In Mather v HMRC13, the FTT has decided that the ultimate taxpayer’s EU law right to an effective remedy was not infringed, despite him having no standing to bring his claim in the FTT and it being unlikely that he had any right of action against the taxable person.


The appellant sought clarification from HMRC on the VAT treatment of a phone call he made from the UK to Canada. VAT had been calculated on the full price of the call but the appellant believed that VAT should only have been calculated on 50% of the price, on the basis that   the use and enjoyment of the call must logically be split 50:50 between the UK and Canada. In its reply to the appellant, HMRC explained that it was unable to provide an answer because “HMRC do not normally supply a VAT ruling to a supplier’s customer unless they disagree with the supplier’s original decision…”. Instead, they provided the appellant with some applicable guidance.

The appellant brought an appeal to the FTT under section 83(1)(b), VATA, on the basis that HMRC’s response amounted to an appealable “decision.” HMRC subsequently applied to have his appeal struck out.

FTT’s decision

In deciding against the appellant, the FTT concluded that section 83(1)(b), VATA, requires   HMRC to have first made a decision on the VAT chargeable on the supply of any goods or services in order for an appeal to be made. HMRC’s letter did not amount to an appealable decision since a refusal to issue a decision is not a decision. Consequently, the FTT found it did not have jurisdiction to hear the matter. Nor could it direct HMRC to issue a decision since,  while it had power to “give a direction in relation to the conduct or disposal of proceedings” this did not amount to a power of judicial review. Additionally, the FTT found that the appellant did not have locus standi to bring his appeal since he had no financial interest in its outcome. As his telephone contract was VAT inclusive, he was not entitled to seek to recover any overpaid VAT.

The appellant argued that, were the FTT to find that HMRC’s letter did not constitute a decision, he would be denied an effective remedy under EU law. The FTT concluded that provided the ultimate taxpayer had a civil law right to claim against his supplier and, in default of its supplier, against HMRC, it would have an effective remedy.

In the FTT’s view, the fact that the appellant paid the sums contractually due precluded him from any right of action to recover VAT paid but not due. Although it was accepted that HMRC had charged VAT on the entirety of the cost of the phone call, the FTT was not satisfied it had evidence to demonstrate that the VAT (overpaid or not) had been passed on to the appellant, consequently the FTT decided that the appellant was not entitled to an effective remedy and struck out his case.


It has been clear on the authorities for several years that there is no breach of EU law in circumstances where an ultimate taxpayer has no direct right of action against the state but has a civil law right of action against its suppliers for VAT paid but not due. This decision is interesting in that the FTT has attempted to articulate an evidential burden incumbent on an ultimate taxpayer in a Danfoss14 scenario. The point is untested elsewhere and the approach taken is somewhat restrictive. It is doubtful this will be the final word on the matter and it is likely that the debate will continue in future cases.

To read the decision click here.