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BT Reopens 10 Year Old Case – Demands HMRC Repay Millions

Monday, Mar 30th, 2020 (4:42 pm) - Score 37,738
internet law uk

Broadband ISP and media giant BT appears to have successfully lifted a stay against a decade old restitution suit in the UK High Court for Value Added Tax (VAT) refunds, which originally claimed that HM Revenue & Customs (HMRC) owed them £91.8 million plus interest in overpaid tax.

The situation began in early 2009 after BT wrote to HMRC making a claim for hitherto unclaimed VAT on “bad debt relief” for the period 1st January 1978 to 31st March 1989, which arose because BT had accounted for the standard rate of VAT on its supplies to customers but, in some cases, those customers had failed to pay the operator (either in part or at all) for its supplies.

Naturally BT wanted a refund and complained that, at the time, the law wrongfully said that debtors had to be forced into insolvency before the VAT could be clawed back. HMRC refused to repay the disputed amount and BT ended up appealing before the First-tier Tribunal (Tax Chamber) against HMRC’s decision (see details of the last case here).

Long story short. The case ended up in a sort of legal limbo, until 2017 when HMRC made a legal application to strike out BT’s FTT case. According to The Register, BT then asked the High Court last August 2019 to lift the stay on its case there and Mr Justice Fancourt has now done exactly that.

At this point we note that, before everything was put into limbo, the parties had agreed a figure for the dispute of £65.2m excluding interest. However, were BT ultimately to succeed, that figure would need to be adjusted to take account of the fact that they had claimed bad debt relief in respect of the VAT when accounting for corporation tax.

In the meantime BT’s appeal won’t be able to make any further progress because the court will first need to make a decision on HMRC’s long running strike-out application. BT would certainly benefit from some extra cash right now (the past couple of years have been particularly difficult for them), but we can’t see this one going anywhere too quickly during the current COVID-19 crisis.

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Mark-Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook and .
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Comments
4 Responses
  1. Avatar photo joe says:

    That they have revived a case for taxes from 1978 to 31st March 1989 says everything about the dysfunctional legal system.

  2. Avatar photo P walker says:

    You wanna stop ripping your customers off

  3. Avatar photo G Goldiing says:

    What about the past emplyees like me are we not due refunds also ? If so good.

  4. Avatar photo Tony Farrow says:

    BT a totally useless company with far , far to much monopoly of communications in the UK. Even before this virus started I had terrible issues with Broadband as of today still not fixed. Now work from home a joke. So far last year upto today I have had over 19 engineers out . BT CEO works a three day week
    Just no accountability.
    Where’s my refund as no broadband band for over 4 weeks still no broadband
    BT lie deceive commits so many counts of incorrect billing there’s no annual signed accounts of customer contracts they each year put up customer bills but still no sign off by customers
    Legal or illegal everyone knows it can’t be right
    So government get involved Now
    Hit BT with a huge fine not penny’s but millions
    I stopped my direct debits I bet they call me in two days
    If we all stop direct debits for useless service hit them in the pockets take care people .

Comments are closed

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