C P G Logistics Limited v Commissioners for Her Majesty's Revenue and Customs
Decision date: 23 July 2010
Neutral citation: [2010] UKFTT 345 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
CPG Logistics appealed HMRC's refusal of VAT bad debt relief after it entered a Compromise Agreement with Ty Europe in administration, receiving £600,000 cash and a conveyor valued at £400,000 against trading arrears and an unamortised IAA balance. The Tribunal held the Compromise Agreement was a global settlement of all claims, treated the total receipt as £1,000,000 and apportioned that sum pro rata between the taxable trading arrears and the unamortised IAA balance, allowing CPG's bad debt claim and awarding costs to CPG.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
Where a compromise payment is silent as to allocation and settles multiple linked claims (including claims not yet formally crystallised), the Tribunal may apportion the total consideration pro rata between the competing claims for the purposes of assessing VAT bad debt relief; bad debt relief compares the original written-off consideration with the consideration actually received.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The Tribunal observed that forbearance to sue in this case had no value as consideration that could be treated as substitute consideration for VAT bad debt purposes, and that the pro rata approach in Regulation 170 attribution rules may be a persuasive guide to allocation where multiple claims are compromised, even if not strictly applicable here.