© 2024 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
Procedure.Tax
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P1: Nature of Tribunal's decision
Decision making process
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“In this case we informed the parties at the end of the hearing that we would reserve our decision, and we gave no indication what our decision would be, particularly as we invited the parties to make further submissions on some points. The members of the Tribunal discussed the case after the hearing and came to general agreement on some matters, pending the further submissions. As is usual in reserved cases Judge Thomas prepared a first draft of the decision, after having received and considered the further submissions, and sent it to Mrs Webb for her comments. The final version prepared by Judge Thomas, after incorporating those and subsequent comments on successive drafts, was then sent to the Tribunal staff in Birmingham for release. That final version both contained our joint decision and gave the reasons for it, but in the usual manner named only Judge Thomas as giving the decision and reasons.
I have gone into more detail than usual about the process for two reasons. One is to show that even if the proceedings were still alive up to the moment we issued the decision, there was no irregularity in the procedure such as was alleged in Virdi. No one who was not entitled to intervened in the decision and the decision took the post-hearing submissions into account. The second is to make it clear that if there are irregularities in the proceedings (which is of course denied) Mrs Webb had, contrary to Dr Milton’s suggestions in §12(1), (4) and (5), nothing to do with them. She did not draft paragraph 95 or suggest the words in it or use those words: I did all those things.” (Couldwell Concrete Flooring Ltd v. HMRC [2017] UKFTT 85 (TC), §§22…23, Judge Thomas).
Decision notice
“(2) The Tribunal must provide to each party within 28 days after making a decision (other than a decision under Part 4) which finally disposes of all issues in proceedings or of a preliminary issue dealt with following a direction under rule 5(3)(e), or as soon as practicable thereafter, a decision notice which--
(a) states the Tribunal's decision; and
(b) notifies the party of any right of appeal against the decision and the time within which, and the manner in which, the right of appeal may be exercised.” (FTT Rules, r.35(2))
Decisions which finally disposes of all issues
Oral decisions in FTT
“(1) The Tribunal may give a decision orally at a hearing.” (FTT Rules, r.35(1)).
Oral decisions in UT
“Because this is not an appeal which (in the words of Rule 40(2) of the Tribunal Procedures, Upper Tribunal Rules 2008/2698) finally disposes of all issues in the proceedings or of the preliminary issues, it is open to me to give a decision orally at a hearing rather than give written reasons and Mr Mandalla has confirmed that his clients are content for me to give an oral decision this afternoon rather than wait for a written decision.” (HMRC v. IA Associates Ltd [2013] EWHC 4382 (Ch), §4, Nugee J)
Conditional decision
“HMRC’s representative accepted that if it was demonstrated to HMRC after the hearing that the supplier had indeed been registered and had included the supplies and the acknowledged cash receipts in its VAT returns, then no point would be taken against the Appellant in relation to the failure of the second and third invoices to reveal that supplier’s VAT number…Subject therefore to the demonstration of those points just referred to, and mentioned in paragraph 8 above, to the satisfaction of HMRC, this Appeal is allowed.” (Savva v. HMRC [2013] UKFTT 692 (TC), §§8…12).
Ex tempore decision binding as to result but not reasons (if written reasons provided)
"[5] The FTT at the conclusion of its hearing gave an ex tempore decision. Mr Birkbeck, who appeared for Mr Breen before the FTT and before us, applied for his contemporaneous manuscript note of the ex tempore decision to be admitted. Mr Birkbeck submitted that even if the Reinstatement Decision contained an error of law as contended by HMRC, the manuscript note would show that the error was not a material reason for the FTT’s decision.
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[7]...In our view, an ex tempore judgment or decision is binding in terms of the result but not as regards the detailed reasons. It is the final fully reasoned written decision of the FTT that is the appealable decision and will be a decision prepared by the FTT having had the opportunity to reflect on the evidence and the law relevant to the issue in question. Moreover, there will be cases in which it is necessary or appropriate for the FTT to give an ex tempore decision (e.g. cases of urgency) and it is undesirable that the FTT should be deterred from doing so lest what is said by the FTT in the course of a less than complete ex tempore decision should be used to construe or call into question its more carefully reasoned written decision." (HMRC v. Breen [2023] UKUT 252 (TCC), Judges Thomas Scott and Brannan)
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Publication
- Decision in public domain once handed down, even if not published
"[19] In Moneybrain (Privacy Application) v the Financial Conduct Authority [2022] UKUT 308 (TCC), I considered the relevant case law and decided that once a judgment has been handed down to the parties it enters the public domain, whether or not the judgment has been published on a judicial website or elsewhere. Thus, the Decision is already in the public domain because it had been issued to the parties." (Lillicrap v. HMRC [2023] UKFTT 72 (TC), Judge Redston)
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- Interlocutory decisions published on request
"[2] HMRC seeks to rely upon the interlocutory decision in response to an appellant’s application in an unrelated First-tier Tribunal (Tax Chamber) matter to which the claimants (in Refinitiv and others ) are not a party. HMRC submit the interlocutory decision gives “guidance on the duty of candour and how the duty to disclose documents is circumscribed by the nature of the case”. The claimants were given the opportunity to respond to HMRC’s application.
