[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] | ||
England and Wales Court of Appeal (Civil Division) Decisions |
||
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Reed Employment Ltd v HM Revenue and Customs [2014] EWCA Civ 32 (23 January 2014) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2014/32.html Cite as: [2014] STI 868, [2014] EWCA Civ 32, [2014] WLR(D) 23, [2014] BVC 6, [2014] STC 1026 |
[New search] [Context] [View without highlighting] [Printable RTF version] [View ICLR summary: [2014] WLR(D) 23] [Help]
ON APPEAL FROM THE UPPER TRIBUNAL
(TAX AND CHANCERY CHAMBER)
THE UPPER TRIBUNAL
(TAX AND CHANCERY CHAMBER)
FTC 392011
Strand, London, WC2A 2LL |
||
B e f o r e :
LORD JUSTICE AIKENS
and
LORD JUSTICE VOS
____________________
Reed Employment Limited |
Appellant |
|
- and - |
||
Her Majesty's Revenue and Customs |
Respondent |
____________________
WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
Tel No: 020 7404 1400, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Ms Philippa Whipple QC and Mr Richard Smith (instructed by HMRC Solicitor's Office) for the Respondent
____________________
Crown Copyright ©
Lady Justice Arden :
i) the conclusion that the equal treatment and fiscal neutrality principles are not infringed by the introduction of the cut off date applying to claims in respect of the same period as claims that have already been filed before that date follows from the decision of the CJEU in Weber's Wine World Handels-Gmbh v AblabenberufungsKommission Wien (Case C-147/01) [2004] 1 CMLR 7.
ii) The 2005 amending provision applies across the board. It made no distinctions between claimants except by introducing the cut off date.
iii) Since EU law permitted the introduction of the unjust enrichment defence, its introduction cannot give rise to any impermissible unequal treatment.
iv) In so far as Reed's argument on effectiveness only arises if the court has to consider a remedy for breach of the other two principles, the court does not have to consider it, and, in so far as it is a self-standing argument, there is no substance in it.
v) The application of the principles of equal treatment and fiscal neutrality to the facts of this case is clear. Therefore, it is not appropriate to make any preliminary reference to the CJEU on these issues.
PRINCIPLE OF EQUAL TREATMENT
(1) Effect of Weber's Wine World and M&S 2
Weber's Wine World
- impose more restrictions on repayment claims under EU law than other comparable claims;
- be specifically targeted at avoiding the effects of a judgment of the CJEU or
- make it impossible or excessively difficult to pursue claims conferred by EU law.
"93. The court has consistently held that individuals are entitled to obtain repayment of charges levied in a member state in breach of Community provisions. That right is the consequence and the complement of the rights conferred on individuals by Community provisions as interpreted by the court. The member state in question is therefore required, in principle, to repay charges levied in breach of Community law (see, in particular, the Comateb case (para 20), Metallgesellschaft Ltd v IRC, Hoechst AG v IRC Joined cases C-397/98 and C-410/98 [2001] All ER (EC) 496, [2001] ECR I-1727 (para 84) and the Marks & Spencer case (para 30)).
94. According to the case law, there is only one exception to that obligation to make repayment. A member state may resist repayment to the trader of a charge levied though not due only where it is established by the national authorities that the charge has been borne in its entirety by someone other than the taxable person and that reimbursement of the charge would constitute unjust enrichment of the latter. It follows that, if the burden of the charge has been passed on only in part, the national authorities are required to repay the amount not passed on (see to that effect, in particular, the Comateb case (paras 27, 28))."
"67. Where such a rule applies to claims in respect of situations which arose before its enactment, that effect does not seem to me incompatible with Community law. On the one hand, in so far as it seeks to preclude unjust enrichment, it in fact precludes only enrichment which would have occurred after its enactment, provided that there is no provision for recovery of any amount already reimbursed. On the other hand, there can in any event be no legitimate expectation of any such enrichment, since the very concept of legitimacy cannot embrace what is unjust."
" 69…since Community law does not require a right to reimbursement at all where unjust enrichment would ensue, the fact that, following a change to national law, a claim which might previously have succeeded can on that ground no longer succeed has no impact on the effectiveness of a right conferred by Community law."
"92. It must be concluded on this point, therefore, that the adoption by a member state of rules which retroactively restrict the right to repayment of a sum levied but not due, in order to forestall the possible effects of a judgment of the court holding that Community law precludes the maintenance of a national duty, is contrary to Community law and, more particularly, to art 10 EC only in so far as it is aimed specifically at that duty, a point which falls to be determined by the national court. Accordingly, the fact that such a measure has retroactive effect does not in itself amount to an infringement of Community law, where the measure is not aimed specifically at the duty which formed the subject matter of a judgment of the court."
i) Neither the CJEU nor the Advocate General determined whether the exception for claims that the tax was unconstitutional infringed the principle of equivalence. This was left to the national courts to determine.
ii) What the CJEU said in Weber's Wine World about breach of equivalence was a good steer. However, I note that the CJEU said no more than that the application of the equivalence principle was a matter for the domestic court.
iii) The exception for constitutional claims was the only difference in treatment. There was no question in Weber's Wine World of different conditions for claims relating to the same claim period. It was not suggested in Weber's Wine World that some people had been paid and some not paid so that the question of equal treatment that arises in Reed's case did not arise.
iv) It is not Reed's case that Weber's Wine World would have been decided differently if the principle of equal treatment had been argued. What it says is that it would be likely to have been decided differently if there had been a difference.
v) The real issue considered was that of effectiveness, which was expressly referred to in the decision of the CJEU.
