The First-tier Tribunal has decided that motor homes were not “caravans” within the meaning of the VAT zero-rating provisions.  A motor home was different from a caravan in an important respect, the ability to move under its own power. That put motor homes outside the ordinary usage of the word “caravan” and the legislative context showed that self-propelled vehicles were not intended to be zero-rated.

Peter Mantle successfully represented HMRC.

Please click to view the full Oak Tree Motorhomes v HMRC judgment.

 

In a judgment delivered yesterday in R  Premier Foods v HMRC  (Q Cold ltd intervening) [2015] EWHC 1483 (Admin),  Supperstone J resolved a dispute as to how to unravel the consequences of a mistaken overpayment of VAT by a supplier which later became insolvent.  The facts were that Q Cold supplied Premier with suet and poppadoms.  It mistakenly treated the supplies (which were in fact zero-rated) as standard-rated and accounted for VAT on them: likewise Premier deducted input tax on the supplies.  The mistake was discovered and Q Cold made a claim under section 80 of VATA for repayment of the wrongly paid VAT: HMRC also issued assessments against Premier for the incorrectly deducted input VAT.  Since Q Cold and Premier agreed that Q Cold would pay the VAT recovered under section 80 to Premier, the net effect of all of this should have been that all parties would have been put back where they started.

However, before any repayments were made Q Cold became insolvent.  HMRC took the view, based on the judgment of the Inner House of the Court of Session (the equivalent of the Court of Appeal in Scotland) in CEC  v McMaster Stores (Scotland) Ltd (in receivership) [1995] STC 846, that they had to pay Q Cold’s section 80 claim notwithstanding its insolvency and that (as a result) Premier would only receive part of the section 80 claim (it being no more than an unsecured creditor of Q Cold).  Since Premier still had to pay the assessments, it would be left substantially out of pocket.  Premier challenged HMRC’s decision to pay Q Cold, and to maintain the assessments against it, by way of judicial review (there being no appeal to the First-tier Tribunal against those decisions under section 83 of VATA).  Q Cold’s liquidators, however, intervened in the judicial review to argue that HMRC were bound to pay Q Cold’s section 80 claim notwithstanding its insolvency.  HMRC took the view that there was much force in Premier’s arguments but that, given McMaster, there were arguments the other way: HMRC were concerned to obtain a decision of the Court that would bind all the parties in order to avoid any risk that HMRC would have to pay Q Cold while being unable to enforce the assessments against Premier (which would result in a tax loss).  Pending the judgment, they agreed not to pay Q Cold’s claim and not to enforce the assessments.

The Judge accepted Premier’s argument that McMaster was no longer good law in the light of Reemtsma [2008] STC 3448, where the ECJ held that a customer in Premier’s position must be able to address a request for reimbursement to the tax authorities if it bore the burden of VAT that had been incorrectly accounted for by its supplier but where it would be impossible or excessively difficult for it to recover against its supplier, for example due to insolvency.  In McMaster, the Court of Session had had to consider whether HMRC could invoke the defence of unjust enrichment in section 80(3) against McMaster on the basis that a only a very small part of the payment to McMaster would (because of its insolvency) go to the customers who had borne the VAT burden: the Court had held that they could not invoke that defence because the consequence of invoking that defence would be that the customers got nothing at all – and on that basis McMaster’s enrichment could not be described as unjust (it was better that the customer got half a loaf than no loaf)  However, Premier argued, after Reemtsma it would have a direct claim against HMRC: and so, it argued, the consequence of paying Q Cold’s section 80 claim had to be that Q Cold’s enrichment was unjust, as it would mean that Premier would only obtain a proportion of the overpaid VAT as opposed to full payment of VAT direct from HMRC (it would get half a loaf instead of a whole loaf).

The Judge therefore granted a declaration that HMRC had a section 80(3) defence to Q Cold’s section 80 claim and need not pay out on it.  He also quashed the assessments issued against Premier, HMRC having accepted that, if the Court decided that Q Cold had no good section 80 claim and that there would therefore be no tax loss to HMRC if they did not enforce the assessments, and where in the unusual circumstances of this case it was clear that Premier would have a Reemtsma claim offsetting any assessment raised against it, they would not be obliged to raise those assessments and, indeed, that there would be no point in doing so (given Premier’s offsetting Reemtsma claim).

