HMRC v Southern Cross Employment Agency Limited

Mr Justice Newey, sitting in the Upper Tribunal, dismissed HMRC’s appeal against Southern Cross Employment Agency Limited’s victory in the First-tier Tribunal that HMRC could not resile from an agreement to repay VAT. Mr Justice Newey held that:

1. Section 80(7) Value Added Tax Act 1994 did not bar HMRC from entering into a binding agreement with Southern Cross. HMRC could enter into such an agreement under their care and management power.
2. The agreement HMRC entered into was not ultra vires and was not void.
3. The FtT was entitled to find that a compromise agreement had been formed between Southern Cross and HMRC on the facts and that such finding could not be disturbed.

Both the FtT and the Upper Tribunal have in essence held that although the initial claim for repayment was made under s80 VATA, HMRC had power to enter into a compromise agreement of that claim and the compromise meant that s80(4A) could not bite.

Peter Mantle acted for Southern Cross Employment Agency Limited.

Please click here to view the full HMRC v Southern Cross Employment Agency Limited case note.

The comments made in this case note are wholly personal and do not reflect the views of any other members of Monckton Chambers, its tenants or clients.

This case note was first featured in the Tax Journal.