Advance copies of the papers for the conference will be published on the new papers page as they become available, and delegates are encouraged to read them in advance.
The page is password-protected; and those who have registered for the conference will be supplied with a password. If you are interested in attending, please register before Thursday 24 June 2010 at 5:00pm.
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Since 1923, Littlewoods ran a mail- and phone-order catalogue sales business; and it is now the brand name of a successful internet retail sales company. It is likely soon also to be the shorthand name for principles governing the restitution of overpaid VAT.
In Littlewoods Retail Ltd HM Revenue and Customs [2010] EWHC 1071 (Ch) (19 May 2010), 15 claimants within the Littlewoods group of companies claimed compound interest amounting more than £1 billion on overpayments of VAT between 1973 and 2004. Subject to the outcome of a reference to the Court of Justice of the European Union (CJEU), their claim failed. The background to the claim is the interplay between two important principles. First, in Case 199/82 Amministrazione delle Finanze dello Stato v San Giorgio [1983] ECR 3595, [1983] EUECJ R-199/82 (9 November 1983) the ECJ held that where a member state has received taxes and duties in breach of EU law, it must repay them. Second, in Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70, the House of Lords that that a taxpayer was entitled to restitution of overpaid tax as of right. Littlewoods is simply the most recent case grappling with the inter-relationship between these two principles.
In Deutsche Morgan Grenfell Group v Inland Revenue Commissioners [2006] UKHL 49, [2007] 1 AC 558 (25 October 2006) the House of Lords held that a taxpayer who mistakenly overpaid tax was entitled to restitution at common law on the grounds of mistake, and that the claim was not excluded by section 33 of the Taxes Management Act, 1970. In Sempra Metals v Inland Revenue Commissioners [2007] UKHL 34, [2008] 1 AC 561 (18 July 2007) the House of Lords held that the Court could award compound interest for such claims. And in Test Claimants In the Franked Investment Group Litigation v Commissioners of the Inland Revenue [2010] EWCA Civ 103 (23 February 2010) and FJ Chalke Ltd v Revenue & Customs [2010] EWCA Civ 313 (25 March 2010) the Court of Appeal considered the impact of the San Giorgio remedial obligation on domestic restitution claims and defences, especially the defence of change of position.
In Littlewoods, Vos J held that the claimants’ claims based upon Woolwich and mistake were, as a matter of English law, excluded by sections 78 and 80 of the Value Added Tax Act 1994, but he referred to the CJEU the question of whether that exclusion is contrary to EU law. Moreover, he held that if the CJEU found that it is, then he would hold that sections 78 and 80 of VATA 1994 could not properly be construed so as to conform with EU law and must be dis-applied to allow the claimants to make claims based upon the Woolwich principle. In his view, such claims would most naturally and comprehensively give effect to the claimants’ San Giorgio right to the use value of the repayments.
Treading paths illuminated by the various judgments in FII and Chalke, Vos J held that, as a matter of principle, the defence of a change of position is available in English law to a mistake-based restitutionary claim, but not to a Woolwich-based claim. Since only Woolwich claims were in play by this point, the absence of the defence to such claims was a significant holding of principle. Nevertheless, he went on to hold that, even if it were available, the defence of change of position would fail on the facts because the claimants’ VAT payments were not material to government spending decisions in each fiscal year, so that the Commissioners failed to prove that they had increased their spending in any way on the basis of the expectation or the happening of the overpayment. He also provisionally held that, if it had been made out on the facts, it should be given effect as a matter of EU law in answer to San Giorgio claims for the use value of overpayments of tax, but he indicated that he would also refer this matter to the CJEU.
This is a very important decision on the nature of the Woolwich principle itself, which will be considered in the contribution of Dr Charlie Webb, and of the defence of change of position, which will be considered in the contribution of Prof Elise Bant. Much of the discussion will be purchased from the Littlewoods catalogue!
In Parabola Investments Ltd v Browallia Cal Ltd [2010] EWCA Civ 486 (05 May 2010), Toulson LJ for the Court of Appeal had to consider a submission that Lord Nicholls’ speech in Sempra Metals Limited v Inland Revenue Commissioners [2007] UKHL 34, [2008] 1 AC 561 (18 July 2007) is authority for the proposition that loss of the use of money can sound in damages, notwithstanding the decision of Lord Tenterden CJ in Page v Newman (1829) 9 B & C 378 a court had no power at common law to award interest in the absence of a contractual agreement to pay interest. Parobla concerned claim in tort for damages in respect of a loss of investment opportunity by virtue of fraud, but the claimants sought to rely on Sempra to enlarge their damages claim. Toulson LJ held that:
Over the years the effect of this unsatisfactory judgment was whittled down in various ways, but it survived in an attenuated form until the ghost of Lord Tenterden was laid to rest in Sempra Metals Limited v Inland Revenue Commissioners. In that case the House of Lords examined the law of contract and the law of restitution in considering a question whether the claimant was entitled to interest on repayment of overpaid tax. … It is true that the House of Lords was concerned with the law of contract and restitution. But it is vain not to recognise the wide general principle stated by Lord Nicholls at 74 and to suggest that it does not apply to a claim in tort for damages for loss of use of money which would satisfy the rules of causation, etc.