[3] In accordance with the open justice principle and noting there were no objections to the application within the deadline specified, I see no reason not to grant the publication application. The fact it is considered that the decision is one that a party wishes to rely on in other proceedings, suggests to me that my original view on publication (that the decision would only be of interest to the parties in the case as it concerned that particular circumstances of their case, and where a full decision in the substantive proceedings would in due course be published) was incorrect.
[4] The interlocutory decision is published as appendix to this decision so that any person who wishes to refer or rely on it in proceedings is able to do so." (R (oao Refinitiv Ltd v. HMRC [2023] UKUT 187 (TCC), Judge Raghavan)
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"[31] The principle of open justice requires that judgments be accessible to the public. The only reason for not publishing routine interlocutory judgments is that they are of insufficient interest to the wider public.
[32] When I decided not to publish the Decision it was on the basis that it fell on that side of the line. It is now clear from Mr Messore’s application that this was incorrect. I therefore attach the Decision as an Appendix to this judgment.
[33] That conclusion is reinforced by the fact that publication will ensure that both HMRC and taxpayers can, should they wish to do so, refer to or rely on the Decision in future court or Tribunal hearings." (Lillicrap v. HMRC [2023] UKFTT 72 (TC), Judge Redston)
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- Encouragement to publish decision in areas with limited examples of discretion being exercised
"[145] Neither the Unless Order nor the Reinstatement Decision were published. Whilst we understand the desire to avoid publishing routine decisions of the FTT which establish no new principle or which may be of little wider interest, we consider that both the Unless Order and the Reinstatement Decision merited publication. The Unless Decision contains a detailed and instructive discussion of the exercise of the discretion of the FTT whether to strike out an appeal in circumstances where an “unless” order had been breached, balancing the various competing factors to be taken into account. Although we have held that the Reinstatement Decision contained errors, we think that that decision should also have been published because it contains an analysis of the balancing factors to be taken into account when approaching a decision whether to reinstate an appeal which had been struck out. We therefore encourage FTT judges to consider the publication of decisions in this area (strike- out and reinstatement applications) in order that other judges and the public can understand the decision-making process involved." (HMRC v. Breen [2023] UKUT 252 (TCC), Judges Thomas Scott and Brannan)
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Quantum not a separate issue unless agreed or Tribunal decides
"[49] HMRC referred to ING Intermediate Holdings Ltd v HMRC [2014] UKFTT 938 (TC). In that case there was a dispute, regarding whether the appellant had to prove its claim was justified not only in principle but in amount. The FTT's views on this turned out to be obiter because it decided the appellant had lost in principle. The FTT (Judge Mosedale) noted variously the appellant's argument that its hearing time estimate would have been longer if it was thought quantum was in issue, that HMRC had not followed up on the appellant's adviser telling HMRC that invoices were not available for inspection, and that the invoices were not in the bundles ([188]). Against that it noted the appellant had not provided any evidence of quantum to HMRC, or anything else which amounted to explicit or implicit acceptance by HMRC that the tribunal would only decide a point of principle ([190]). Judge Mosedale continued:
"I have the power to make an (effectively belated) direction that the hearing is only to determine the matter in principle…If quantum had been relevant, without any evidence that HMRC explicitly or implicitly accepted that this hearing, which was to determine the validity of the appellant's voluntary disclosures, was only on a point of principle, I would have been inclined to dismiss the appeal on the basis that the appellant had failed to prove the quantum of its claim or to agree with HMRC or, prior to the hearing, ask the Tribunal to direct, that this would be a hearing in principle only."
