Browne v Revenue Commissioners (Approved)

Factual and Procedural Background

The Appellant was a fisherman engaged in the mackerel fishing business until 2010, holding a tradable asset known as "capacity" related to tonnage and kilowattage. In 2015, a bank holding a charge over this capacity appointed a Receiver to sell it. The Receiver sold the capacity for €817,000 but did not charge VAT on the sale, considering it not a taxable supply. The Receiver incurred costs for professional services, including solicitors and consultants, paying €27,472 in VAT, which was invoiced to the Appellant. The Appellant subsequently re-registered for VAT and sought a repayment of this VAT via a VAT 3 return.

The Respondent conducted a compliance check and refused the repayment, reasoning that the VAT invoices were addressed to the Receiver, the accountable person at the time. The Appellant appealed to the Tax Appeals Commissioner (TAC), who focused on whether the Appellant was entitled to repayment of the VAT paid on professional services related to the sale of the capacity. The TAC upheld the Respondent's refusal, concluding that no refund was due either because the sale was untaxed or because the Appellant was not registered for VAT during the relevant period.

The Appellant sought to appeal the TAC's decision, raising various procedural complaints. The TAC stated a case to the High Court under section 949AQ of the Taxes Consolidation Act 1997, posing several questions for determination. The Court allowed amendment of one question and permitted additional submissions before concluding the hearing in April 2024.

Legal Issues Presented

1. Whether the Commissioner erred in finding that no deduction of VAT paid on professional services could be allowed if the sale of the capacity was a taxable supply but untaxed.
2. Whether the Commissioner erred in interpreting section 59 of the VATCA 2010 regarding the requirement for the Appellant to have a taxable supply during the periods of the invoices to claim a deduction.
3. Whether the Commissioner erred in finding the Appellant was not registered for VAT during the relevant invoice periods, affecting the VAT repayment claim.
4. Whether the Commissioner erred in applying VATCA 2010 and if this amounted to discrimination.
5. Whether the Commissioner lacked jurisdiction to consider constitutional, procedural fairness, or human rights challenges to the VATCA 2010 application.
6. Whether the Commissioner erred in finding the Appellant failed to prove taxable economic activity during the relevant period.
7. Whether the Commissioner erred in failing to recognize ongoing economic taxable activity related to vessel maintenance and associated costs.
8. Whether the Commissioner erred in allowing the Respondent to alter submissions following the initial hearing and the Appellant’s non-attendance at a rescheduled hearing.
9. Whether the Commissioner erred in adjudicating despite allegations of perjury and technical issues affecting the Respondent’s evidence.
10. Whether the Commissioner erred in adjudicating despite alleged conflicts of interest related to the Commissioner’s prior employment not being raised until after the Determination.

Arguments of the Parties

Appellant's Arguments

• Fishermen are not required to register for VAT but may elect to do so; thus, the Receiver should be treated as the Appellant’s agent for incurring costs.
• Sales of fish by fishermen attract a zero rate VAT, allowing fishermen to claim full refunds of VAT on business expenses despite zero-rated sales.
• The VAT paid by the Receiver on professional services related to the sale of capacity should similarly be refundable to the Appellant.
• The Appellant should be considered still "in business" due to ongoing costs such as harbour dues and boat maintenance, constituting taxable economic activity.
• Procedural complaints, including allegations of perjury and bias, were raised but not substantially pursued at the hearing.

Respondent's Arguments

• The TAC's decision was legally correct based on section 59 of the VATCA 2010, which entitles only accountable persons to claim VAT refunds.
• An accountable person is defined as one who carries on a business and engages in taxable supplies; the Appellant was not carrying on a business or making taxable supplies during the relevant period.
• Zero-rated supplies remain taxable supplies, but the Appellant was not engaged in any such supply as he had ceased fishing in 2010.
• The Appellant was not registered for VAT during the relevant periods and thus was not an accountable person eligible to claim VAT refunds under the statutory scheme.
• Whether the Receiver was the Appellant’s agent or whether the sale of capacity was a taxable supply is irrelevant because no VAT was charged on the sale and no taxable supply existed for refund purposes.
• Claims regarding procedural irregularities and alleged perjury fall outside the jurisdiction of the TAC and are matters for judicial review, which the Appellant did not substantively pursue.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court analyzed the legal framework under the VATCA 2010, focusing on section 59 which governs entitlement to VAT refunds. The entitlement applies only to "accountable persons" who carry on taxable supplies during the relevant taxable periods. The Appellant ceased fishing in 2010 and was not registered for VAT at the time the VAT invoices were issued. The Court found that the Appellant was not carrying on a business or making taxable supplies during the relevant period, thus was not an accountable person eligible for VAT deductions or refunds.

The Court noted that zero-rated supplies remain taxable supplies, but since the Appellant was not engaged in any supply, this was irrelevant. The VAT paid by the Receiver could not be claimed by the Appellant because no VAT was charged on the sale of capacity, and the Appellant was not registered for VAT during the relevant periods.

Procedural and jurisdictional issues raised by the Appellant, including allegations of perjury, bias, and procedural irregularities, were outside the scope of the TAC’s jurisdiction and more appropriately addressed by judicial review proceedings. The Court confirmed the TAC’s role is limited to matters relevant to the statutory charge to tax.

The burden of proof rested with the Appellant to demonstrate taxable economic activity during the relevant period, which was not established. Costs such as vessel maintenance and harbour dues did not constitute taxable economic activity for VAT deduction purposes.

Accordingly, the Court concluded that the TAC did not err in its findings or legal conclusions.

Holding and Implications

The Court’s decision is that the Tax Appeals Commissioner did not err in refusing the Appellant’s claim for repayment of VAT paid on professional services related to the sale of the fishing capacity.

The direct effect is that the Appellant is not entitled to a VAT refund for the €27,472 paid by the Receiver. No broader legal precedent was established beyond affirming the correct application of VATCA 2010 provisions and the limits of the TAC’s jurisdiction. Procedural complaints and allegations of bias or perjury were held to be outside the remit of the TAC and should be pursued, if at all, by separate judicial review proceedings.