This is an interesting extension of Sempra, and whether the prinicple of that case is sound will be considered by Dr Tariq Baloch at the conference.
Today is the twenty-first birthday of the decision of the Supreme Court of Canada in Air Canada v British Columbia [1989] 1 SCR 1161, 1989 CanLII 95 (SCC) (04 May 1989). The Court held that the Gasoline Tax Act, as it existed in 1974, was constitutionally invalid, but that amendments in 1976 and 1981 were valid. The plaintiffs therefore claimed that they were entitled to recover the taxes paid pursuant to the invalid statutory provisions on the grounds of mistake, and the defendants sought to defend the claim on the basis that the relevant mistakes were mistakes of law which did not justify restitution. Discussing Hydro Electric Commission of Nepean v Ontario Hydro [1982] 1 SCR 347, 1982 CanLII 42 (SCC) (02 March 1982), the Court rejected the “mistake of law” bar as having been constructed on inadequate foundations, lacking in clarity and resulting in undue harshness. Moreover, the Court held that the development of the law of restitution for unjust enrichment had rendered otiose the distinction between mistakes of fact and mistakes of law. This general issue will be discussed at the conference by Dr Duncan Sheehan.
However, the Court held that, since the plaintiffs had passed on the burden of the overpaid tax to their passengers, they had suffered no loss, so that the enrichment of the defendant was therefore not at the plaintiffs’ expense. This conclusion was buttressed by policy reasons. The Court emphasised that, while the principles of unjust enrichment can operate against a government to ground restitutionary recovery, nevertheless where the effect of an unconstitutional or ultra vires statute is in issue, special considerations operate to take the case out of the normal restitutionary framework and require a rule responding to the underlying policy concerns specific to this problem. This rule was justified on the basis of the policy of the security of the public purse and the prevention of fiscal chaos. To protect the treasury and to finance the operations of government, if the tax were refunded, modern government would be driven to the inefficient course of reimposing it, either on the same or on a new generation of taxpayers. Moreover, the tax here was of broad general application and had been imposed for decades, and restitution of the proceeds of such a long-standing taxation measure would have resulted in widespread disruption of public finances. The place of this analysis in the general context of defences will be discussed at the conference by James Lee.
The issues in Air Canada were revisited in Kingstreet Investments Ltd v New Brunswick [2007] 1 SCR 3, 2007 SCC 1 (CanLII) (11 January 2007) and Marcotte v Longueuil[2009] 3 SCR 65 (CanLII), 2009 SCC 43 (08 October 2009), and Prof Robert Chambers will discuss all of these cases in his paper at the conference.
In much the same way that April 15 is US tax day, today, April 30, is tax day in Canada (although tax freedom day in Canada won’t come around until June 6, or thereabouts). On Slaw (one of my favourite blogs) Ted Tjaden writes:
In the Spring, a young man’s thoughts turn to . . . taxes
Yes, it is that time of year in Canada. On or before April 30, 2010,
to be specific, for most people.
As a known procrastinator, I vow to file on time this year. …
Staying in Canada, April 30 is also the day on which the controversial Meech Lake Accord was agreed in 1987. In many European countries, it is Walpurgis Night, a springtime Hallowe’en that has inspired much horror literature. For many Canadians, today will be their own personal horror story! But, as Agnes Caruso points out in a later Slaw post, after tomorrow, the Canadian Tax Foundation (CTC) TaxFind service will be available online. It might even serve to make Canadians taxpayers’ stories less horrific!
On this day, 15 April, millions of US citizens will complete their annual tax returns: for the IRS, today is filing day, colloquially known as tax day. It is also the day on which, in 1755, the first edition of Dr Samuel Johnson’s Dictionary of the English Language was published. Many of the US taxpayers filing their taxes today would probably apply to their situations the sentiments of one of his better know definitions:
Excise: a hateful tax levied upon commodities and adjudged not by the
common judges of property but wretches hired by those to whom excise is paid.
The Commissioners of Excise sought the advice of the Attorney General as to whether the definition was defamatory and invited Johnson to amend it. Characteristically, he declined, and the definition appeared in subsequent editions of the Dictionary. However, the Commissioners did not pursue a defamation claim against him, but there is evidence to suggest that they did keep watching to see if he ever amended the definition.
I have added a list of links to the right task bar under the above heading. If you think that another link ought to be added, please let me know.
Thanks.
In the US, the Tax Foundation tells us that today, 9 April 2010, is tax freedom day this year – according to wikipedia, this means that it is the first day of the year in which the US has theoretically earned enough income to fund its annual tax burden.
The same article says that, according to the Adam Smith Institute, the equivalent date in the UK last year was 14 May, and they are still calculating the relevant date for 2010.
I’d hate to think what the equivalent date in Ireland is this year (back before the recession, in 2008, it was 30 March; but it will be much much later this year).
From one of my favourite blogs, Slaw.ca:
… I’ve never seen a discussion of dispositions in tax law like these next two images
and the section dealing with raising additional taxes for local government packs a certain punch
…
