VRM9200 - Verifying a claim: case law support

Entitlement to satisfy ourselves on accuracy of claim and refuse to repay

We are entitled, when dealing with claims, to satisfy ourselves that the amount claimed is accurate and we are entitled to refuse to make a payment against the claim until we are so satisfied (see the judgment of the High Court in R (on the application of UK Tradecorp Ltd) –v- CCE [2004] EWHC 2515 (Admin); [2005] STC 138; [2005] BVC 128). This case related to a claim for input tax but the logic applies equally to any claim made against HMRC.

Burden of proof

The evidential burden placed on the claimant has been addressed in a number of recent decisions of the First-tier Tribunal.

In WMG Acquisition Co Ltd –v- CRC [2013] UKFTT 215 (TC) Judge Demack said:

‘29. The burden of proving that the two companies have not recovered the input tax on employee’s travel and subsistence expenses falls on the taxpayer in appeals such as the present one. And whilst only the civil standard proof is involved, the tribunal cannot be expected to make decisions simply on the basis that a claim covers a period long ago for which a taxpayer cannot be expected to hold any records, so that its claims should be accepted without question and without evidence. It is simply not good enough for the two companies to say to the Commissioners, “You accepted our claims for input tax recovery for the period 1999 on 2002 on the basis of our records for that period. We say that we made no input tax recovery for earlier periods for which we hold no records whatsoever, but for which we say we operated in exactly the same way and made no input tax recovery claims. You must accept our claims and repay the input tax concerned.”’

This case clearly concerned an input tax claim but the logic is to be applied equally to any tax claims.

In his judgment in The claimants listed in the group register of the Loss Relief Group Litigation Order –v- CRC, [2013] EWHC 205 (Ch) Henderson J made the following observation on the claimant’s burden of proof:

‘52. I now come to the second limb of Mr Aaronson’s argument. The real problem here, as it seems to me, is the unwillingness of the claimants to provide detailed answers to the Revenue’s enquiries relating to the no possibilities test, which are of course predicated upon the law as stated by the Court of Appeal in M & S (CA) I and M & S (CA) II. To some extent, I can sympathise with this reluctance. The enquiries involved are no doubt comprehensive and often difficult to deal with, involving events which took place many years ago and in different jurisdictions. But it is the claimants who have chosen to bring their claims, involving very large sums of money, and the evidential burden lies on them to demonstrate that the no possibilities test is satisfied. The Revenue cannot reasonably be blamed for making searching enquiries when so much is at stake, and in basing those enquiries on the law as stated by the Court of Appeal, … . The process may well be inconvenient, time-consuming and expensive for the claimants; but … it is in my view a burden which they have brought upon themselves, and about which they cannot legitimately complain.’

See also the decisions in KDM International Ltd –v- CRC [2013] UKFTT 315 (TC), Perenco Holdings –v- CRC [2015] UKFTT 65 (TC) and Lothian NHS Health Board –v- CRC [2015] UKUT 264 (TCC).

The presumption against estimation of claims is a symptom of the burden and standard of proof which is placed on the claimant to state. See VRM9300 for guidance about evidence in historic claims.