Practitioners may want to note the following points: –

• This is a classic example of where judicial review plays a part in challenging HMRC decisions.  Premier could not appeal to the First-tier Tribunal against the decision to pay Q Cold , there being no appeal against a decision to pay another party’s claim even where that decision has a significant impact on one’s own position (it being common ground that HMRC could not be required to suffer a tax loss as a result of the unwinding of the mistake).  And since there was no doubt that Premier had incorrectly deducted input tax, it had no basis to appeal against its assessments to the First-tier Tribunal: its point was that HMRC should have used its powers not to issue the assessments even though tax was due (a point that could only be argued in judicial review).  Further, the use of the judicial review procedure meant that Q Cold could be joined as a party and was bound by the result.
• It was a critical element of the case that there was no dispute that the overpaid VAT was passed on in full: had Q Cold been able to argue that it had not passed the VAT on, it is less obvious that judicial review would have been the right way of resolving what then would have been a complex factual dispute.
• It is also worth noting that because the mistake related to zero-rating and not to exemption there was no issue that Q Cold had wrongly deducted input tax on its own supplies which had to be taken into account in any section 80 repayment (the key point about zero-rating being, of course, that a supplier is entitled to deduct standard-rated VAT on inputs while charging 0% VAT on outputs, while no input tax deduction is available in relation to exempt supplies).  So the present case was in that respect very different from Investment Trust Companies v HMRC [2015] EWCA Civ 82, where major issues flowed from the fact that where the mistake was to treat exempt supplies as standard rated, unravelling the mistake had to take into account the fact that the supplier had wrongly deducted input tax on its own inputs, thereby reducing the amount of its section 80 claim.

Valentina Sloane appeared for Premier; George Peretz QC appeared for HMRC

The Court of Appeal handed down judgment today in a case regarding the circumstances in which a court or tribunal quashing a decision by an administrative body should remit that decision to be made by a freshly constituted decision making body when allegations had been made, not only of apparent bias, but also of incompetence and unfairness.

The case arose from the Competition and Market Authority’s (CMA’s) investigation into the private healthcare market.  HCA is a private healthcare operator in the UK, particularly London, and runs hospitals such as the London Bridge and Princess Grace.  It was one of the main subjects of the CMA’s private healthcare investigation.  As a result of decisions made by the CMA in its report into that investigation published in April 2014, HCA had brought review proceedings in the Competition Appeal Tribunal (CAT).  In the course of those proceedings, the CMA had agreed that certain of its decisions affecting HCA should be quashed by the CAT and remitted to it.  HCA asked the CAT to remit the decisions to be remade by a freshly constituted inquiry group of the CMA.  That application was made on the basis that the inquiry group of the CMA which had handled the original investigation, was incompetent, treated HCA unfairly over an extended period, and would be affected by either or both of apparent bias and “confirmation bias”.   The CAT had rejected that application in its judgment of 23 December 2014.  HCA appealed that judgment.

The Court of Appeal indicated that the test to be applied in such a case was “that remission will be made to the same decision maker unless that would cause reasonably perceived unfairness to the affected parties or would damage public confidence in the decision making process”.  The Court indicated that the basis on which the Court will approach those “two interlocking concepts” may depend heavily on the facts.    The Court considered the facts of the case in some detail.  It concluded that the CMA had acted unfairly as regards one particular hearing with HCA during the administrative process, but that overall remission to the same inquiry group of the CMA would not cause reasonably perceived unfairness to HCA or damage public confidence in the decision making process.  The Court therefore concluded that HCA’s appeal should be dismissed.  Two further grounds of appeal regarding costs were also dismissed.

Kassie Smith QC and Robert Palmer acted for the CMA.

Josh Holmes acted for HCA.

Please click to view the HCA International v CMA judgment.

The Court of Appeal has by a majority today upheld the SCOP’s challenge to the CMA’s remitted decision in the Eurotunnel / Sea France investigation. The challenge related to a decision made by the CMA in June 2014 that it has jurisdiction to consider the acquisition of certain assets of Sea France by Eurotunnel under its merger control powers. That decision followed earlier proceedings in the Competition Appeal Tribunal in which the Tribunal partially upheld the SCOP’s challenge to an earlier finding of jurisdiction by the then Competition Commission in June 2013, and remitted the issue to the CMA for further consideration.

The SCOP’s challenge to the CMA’s remitted decision was dismissed by the Tribunal in January 2015 but the Court of Appeal granted permission for an expedited appeal which was heard in March 2015.

The Court of Appeal has today allowed the SCOP’s appeal (Tomlinson LJ and Sir Colin Rimer, Arden LJ dissenting). The majority concluded that the CMA’s decision that Eurotunnel and the SCOP acquired the activities of Sea France was irrational.

Please click here to view the full Société Cooperative de Production Sea France SA v Competition and Market Authority – Court of Appeal judgment.

The SCOP was represented by Daniel Beard QC and Rob Williams instructed by RPC.

