Indirect effects: have bad debts ended non-statutory remedies in VAT?

The BDR saga started with Goldsmiths (Jewellers) Ltd (Case C-330/95). In BT Plc v HMRC [2021] EWHC 1095 (BT), the High Court may have sounded the final bell.

The history of BDR litigation is tortuous. A review would generate a substantial carbon footprint. Nevertheless, BT has wider implications for common law tax claims, and possibly HMRC’s unjust enrichment defence.

Background

BT deals with a claim for restitution and damages arising out historic defects in the UK BDR regime. It covered two periods:

• 1 January 1978 to 30 September 1978, when the UK had no BDR scheme; and
• 1 October 1978 to 31 March 1989, when the UK had a non-compliant BDR scheme (‘the old scheme’).

FA 1997 s 39(5) barred access to the old scheme after a long and confusing transition to the new scheme. The Court of Appeal has already found that s 39(5) was lawful, so BT’s only option was a common law claim. BT sought to avoid s 39(5) by bringing a restitution and damages claim.