[50] Neither case suggests to us that, in the circumstances of this case, the FTT was bound to have decided the question of whether to restrict its decision to one of principle in a particular way. Both are illustrations of how the discretion the FTT has on how to manage the case before it will depend on the circumstances. It does not appear the approach to be taken was a matter of dispute, in Hedge Fund so there was not the same consideration of factors as there was in ING albeit that consideration was obiter. What the cases also show is that there is tension on the one hand between making a final overall decision which provides certainty, but which may not then take account of all the relevant detail and argument that could have been considered, if further discussions or a further hearing were allowed, with the lack of finality, certainty and delay, that comes with allowing such further deliberations. Where the right balance is to be struck will be a matter for the FTT to consider in accordance with the overriding objective. In considering the fairness and justice of proceeding to make a decision which is only in principle it will be relevant in our view, as the FTT noted in ING, to consider 1) the scope of the hearing that took place (in that case the FTT described it as a hearing to determine the validity of the appellant's voluntary disclosures) 2) what if anything the parties explicitly or implicitly agreed which altered that scope and 3) whether any direction on the scope of the hearing had been sought by the party seeking a decision in principle only." (Kingston Maurward College v. HMRC [2023] UKUT 69 (TCC), Judge Raghavan and Judge Brannan)
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“Nobody limited the first hearing to “an eligibility issue”. HMRC might have done in that they failed to raise any other issue but it is wrong to say this was the limited and agreed subject matter, and that everybody was clear that one of the parties might think of some other point later, and then wish to raise a completely new argument.” (Pearson v. HMRC [2014] UKFTT 890 (TC), §19 – claim for repayment based on VAT at 20% and appeal allowed on that basis, HMRC later repaid at 5% and whilst FTT agreed that was the correct amount, the issue had not been raised in time).
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FTT normally expected to deal with all of the appeal
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"[55]...First, the FTT will normally be expected to deal with all of the appeal before it at the substantive hearing unless otherwise agreed or directed. Second, the tribunal will only be able to decide the issues within the scope of that appeal on the evidence before it. Parties will be well aware of this, and if they are not, then they ought to be. If the relevance of the evidence depends on the outcome of certain issues then the party should adduce the evidence so they are covered, should the alternative arise, and not assume the tribunal will put the matter back to the parties for agreement or hold a further hearing. By not putting in evidence to cover off decisions in the alternative, the party runs the risk of an adverse decision being made due to an insufficiency of relevant evidence. Alternatively, if the party considers it makes sense to have a more restricted scope of hearing, the party should broach the scope of the hearing with the other side and the tribunal at a suitably early stage, so the more limited scope of the hearing can be settled in good time before the hearing takes place." (Kingston Maurward College v. HMRC [2023] UKUT 69 (TCC), Judge Raghavan and Judge Brannan)
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FTT remitting quantum issue back to the parties
"[31] But the appellant needs to go further. It needs to establish either that at the time the input tax was incurred, it was attributable to those expected taxable supplies, or that the input tax reflected overhead costs.
[32] The evidence that we have seen makes it very difficult for us to come to a definite view on this, as we only have one quarters worth of financial information, namely the details of the input incurred for the period 09/17. This is unsurprising since this is, as far as we are aware, the only period for which the appellant was asked to provide that breakdown.
[33] That breakdown includes an item for rent (clearly in overhead) as well as what are likely to be regular expenses such as Microsoft subscriptions and network charges. It was Mr Patel’s evidence that the inputs incurred in this period were typical of his inputs throughout the period covered by this appeal.
[34] We are reluctant to come to a conclusion on this point, and in our view the most appropriate way of dealing with it is for the parties to review the inputs claimed by the appellant throughout the relevant period on the basis of the finding that throughout the period the appellant was an intending trader. It seems to us that the appellant and HMRC should readily be able to undertake such review and to reach an agreement as to the extent to which the inputs incurred during that period are either directly attributable to the appellant’s intending trade or (more likely we suspect) comprise overhead costs.