The CMA was represented by Paul Harris QC and Ben Rayment.

Meredith Pickford QC and Ligia Osepciu represented DFDS AS which intervened in the proceedings in the CAT and the Court of Appeal, instructed by Hogan Lovells.

The outcome of the UK General Election is now known. In its Manifesto, the Conservative Party promised to renegotiate the UK’s relationship with the EU and then to hold an in/out referendum.

Monckton is one of London’s leading sets of chambers in the EU Law field. Practitioners, businesses, individuals and opinion formers will be planning ahead for different possibilities. Therefore they will want to understand the legal framework within which decisions will be taken about future relations between the EU and the UK.

On 24 June, members of chambers will present the first of two events at which they will explore some of the key issues. The seminar will involve a number of experienced EU practitioners. It will build on two recent lectures on the legal implications of Brexit, given by Christopher Muttukumaru CB to the Dutch Academy of Legislation on 15 April and by Ian Rogers QC to the Central European University, Budapest, on 24 April.

To register please click here.

In its judgment in R(Hemming) v Westminster CC [2015] UKSC 25, released on 29 April, the Supreme Court had to grapple with the question of how to apply a provision of Directive 2006/123/EC on services in the internal market that restricted charges that could be made to an applicant for an authorisation to provide services.  The provision at issue (Article 13(2)) stated that “charges which the applicants may incur from their application shall be reasonable and proportionate to the cost of the authorisation procedures in question and shall not exceed the cost of the procedures“.

The facts of the case concerned a sex shop that applied for a licence to operate as such from Westminster City Council.  Westminster charged an up front fee that was calculate to cover both its costs of determining whether a licence should be granted and its costs of enforcing the licensing scheme (e.g. by prosecuting unlicensed sex shops).  But if an application was unsuccessful, the part of the fee that covered enforcement costs was refunded.

The Court of Appeal held that that arrangement infringed Article 13(2).  Its judgment caused great concern to a wide range of regulators who receive their income from licensing regimes, including the Solicitors Regulation Authority and the Bar Standards Board, who intervened in the appeal along with the Treasury.

Lord Mance gave the single judgment of the Supreme Court.  He agreed with the sex shop that costs of enforcement could not be regarded as part of the “costs of the procedures”: in particular, he accepted a point made by the Treasury that Westminster’s argument on that issue was inconsistent with the French and German language texts of the Directive.  However, he agreed with Westminster and the regulators that it was clear (“acte clair“) that Article 13(2) did not apply to situations (called “type A”) where an applicant paid a fee for authorisation that was based on the costs of processing the authorisation decision, but in order to practise had to pay a further fee covering other costs such as enforcement.  But he then went on to record disagreement between the Supreme Court judges as to what the position was where – as in the case of the sex shop –  the applicant had to pay an up front fee including both authorisation costs and enforcement costs but received a refund of the part of the fee covering the latter element if it was unsuccessful (“type B”).  So that question was referred to the Court of Justice of the EU for a preliminary ruling.

The first part of the judgment clarifies the position in relation to a number of professional and other licensing regimes. The question that has been referred is a fairly narrow one that may have limited application outside the world of sex shops.  However, it has been known for the Court of Justice not to agree with the assumptions behind the questions referred to it: so it cannot be entirely certain that even the clear view of the Supreme Court on “type A” regimes will necessarily survive the reference process.

George Peretz QC appeared for HM Treasury in the Supreme Court.

Following its successful defence of the appeal brought by AXA PPP Healthcare Limited (AXA PPP) against its investigation into the provision of private healthcare, the Competition and Markets Authority (CMA) has also now succeeded in defending the appeal brought by the Federation of Independent Practitioner Organisations (FIPO).

On 29 April 2015, the Competition Appeal Tribunal, by majority judgment, dismissed FIPO’s application for review of parts of the CMA’s final report on the private healthcare market investigation. The majority of the Tribunal (Sales LJ and Clare Potter) rejected each of FIPO’s grounds of challenge and upheld the CMA’s finding that there was no adverse effect on competition resulting from insurers’ buyer power in relation to consultants and the restrictions placed on consultants’ fees. The Tribunal held that CMA’s findings were not irrational and were supported by the evidence. Further, the Tribunal found that there had been no failure to consult by the CMA.

One member of the Tribunal (Dermot Glynn) issued a dissenting opinion in which he set out his view that the CMA acted irrationally in not finding an adverse effect in competition and in concluding that consultants were able to compete below the price caps imposed by the insurers. The minority view was, in particular, that the CMA’s findings did not reflect economic realities in the market. However, the majority of the Tribunal considered that the minority opinion did not reflect the grounds of challenge raised by FIPO, involved a merits-based review and went beyond the scope of the CAT’s review role under section 179 of the Enterprise Act 2002.

