Case: Late VAT appeal failed

[2019] BVC 510

[2019] UKUT 0140 (TCC)

Upper Tribunal (Tax and Chancery Chamber).

Judge Jonathan Richards, Judge Andrew Scott.

Decision released on 2 May 2019.

Value added tax – (1) Whether company had appealed against appealable decision – No – (2) Whether extension of time should be granted to permit a late appeal against a previous appealable decision – No – Company’s appeal dismissed.

Buckingham Bingo Ltd v R & C Commrs


There was a dispute between BBL and HMRC regarding the VAT treatment of its bingo business. HMRC changed their policy and required BBL to account for VAT using a session basis, instead of a game-by-game basis. BBL concluded that, even though calculating VAT on a session basis did not alter the total that it received from its customers, it cut the proportion of those sums that constituted participation fees, which were subject to VAT. Thus, BBL reclaimed the output tax that it argued had been overpaid.

BBL issued an “internal credit note” to try to adjust the consideration for bingo sessions from 1 January 1997 to 30 September 2004. BBL argued that the internal credit note cut the amount of (taxable) participation fees that it received in that period under Value Added Tax Regulations 1995 (SI 1995/2518), reg. 38 by altering the proportion of its total receipts that was VATable. HMRC denied that it had that effect. BBL reflected what it regarded as a cut in taxable consideration in its VAT return for the 12/11 period, which it filed on 21 January 2012 and which included a claim for a VAT repayment of £1,616,384. On 3 July 2012, HMRC issued a decision letter (the 2012 Letter) rejecting the claim for the VAT repayment. It was agreed that this was an appealable decision.

On 14 September 2012, BBL’s advisors wrote to HMRC stating that, while they disagreed with the decision in the 2012 Letter, BBL had decided not to challenge that decision.

On 5 January 2017, HMRC wrote the “2017 Letter” stating that (1) the 2012 Letter contained their decision on the reg. 38 adjustment and (2) it was not a fresh decision, rather it affirmed the decision that had been made on 3 July 2012.

BBL’s appeal before the FTT relied on three arguments:

(1)there was no time limit within which a reg. 38 adjustment must be made;

(2)HMRC had breached their continuous duty to “process” the 12/11 VAT return that contained the reg. 38 adjustment; and

(3)the 2017 Letter contained an “appealable decision” (i.e. refusing to process the 12/11 return), against which BBL had made an in-time appeal to the FTT.

The FTT had rejected all three arguments ([2018] TC 06487).BBL appealed to the UT against the FTT’s decision on the following grounds:

(1)the FTT had made an error in concluding that there is a time limit for making an adjustment under reg. 38 when there is no such limit (Ground 1) and this error had led the FTT to conclude incorrectly that the 2017 Letter was not an appealable decision which, in turn, resulted in the FTT incorrectly striking out the appeal;

(2)the FTT had failed to give effect to the overriding objective in rule 2 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273) (the FTT Rules) when deciding whether to exercise its discretion to permit BBL to amend its grounds of appeal, so as to constitute a (late) appeal against the 2012 Decision; and

(3)the FTT should have used the checklist of matters in the original rule 3.9 of the Civil Procedure Rules (CPR). BBL had made written submissions using that checklist, which the FTT had failed to take into account.

The UT held that Grounds 2 and 3 disclosed no error of law in the FTT’s decision. Also, the UT was not satisfied that there was any error of law of the kind set out in Ground 1, as the FTT’s conclusions on time limits applicable to reg. 38 did not form part of its core reasoning. Even if the FTT had reached an incorrect conclusion on time limits for reg. 38, the FTT’s decision would inevitably have been the same, because BBL’s appeal had to be struck out, since it did not concern an appealable decision.

Thus, BBL’s appeal was dismissed.


The VAT treatment of bingo is complex. The fee, which is paid by a player for a session, is divided into two components for each game. The first is the participation fee, which is attributed to the supply of the game to the player and which is subject to VAT. The second is the stake money, which contributes to the cash paid to the winner and which is not subject to VAT. The value of each component varies from session to session according to the number of players. Also, it varies because the promoter may decide on the prize money only at the start of a session, once he has reviewed the ticket sales, although that the amount is usually similar to that selected for the same session during the previous week. The prize money may not be directly related to the number of participants. There may be a guaranteed minimum for some, or all, games. Thus, if too few customers play in one game, the promoter may have to top up the prize money from the general pool of participation fees in the session. The VAT payable varies depending on whether it is assessed on a game-by-game, or session, basis. Due to this complexity, it is not surprising that this dispute has been spread over so many years. After being advised by the accountants KPMG, BBL had had the chance to appeal some years previously, but failed to do so.

For commentary on late appeals, see In-Depth at ¶61-505.

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