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[37] In our judgment, the appellant was an intending trader throughout the periods covered by these appeals and thus, to the extent that it can demonstrate that the inputs incurred in those periods had either a direct and immediate link to the expected taxable supplies or were overhead costs, is entitled to credit for any input tax incurred on those inputs. We Direct that within 28 days from the date of release of this Decision, the appellant sends to HMRC a detailed breakdown of those costs together with an analysis of whether they have either a direct and immediate link to its expected taxable supplies, or that they comprise overheads. The parties shall then use all reasonable endeavours to agree the extent to which the appellant is entitled to credit for that input tax, and in the absence of any such agreement within 3 months from the date of release of this decision, the parties may apply to the Tribunal for the Tribunal to resolve the issue." (Hedge Fund Investment Management Limited v. HMRC [2022] UKFTT 340 (TC), Judge Popplewell)
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Reasons (summary v. full)
“(3) Unless each party agrees that it is unnecessary, the decision notice must--
(a) include a summary of the findings of fact and reasons for the decision; or
(b) be accompanied by full written findings of fact and reasons for the decision.” (FTT Rules, r.35(3)).
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Full reasons (necessary to appeal)
“(4) If the Tribunal provides no findings and reasons, or summary findings and reasons only, in or with the decision notice, a party to the proceedings may apply for full written findings and reasons, and must do so before making an application for permission to appeal under rule 39 (application for permission to appeal).
(5) An application under paragraph (4) must be made in writing and be sent or delivered to the Tribunal so that it is received within 28 days after the date that the Tribunal sent or otherwise provided the decision notice under paragraph (2) to the party making the application.
(6) The Tribunal must send a full written statement of findings and reasons to each party within 28 days after receiving an application for full written reasons made in accordance with paragraphs (4) and (5), or as soon as practicable thereafter.” (FTT Rules, r.35(4) – (6))
- Application for full reasons (necessary to appeal)
“(4) If the Tribunal provides no findings and reasons, or summary findings and reasons only, in or with the decision notice, a party to the proceedings may apply for full written findings and reasons, and must do so before making an application for permission to appeal under rule 39 (application for permission to appeal)." (FTT Rules, r.35(4))
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- Must apply for full reasons within 28 days
"(5) An application under paragraph (4) must be made in writing and be sent or delivered to the Tribunal so that it is received within 28 days after the date that the Tribunal sent or otherwise provided the decision notice under paragraph (2) to the party making the application.” (FTT Rules, r.35(5))
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- FTT accepting late request for full reasons despite no good reasons for delay
"[52] The summary decision was issued on 29 November 2023. It recorded at paragraph 2 that it related to an application to make a late appeal in respect of two PLNs, at paragraph 3 that the appeals for both had been lodged with the Tribunal in one Notice of Appeal and at paragraph 7 that the appeals having been struck out, they were reinstated. The application for permission to notify the appeals late was refused and the appeals were therefore not admitted.
[53] On 11 January 2024, Mr Abbas (who was now with Dyson Solicitors) wrote to the Tribunal, copied to my clerk, requesting full findings and reasons for the Decision. However, he also wrote to the Tribunal and my clerk on the same day referring to documentation issued by the Tribunal and stating that the appellant "intends to proceed with this appeal to a hearing". It transpired that that was the appeal relating to the Discovery Assessments and one with which I had no involvement.
[54] The application for full reasons was out of time since the application should have been made within 28 days of the issue of the Decision. No explanation was offered for the delay and there was no application for an extension of time. The 28 day time limit was clearly stated in the Decision. [55] On 9 February 2024, Mr Abbas lodged an application for leave to appeal to the Upper Tribunal ("the PTA") which was drafted by Counsel.
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[67] It would not be a good use of Tribunal, or HMRC, resources to refuse the PTA on the basis of non-compliance with Rule 39 of the Rules; presumably that might trigger a recognition that an application for an extension of time for a request for full reasons should be lodged. If done, that may or may not be successful but it is a possibility.
[68] In summary, although the appellant and those acting for him have not complied with the Rules and have not advanced adequate reasons for the failure to apply timeously, I have decided to produce a Decision with full Findings of Fact and reasons." (Rodrigues v. HMRC [2024] UKFTT 517 (TC), Judge Anne Scott)
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- FTT to produce full decision within 28 days of application or as soon as practicable
"(6) The Tribunal must send a full written statement of findings and reasons to each party within 28 days after receiving an application for full written reasons made in accordance with paragraphs (4) and (5), or as soon as practicable thereafter.” (FTT Rules, r.35(6))
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Concessions may be recorded but should not be part of the decision
“The company is asking for, and the Crown is not resisting, a declaration relating to a loss claim made by the company for the year 1970. As I have not heard argument on the point, it is inappropriate to make a declaration as asked. The matter can be dealt with by the order containing a recital of a concession by the Crown in the terms of the declaration sought.” (Hallamshire Industrial Finance Trust Ltd v. IRC [1979] STC 237 at 243).
