Judgment summary
The Tribunal considered, as a preliminary issue, whether it had jurisdiction to hear an appeal brought by Education Training Collective against an HMRC decision refusing to repay VAT directly to it as the purchaser of a supply. The appellant argued that section 80 of the Value Added Tax Act 1994 should be interpreted, by application of the Marleasing principle and the Reemtsma principle preserved by section 28(5) of the Finance Act 2024, so as to allow a purchaser to claim directly from HMRC where recovery from the supplier was impossible or excessively difficult.
The Tribunal held that it was bound by the decision of the Upper Tribunal in Earlsferry Thistle Golf Club v Revenue & Customs, whose ratio precluded the conforming interpretation contended for by the appellant. It therefore found that it had no jurisdiction under section 83(1)(t) VATA to determine the appeal, and struck out the proceedings under rule 8(2)(a) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.
Background
The Appellant, a provider of education and training, appointed a construction company as principal contractor for a project at one of its colleges in June 2022 (para 7). The supplier charged VAT at the standard rate on its supply of construction services and accounted for it to HMRC (para 7).
The Appellant sought HMRC's opinion on the correct VAT treatment of the supply, and HMRC confirmed that, on the information submitted, the supply qualified for zero rating (para 7).
On 2 May 2024 the Appellant wrote to HMRC requesting a refund of the VAT directly, stating that the supplier had agreed to refund the VAT but had not done so and had since entered administration, leaving the Appellant with no prospect of recovering the VAT from the supplier (para 8). The Appellant relied on the Reemtsma principle, under which a purchaser must be able to claim reimbursement directly from the tax authorities where recovery from the supplier is impossible or excessively difficult (para 8).
HMRC refused the request on 24 October 2024, stating that the right to bring a claim based on EU law principles had ended on Brexit (para 9). Further submissions by the Appellant were rejected on 11 February 2025 (para 10). Following a request for statutory review, HMRC issued a review conclusion letter on 5 September 2025 finding that the decision under review was not appealable, because section 80 VATA permits claims only by the supplier and not the purchaser (para 12). The Appellant commenced the Tribunal appeal on 3 October 2025 (para 13), and the Tribunal held a hearing on jurisdiction on 10 September 2026 (para 14).
Core dispute
It was common ground between the parties that the wording of section 80 VATA allows claims to HMRC for recovery of unduly paid VAT only by the supplier, not the purchaser, and that this section is the exclusive means by which HMRC is liable to repay unduly paid VAT (para 15). It was also common ground that, by virtue of section 28(5) FA 2024, the Marleasing principle continues to apply to the interpretation of section 80 VATA so as to give effect, as far as possible, to the Reemtsma principle (para 15).
The parties agreed that if section 80 VATA could be given the conforming interpretation proposed by the Appellant, the Appellant's request would be treated as a claim under that section, and the Tribunal would have jurisdiction under section 83(1)(t) VATA (para 18). Conversely, if no such conforming interpretation were possible, the Tribunal would have no jurisdiction and the appeal would have to be struck out under rule 8(2)(a) of the Rules (para 19).
The sole issue dividing the parties was therefore whether, pursuant to the Marleasing principle, section 80 VATA could be interpreted to permit a claim by a purchaser in Reemtsma circumstances (para 20). The Appellant proposed two alternative conforming interpretations of section 80(1) VATA to this effect (para 17). HMRC argued that this exceeded the limits of the Marleasing principle and that the matter was already settled by the Upper Tribunal's decision in Earlsferry Thistle Golf Club v Revenue & Customs (paras 37 to 39).
Court findings
The Tribunal found that it was bound by the decision of the Upper Tribunal in Earlsferry Thistle Golf Club v Revenue & Customs, whose ratio decidendi precludes the conforming interpretation contended for by the Appellant (para 42).
The Tribunal held that the substance of the ratio in Earlsferry UT is that, where a purchaser has paid undue VAT and cannot without excessive difficulty recover it from the supplier, the purchaser's remedy is an ordinary action for payment against HMRC in the courts, and that this satisfies the Reemtsma principle without requiring section 80 VATA (or section 83 VATA) to be interpreted as conferring a right to claim from HMRC with a right of appeal to the Tribunal (para 42(4)).
The Tribunal rejected the Appellant's arguments that Earlsferry UT merely assumed the relevant point of law, that it had been undermined by the Supreme Court's decision in Revenue and Customs v The Investment Trust Companies, or that it was decided per incuriam for failing to consider Marleasing authorities (para 42(5)). It also rejected the submission that the present case was distinguishable from Earlsferry UT on the facts, including differences in the statutory provision relied upon for jurisdiction and the supplier's solvency (para 42(6)).
The Tribunal concluded that the doctrine of precedent required it to follow Earlsferry UT, and declined to express any view on whether that decision was correctly decided or on whether a Reemtsma claim could currently be brought by a purchaser against HMRC in civil proceedings, noting that such questions could only be raised before the Upper Tribunal or a higher court (para 43).
Outcome
The Tribunal found that it had no jurisdiction to determine the appeal under section 83(1)(t) VATA, because the Appellant's request to HMRC was not a valid claim under section 80 VATA (para 44).
The appeal was struck out pursuant to rule 8(2)(a) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.
Major issues / areas of contention
- Whether the Tribunal has jurisdiction under section 83(1)(t) VATA to hear an appeal against an HMRC decision refusing a purchaser's direct claim for repayment of unduly paid VAT.
- Whether section 80 VATA can be given a conforming interpretation, pursuant to the Marleasing principle, so as to permit a claim by the purchaser of a supply where recovery from the supplier is impossible or excessively difficult (the Reemtsma principle).
- The effect of section 28(5) of the Finance Act 2024 in preserving retained general principles of EU law for the interpretation of VAT and excise law.
- Whether the First-tier Tribunal is bound by the Upper Tribunal's decision in Earlsferry Thistle Golf Club v Revenue & Customs.
- Whether Earlsferry UT was decided per incuriam or has been undermined by later authority, including Revenue and Customs v The Investment Trust Companies.
- Whether the present case is factually distinguishable from Earlsferry UT, including as to the insolvency of the supplier and the statutory basis of jurisdiction invoked.