section 85 Agreement was signed of the possibility of second or subsequent claims, we do not in any event consider that Hayward Gill and the apparent endorsement of it in John Wilkins bear the weight that Mr Mantle seeks to place on them. In Hayward Gill, the taxpayer had simply made a claim for refund of an overpayment, based on HMRC’s published guidance as to the basis upon which it was prepared to accept such claims. HMRC had then simply paid it. There had been no agreement and no appeal to the Tribunal. Subsequently, HMRC had published guidance permitting a more advantageous basis for such claims, and the taxpayer submitted a further claim for the difference. HMRC argued that the second claim should be rejected by analogy to the principle of res judicata. The Tribunal rejected the argument, but in doing so said this:

In relation to the argument that there had been an agreement which should be regarded as compromising the appellant’s claim in full, it said this:

In other words, the Tribunal’s decision in Hayward Gill to allow the second claim was specific to a situation in which there had been no agreement, no appeal to the Tribunal and no determination (actual or deemed) by the Tribunal, and it seems to us that there are clear indications in the decision that it may well have decided the matter differently if there had been an agreement, appeal and/or determination (actual or deemed) by the Tribunal. This point did not arise for consideration in John Wilkins, accordingly there is nothing in that decision which in our view casts any further light on the matter.

Section 85 provides that all the like consequences shall ensue for all purposes as would have ensued if, at the time when the agreement was come to, a tribunal had determined the appeal in accordance with the terms of the agreement. Following on from our observations above, we consider what would have happened if there had been no settlement and the 2003 claims had been determined by the Tribunal. In that case, the quantum of the claims (which was the only issue remaining outstanding) would have been determined by the Tribunal, probably using the Italiantables current at the time – though, as Mr Puzey pointed out, the Tribunal need not have done so (he gave HMRC v General Motors UK Limited [2015] UKUT 605 (TCC) as an example of a situation in which the FTT had used its own method to reach a result, not accepting one advanced by the parties, and the Upper Tribunal had endorsed that approach). The Tribunal would have had to form a view about the number of vehicles involved in each VAT accounting period, and the amount of overpayment attributable to each one. It would have had to do this on the basis of the best evidence available to it at the time, and after it had issued its decision (no appeal against such a decision having been made), any later attempt to re-open the matter on the basis that subsequent evidence showed there were better approximations than those which the Tribunal had adopted would, we consider, inevitably have been met by an argument that the matter was res judicata. To accept Mr Mantle’s argument, we would have to be satisfied either that this analysis is wrong, or that a Tribunal would have been willing and able to issue a determination which (despite having determined the amount of VAT that had been overpaid) explicitly allowed for the parties to make further claims (presumably either for further payments or for repayment of excessive payments) after the event unless those claims had “nothing new to say”. We reject any such suggestion as completely implausible.

Whilst we would agree with Mr Puzey that the case law on what constitutes a “new claim” as opposed to an amendment to a pre-existing claim has some relevance (though that case law is mostly concerned with the question of identifying whether a supposed amendment to an existing claim is in fact a new claim and therefore out of time), it does not appear that the arguments as advanced before us (or the authorities relied on) were put to the FTT. Further HMRC did not appeal against the FTT’s finding at [24] that the claims were permissible second claims under section 80. Whether or not we agree with the Tribunal’s conclusion, just because the 2009 claims had something new to say does not in our view mean that they must be regarded as entirely valid new claims outside the scope of the Section 85 Agreement, as Mr Mantle appeared to be arguing.

Nor do we accept Mr Mantle’s argument that the very fact of a different method of calculation meant that the 2009 claims must be regarded as distinct claims as a result of Regulation 37 of the VAT Regulations. That regulation is in our view an administrative provision which simply requires that, to be validly made, a claim needs to include a statement of the amount claimed and the method of calculation so that HMRC are in a position to understand and respond to the claim properly. If Mr Mantle’s argument were correct, every slight change in the method of calculation during the course of negotiation of a claim would technically result in a new claim, with all the risks highlighted in the case law of the supposedly new claim falling foul of statutory time limits.

For the above reasons, we consider it is clear that a reasonable person, having all the background knowledge which would have been available to the parties at the time of signature of the Section 85 Agreement, would have understood the phrase “the Appellants’ claim for overpaid VAT” in the Section 85 Agreement to have the meaning contended for by HMRC, namely as extending to all overpayments pursuant to the Italian Republic case in relation to the vehicles supplied by the Companies during the relevant periods.

Neither party disputed that if we reached this conclusion, then it would automatically follow that the appeals against HMRC’s refusal of the 2009 claims ought to be dismissed as an abuse of process. We agree.

It follows that we agree with the FTT that the Section 85 Agreement precludes the Companies from making any further valid Italian Republic claims in respect of the periods covered by it, that the attempt to do so in the 2009 claims was invalid and therefore their appeals against HMRC’s refusal of those claims amounts to an abuse of process.

We consider there to have been errors in the FTT’s Decision and therefore set it aside – see [61] and [62] above.

In remaking the decision, we have reached the same conclusion as the FTT but for the different reasons which we have given – see [82] to [84] above.

The appeal is therefore DISMISSED.