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Tribunals produce a decision notice with reasons, they do not draw up a formal order
“The FTT does not draw up a formal order in the same way as a court. Instead, the rules applicable to the FTT (the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009/273) provide in r 35(2)(a) that the FTT must, after making a decision which finally disposes of all issues in the proceedings, provide to each party a decision notice which “states the Tribunal's decision”. By r 35(3) the decision notice must (unless the parties agree it is unnecessary) include either a summary of the findings of fact and reasons for the decision, or be accompanied by full written findings of fact and reasons for the decision. In the present case, as is commonly the case in our experience, the FTT produced a single document headed “Decision” that is both the decision notice required by r 35(2)(a) and contains full findings of fact and reasons for the decision as required by r 35(3): see [192] which expressly refers both to “this decision notice” and to ‘this document” containing “full findings of fact and reasons for the decision.’” (Price v. HMRC [2015] UKUT 164 (TCC), §39, Nugee J and Judge Nowlan)
However Tribunal may direct time for compliance with decision
“The obligation to pay interest under section 84(8) is not essentially voluntary, as HMRC suggests, but a matter that HMRC 30 must comply with. As a matter of necessary implication – and, indeed, in order to be fair to HMRC, the paying party – the time for compliance must be specified, otherwise there is the risk that HMRC will be in immediate breach of any order made. It is, as it seems to me, essential that decisions of the FTT and the Upper Tribunal are clear in what they require.” (Emblaze Mobility Solutions Limited v. HMRC [2018] UKUT 373 (TCC), §52(5), Marcus Smith J).
Requiring HMRC to remake a decision
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- Statutory authority required
"[85] For the above reasons, I would allow the appellant's appeal against the Upper Tribunal's order. I would restore the order of the FtT allowing the appellant's appeal against the assessment and I would discharge the assessment. It will be a matter for HMRC as to whether, in all the circumstances, they consider it appropriate to seek to raise a further assessment and a question of law as to whether they have power to do so, given the passage of time and the statutory time constraints. I say nothing about those issues." (GB Housley Limited v. HMRC [2016] EWCA Civ 1299, Gloster LJ)
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"[88] In these circumstances, I consider that the Upper Tribunal was wrong to hold that because there had been no complete determination as to how the discretion would have been exercised following the review this somehow justified remitting the matter back to the FtT for a determination of that matter. The FtT had already determined that there had been no proper exercise of the Regulation 29(2) discretion and HMRC could only preserve the assessment by demonstrating that had the discretion been exercised the result would inevitably have been the same. This they were unable to do.
[89] These considerations apply a fortiori to the Upper Tribunal's decision that HMRC should be allowed to re-consider and, if necessary, re-exercise the discretion prior to any final determination of the appeal. It is not clear to me what power the Upper Tribunal thought it was exercising and its approach was wrong in principle. If HMRC had not lawfully exercised its powers under the Regulations then the assessment was invalid and it cannot be validated retrospectively by a re-exercise now of the discretion. The only legally relevant re-exercise of the Regulation 29(2) discretion would be in the context of a new assessment." (GB Housley Limited v. HMRC [2016] EWCA Civ 1299, Patten LJ)​
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- Statutory authority for customs and excise duties
“In relation to any decision as to an ancillary matter, or any decision on the review of such a decision, the powers of an appeal tribunal on an appeal under this section shall be confined to a power, where the tribunal are satisfied that the Commissioners or other person making that decision could not reasonably have arrived at it, to do one or more of the following, that is to say —
[…]
(b) to require the Commissioners to conduct, in accordance with the directions of the tribunal, a review or further review as appropriate of the original decision;” (FA 1994, s.16(4)(b))
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See further J3: Appealing other indirect tax decisions
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- Review to be conducted on the basis of the law and HMRC notices in existence at the time of the original decision
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"[66] The short answer to these arguments, in my judgment, is that the Upper Tribunal only had jurisdiction to require HMRC to conduct "a further review of the original decision": see section 16(4)(b) of the 2004 Act. It did not have jurisdiction to require a fresh review to be undertaken in the light of circumstances and published guidance in force at the date when the review is carried out. The original Revocation Decision was made by reference to the published guidance contained in the then current form of Notice 192, from which it follows, in my view, that any review of that decision must likewise be taken by reference to the same guidance. If the question were whether the Company had complied with some statutory requirement, the original decision would obviously have had to be taken by reference to the version of the legislation then in force, and if a court or tribunal subsequently found an error of law in the decision and directed it to be reviewed, any such review would in the normal way also have to be conducted in accordance with the law in force at the date of the original decision. I can see no good reason why the position should be any different merely because we are concerned with published guidance rather than statutory requirements. In short, fairness requires that the Company should be judged by the same standards when the further review is carried out as it was at the time of the original decision. The fact that different standards might be applied today, whether to a fresh application for RDCO status or to the cancellation of trader's existing approval, is to my mind beside the point. The current version of the guidance would become relevant, if at all, only if the Company were to regain its RDCO status as a result of the present proceedings and if HMRC were subsequently to form the view that its approval should be cancelled for reasons unconnected with the present proceedings." ​(HMRC v. Behzad Fuels (UK) Ltd [2019] EWCA Civ 319, Henderson LJ)
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- FTT directing HMRC as to the law
"[144] HMRC are required to conduct, in accordance with the following directions, a further review of their decision on the appellant’s 4 April 2017 application for end-use authorisation.