"65. The limitation of the temporal effect of the ruling in the EKW judgment does not mean that whenever a person had raised a claim before the date of the judgment that claim must be free from any other restriction laid down by national law but rather that, in relation to the period specified, no other claims may be allowed to proceed. Nor is there is anything in the judgment which itself imposes or implies any general condition as to the date of enactment of any applicable national rules or which precludes any retroactive effect thereof. "
i) If the claim had in fact been filed by the date of the CJEU's judgment in EKW, the state could in an appropriate case rely on the unjust enrichment defence. Likewise, if a claim for a credit had in fact been filed by the date of the CJEU's judgment in EKW, the new law expressly provided that the state could in an appropriate case determine that there was no entitlement to such a credit where the credit would lead to unjust enrichment.
ii) If the claimant could establish a constitutional right to receive payment under the Austrian constitution, he had to be excepted from any unjust enrichment defence. I do not accept that this possibility is to be completely discounted because the constitutional right may itself have contravened the equivalence principle. The CJEU held that that question had to be determined by the national court, and so it had to proceed on the basis that the national court might hold that there was no breach of the equivalence principle.
iii) If claims for repayment had been filed and paid by the date of the introduction of the unjust enrichment defence, the state could not seek to recover on the basis of the unjust enrichment defence (see [67] of the Opinion of the Advocate General, set out at paragraph 23 of this judgment). The Advocate General did not find it necessary to state a principle which would prevent this but it was no doubt the principle of legal certainty. It would seem to follow from this carve-out for claims that had been reimbursed that, once it had been determined by that date that a claimant should be entitled to a credit for tax which was not lawfully due, that too could not be disturbed under the new law.
"20. It appears that a large number of claims had in fact been raised, in one form or another, before the date of the judgment in the EKW case (when the court had been informed of a total which might have to be reimbursed if all claims were to succeed, but not of the number of claims estimated to have been brought already). In its observations in the present case, the Austrian government states that 16,000 such claims, representing some ATS 3,000m, are pending for Vienna alone, and suggests that their number is due at least in part to the fact that the Verwaltungsgerichtshof has decided that the concept of 'equivalent administrative claims', used by the court in the EKW judgment, must be given a broad interpretation."
M&S 2
(2) Are Reed's claims and a claim for repayment in respect of the same period but made before the cut off date "relevantly similar"?
i) a claim cannot sensibly be described except by stating its period but the date of the claim is not essential in this sense.
ii) the date on which a claim is paid cannot be an inherent characteristic of a claim since it is a matter for the executive.
iii) for the purposes of the unjust enrichment defence the issue is whether the burden of the payment has been passed on in the same period and so it is necessary to analyse what happened in the relevant accounting period.
iv) there is no rational connection between the unjust enrichment defence and the date of the claim which would justify treating claims differently according to their date.
v) the date of the claim is relevant to any limitation period, but not thereafter: once (as here) a claim is made within the applicable filing period, it cannot be treated differently from claims for the same claim period.
vi) it follows that Weber's Wine World would be decided differently in a post-M&S 2 world.
i) the defect identified in M&S 2, which was the unjustified distinction between payment and repayment traders, was of an entirely different nature from that alleged on this appeal.
ii) Advocate General Jacobs considered that unjust enrichment did not occur until the member state actually repays the overpaid VAT (see his Opinion in Weber's Wine World at [67]).
iii) to ignore the date of the claim is contrary to Weber's Wine World. Once it is clear that an unjust enrichment defence may be introduced for some claims with retroactive effect, it is inevitable that differences of one kind or another will be created and that they are compatible with EU law.
iv) if Reed were right, the unjust enrichment defence could never be retroactive.
v) a purely prospective or fully retroactive unjust enrichment defence would have created differences between post- 2005 claims for pre-2005 periods and post-2005 claims for other periods.
PRINCIPLE OF FISCAL NEUTRALITY
PRINCIPLE OF EFFECTIVENESS
SHOULD THERE BE A PRELIMINARY REFERENCE TO THE CJEU?
CONCLUSION
Lord Justice Aikens:
Lord Justice Vos:
CHRONOLOGICAL BACKGROUND
First issue: does the EU principle of equal treatment mean that the 2005 amending provision is unlawful?
Second issue: does the EU principle of fiscal neutrality mean that the 2005 amending provision is unlawful?
Third issue: does the EU principle of effectiveness mean that the 2005 amending provision is unlawful?