Please click here to view the Federation of Independent Practitioner organisations v CMA judgment.

Kassie Smith QC and Brendan McGurk appeared for the Competition and Markets Authority.

Paul Harris QC will be chairing a round table session at the prestigious Lawyer General Counsel Strategy Summit in Portugal.

The impact of the new EU wide Damages Directive concerning breaches of competition law round table session will cover the following issues:

• Consider being a claimant, not just a Defendant
• Limitation issues: how will they work?
• Privilege: EU differences
• Developments in disclosure – how will they impact your business?
• Presumptions in the Directive, including as to damage

The Lawyer General Counsel Strategy Summit is attended by over 90 general counsel and heads of legal from some of the world’s largest companies across a range of industries.  The Summit will take place on 13 – 15 May 2015.

Paul is a well-known Silk in the field of commercial competition litigation and is instructed in many of the highest value and profile proceedings in the country. Current instructions include: acting as Lead Counsel for the Claimants in the largest follow on damages action in the UK (Air Cargo), acting for NHS bodies to recover damages from Reckitt Benckiser following its abuse of its dominant position in relation to the drug Gaviscon and defending IMI plc in multiple damages actions for cartel behaviour (copper tubes and fittings) He recently acted as Lead Counsel for Arriva Plc in their successful abuse of dominance trial against Luton Airport.

Chambers UK singles Paul out as “a particularly popular choice as lead counsel in follow–on damages actions, not least because of his outstanding litigation skills. An absolute delight to work with, he is incredibly clever and truly a litigator’s litigator. He is good at devising a strategy.”

Paul’s practice concentrates on contested litigation and advocacy, particularly in the fields of competition, European, broadcasting, public/administrative, sports, and VAT law and is regularly instructed directly by the in house legal market.

In a decision released yesterday the First-tier Tribunal upheld an appeal by the Department of Business, Innovation and Skills (BIS) against a decision by the Information Commissioner (IC) under the Freedom of Information Act 2000 (FOIA) that had ordered disclosure in full of a briefing to the Prime Minister in late 2011 on the financial situation of Thomas Cook.  By the time of the hearing, the BIS had agreed that much of the information could be disclosed, and IC agreed (on the basis of information not available to him at the time of his decision) that some of the information which remained in dispute was subject to a statutory restriction on disclosure and therefore was subject to an absolute exemption under FOIA. 

In relation to other parts of the briefing,  BIS argued that disclosure would prejudice Thomas Cook’s commercial interests (s.43 of FOIA) and that that damage outweighed the public interest in disclosure; it also argued that factual information obtained from Thomas Cook was subject to a duty of confidence so that the absolute exemption in section 41 FOIA applied. 

The Tribunal agreed with BIS that redactions should be made in the information disclosed.  It accepted that factual information in the briefing about Thomas Cook was obtained from it in confidence and that there was no sufficient public interest justification for breaching that confidence.  It also accepted evidence from Thomas Cook and from the Civil Aviation Authority (which has regulatory responsibility for Thomas Cook) that disclosure of information in the form of commentary from civil servants about Thomas Cook’s financial situation in 2011, even some time after Thomas Cook had been restructured, would be likely to prejudice its interests: it noted the volatility of the travel industry and its vulnerability to any adverse publicity. 

Thomas Cook was a major employer and any difficulty it got into could harm the taxpayer given that the Government guaranteed the ATOL scheme that insures customers against failure by holiday providers. Those factors overall outweighed the public interest in fully understanding the briefing given to the Prime Minister about the financial situation of a major company.

George Peretz QC acted for BIS: Laura Elizabeth John acted for the IC.  

 

The High Court (Mrs. Justice Andrews) has granted Greenpeace permission to challenge the UK’s failure to properly implement the EU’s new Common Fisheries Policy (“CFP”).

In December 2013, the EU legislature adopted a new regulation reforming the CFP, in particular by requiring Member States to allocate fish quotas based on environmental, economic and social criteria.

Greenpeace claims that the new regulation means that the UK is obliged to modify its current method of allocating fish quotas which is primarily based on historical fishing records from 1994-1996. The Secretary of State for Environment, Food and Rural Affairs has taken a decision that the UK’s method of allocating fish quotas is compatible with the new regulation. The High Court has permitted Greenpeace to challenge the lawfulness of that decision under EU law.

The case has received the following press coverage:

• BBC
• BBC Radio 4 Today
• Independent

Further information can also be found on the Greenpeace blog.

Kassie Smith QC and James Bourke are acting for Greenpeace, instructed by Harrison Grant.