[145] HMRC are directed, when conducting their further review, to have regard to relevant findings of fact and analysis of law in this decision, being:
(1) as regards findings of fact: [25-34], [35(6)], [53-55], [58-59], [61-66], [68], [70-79], [115] and [122] above; the agreed facts; and Appendix 2 below; and
(2) as regards analysis of law: [35(3)], [40-50], [80-87], [92-103] and [105-113] above." (DHL Air Limited v. HMRC [2023] UKFTT 123 (TC), Judge Citron)
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- HMRC generally bound by Tribunal’s findings of fact unless contrary direction given
"[62]...They are not free to go behind the findings of fact already made in 2014 and 2016, save in the uncontroversial respects indicated by the Upper Tribunal, but that is a very different matter from requiring HMRC to review the evidence afresh, together with the due diligence evidence presented to it by the Company, without an open mind on the issue of the Company's possible involvement." ​(HMRC v. Behzad Fuels (UK) Ltd [2019] EWCA Civ 319, Henderson LJ)
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“In conclusion, I am satisfied that the Second Decision should have considered itself bound by the First Tribunal’s findings of fact unless there was some new evidence available which could not with reasonable diligence have been placed before the First Tribunal. There was no such evidence.” (HJS Developments Ltd v. HMRC [2015] UKFTT 465 (TC), §51)
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- Not required to assume fact in T's favour where FTT unable to reach decision
"[59]... In those circumstances, and with all respect to the very experienced members of the Upper Tribunal, I find it hard to understand what justification there could be for requiring the review to proceed on the basis that the Company was not involved in laundering of fuel, when the 2016 FTT deliberately decided to leave the question open. Speaking for myself, I would not regard the findings of the 2016 FTT on this issue as "ambivalent" in any objectionable sense. They clearly considered the evidence with great care, and found themselves unable to reach a firm conclusion one way or the other. That was in my opinion a perfectly tenable position for the 2016 FTT to adopt, in circumstances where the question which they had to consider was whether the Restoration Decision could not reasonably have been made. In my view, fairness requires that the further review directed by the Upper Tribunal should start from the same inconclusive position, and HMRC should be at liberty both to consider the fresh evidence advanced by the Company, and to review the history of the matter from 2009 to 2013, without being obliged to assume from the outset that the Company was not involved in the laundering of fuel." ​(HMRC v. Behzad Fuels (UK) Ltd [2019] EWCA Civ 319, Henderson LJ)
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- FTT may give directions as to what HMRC should and should not take into account
“In my judgment, it is open to the Tribunal not only to direct HMRC to carry out a review on the basis of findings of fact made by the Tribunal or on the basis that they should ignore certain factors which it considered to be irrelevant but also to limit the additional material which HMRC should be entitled to take into account. Nonetheless, the Tribunal ought, in my view, to have a good reason for restricting material which would otherwise be relevant, for instance to prevent a disproportionate exercise under which HMRC might otherwise require a taxpayer to produce a wealth of documentation which they had not asked for when making the original decision. And, in directing a review restricted in such a way, the Tribunal ought to explain in its decision why it is imposing the restriction.” (R (oao Ace Drinks Limited) v. HMRC [2016] UKUT 124 (TCC), §17, Warren J)
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- HMRC may be directed to take account of all information, including new information on review
“In my judgment, the Tribunal is entitled not only to require a review to be carried out on the basis of material, or factors, not taken into account at the time of a decision (such as the original decision in the present case) even though the information could have been made available or been discovered at the time, but is also entitled to require a review to be carried out taking account of new material, or factors, which have only arisen in the intervening period. For instance, if a taxpayer had been caught, during that interim period, committing an excise offence, that is something which is at least capable of being taken into account. I say “at least capable” to leave open the argument that the Tribunal 13 could, by making directions within the meaning of section 16(4), preclude the admission, on the review, of new material or factors.” (R (oao Ace Drinks Limited) v. HMRC [2016] UKUT 124 (TCC), §12, Warren J)
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- Query whether events subsequent to original decision can be taken into account
"[68] At the hearing, the parties agreed that if the Tribunal were to allow the appeal, and to direct a review of the decision, then it should direct that the subsequent review by HMRC should take place on the basis of the facts as they exist at the time of that subsequent review, but on the basis of the law and policy as it existed at the time of the Refusal Decision. The Tribunal finds that it has the power to direct that the review be conducted on this basis in circumstances where the parties so agree. Conducting the further review on the basis of the facts at the time of review is consistent with R (Ace Drinks Ltd) v Revenue and Customs [2016] UKUT 124 (TCC) at [11]-[19]). Conducting it on the basis of law and policy at the time of the original decision is consistent with Revenue and Customs v Behzad Fuels (UK) Ltd [2019] EWCA Civ 319 at [67], [71] and [72]. It is unnecessary to determine on what basis such a review would need to be conducted in the event that the parties did not so agree." (Hare Wines Limited v. HMRC [2022] UKFTT 176 (TC), Judge Staker)
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"[99] Should the Tribunal find that HMRC’s decision as unreasonable, it has the power to direct HMRC to carry out a further review. In our view, there is an open question as to the basis on which the Tribunal can direct HMRC to conduct such a review. The Upper Tribunal decided in R(OAO Ace Drinks Limited) v HMRC [2016] UKUT 124 (TCC) that such a review could be required to be undertaken on the basis not only of the facts as they existed at the time of the original decision but also taking into account subsequent events (see paragraphs [12-15]).
[100] However, this decision was made before the comments of the Court of Appeal in Behzad which indicate that the Tribunal only has power to order a review based on the facts and circumstances in existence when the original decision was taken. It does not appear that the decision in Ace Drinks was brought to the attention of the Court of Appeal in Behzad." (Continental Cash & Carry Limited v. HMRC [2022 UKFTT 49 (TC), Judge Vos)
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- FTT directing new decision taken by officer with no prior involvement
"[67] For those reasons the appeal is allowed. The effect of that is the Tribunal requires HMRC to remake the restoration decision.
[68] In doing so we make the following directions:
The original decision and the restoration decision cease to have effect
The restoration decision is to be remade by an officer with no prior involvement in the case
That officer will take into account our findings set out in paragraph 64 above." (Petmaster Limited v. HMRC [2024] UKFTT 718 (TC), Judge Rudolf KC)
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- HMRC may apply for directions to be varied in light of change of circumstances
“Depending on the precise directions made by the Tribunal, it may be possible for HMRC (or for that matter the taxpayer if the material is in his favour) to bring the matter back for the directions to be varied, failing which, HMRC might in a case such as the present decide that they would revoke any certification or registration as soon as it is made.” (R (oao Ace Drinks Limited) v. HMRC [2016] UKUT 124 (TCC), §18, Warren J)
- Judicial review of failure to comply with directions
“But I wish to say a little, in deference to the arguments raised, if, contrary to my view, the 4 December 2014 Letter is not properly to be seen as complying with the direction in [23]. In that case, Mr Jones’ argument is that either (i) the appeal route is not available at all or (ii) if it is, then it is not an adequate remedy so that ADL should be entitled to challenge HMRC’s purported decision by judicial review…On this aspect of the case, I would prefer Mr Jones’ arguments if they arose for decision.” (R (oao Ace Drinks Limited) v. HMRC [2016] UKUT 124 (TCC), §§67…71, Warren J).
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Power/duty to increase assessment/reduce claim or election
“(7) If, on an appeal notified to the tribunal, the tribunal decides
that the appellant is undercharged to tax by a self-assessment
that any amounts contained in a partnership statement are insufficient; or

that the appellant is undercharged by an assessment other than a self-assessment,
the assessment or amounts shall be increased accordingly.” (TMA 1970, s.50(7)).
“(7A) If, on an appeal notified to the tribunal, the tribunal decides that a claim or election which was the subject of a decision contained in a closure notice under section 28A of this Act should have been allowed or disallowed to an extent different from that specified in the notice, the claim or election shall be allowed or disallowed accordingly to the extent that the tribunal decides is appropriate, but otherwise the decision in the notice shall stand good.” (TMA 1970 s.50(7A)).
"(5)Where, on an appeal against a decision with respect to any of the matters mentioned in section 83(1)(p) or (rb) —
(a)it is found that the amount specified in the assessment is less than it ought to have been, and
(b)the tribunal gives a direction specifying the correct amount,the assessment shall have effect as an assessment of the amount specified in the direction, and that amount shall be deemed to have been notified to the appellant." (VATA 1994 s.84(5))
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- Duty to increase assessment
“Section 50(7) of the Taxes Management Act 1970, however, preserved the right, and as it seems to me the duty, of the commissioners to increase the assessment on the hearing of the taxpayer's appeal if the evidence shows this to be appropriate.” (Glaxo Group Ltd v. IRC [1996] STC 191, at 199, Millett LJ).
“I therefore consider that the Tribunal has the power, and indeed the duty, to increase an assessment if satisfied that the amount assessed is an undercharge.” (Always Sheet Metal Ltd v. HMRC [2017] UKFTT 198 (TC), §114, Judge Jonathan Richards).
“By virtue of s50(7)(c) of TMA 1970, we have the power, and indeed the duty, to increase the amount of the assessments for 2008-09 if the discovery assessments issued undercharge the appellants to tax and we will do so.” (Patel v. HMRC [2016] UKFTT 78 (TC), §82)
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- No duty if HMRC do not seek an increase
“But that decision does not support the proposition that the FTT was under a duty (even though not asked by HMRC) to consider whether there was a case for increasing the assessment and (in the light of its provisional view that the supply was standard rated) to call for evidence and argument to support an increase, adjourning the appeal against the assessment for those steps to be taken. We are persuaded of the correctness of the view of Carnwath J in Elias Gale (at p.76d) where he observed that the rules that govern appeals envisage an adversarial procedure, with the running made by the two parties (a view that he has maintained in the Supreme Court – see Volkswagen Financial Services (UK) Ltd v HMRC [2017] UKSC 26 at [7]). They do not provide for the tribunal to raise or investigate issues of its own motion, a feature that argues “strongly against the tribunal having a free-standing power to increase the assessment entirely of its own initiative”. We further consider that where one party does seek such a direction, the giving of a direction is not a matter of right, but calls for the exercise of a discretion upon proper grounds.” (HMRC v. C Jenkin & Son Limited [2017] UKUT 239 (TCC), §36, Norris J and Judge Sinfield)
“On appeal HMRC did not to seek to increase amendments to the returns for these years to include the additional amounts that it submitted may have been included. Therefore, the Tribunal does not need to determine this issue.” (Jinks v. HMRC [2017] UKFTT 200 (TC), §172, Judge Rupert Jones – explicable on the basis that HMRC did not seek to discharge the burden of proof)
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- Burden of proof on HMRC
"[85] Where HMRC wishes to assert that an assessment (including an amendment to a self-assessment) is to be increased by virtue of section 50(7) TMA, the burden is on them to show that the original assessment or amendment undercharges the taxpayer (see Revenue and Customs Commissioners v C M Utilities Limited [2017] UKUT 5 0305 (TCC), at [42])." (HMRC v. West [2018] UKUT 100, Vos J and Judge Berner)
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So far as the last one is concerned, that was (having regard to the fact that the Commissioners increased the assessment) governed by s 50(7) of the Taxes Management Act 1970, which reads: "If on any appeal it appears to the Commissioners that the person assessed ought to be charged in an amount exceeding the amount contained in the assessment, assessment shall be increased accordingly." Therefore, the onus there was upon the Inspector of Taxes." (Cutmore v. Leach 55 TC 602 at 606, Walton J)
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“I have concluded that the statutory words of s50(7) suggest that, before I can increase the assessment, I must be satisfied on a balance of probabilities that the taxpayer is undercharged and that, as Mr Hackett submits, HMRC bear the burden of proof.” (Always Sheet Metal Ltd v. HMRC [2017] UKFTT 198 (TC), §115, Judge Jonathan Richards)
- FTT may increase assessment if HMRC’s legal basis for assessment wrong
“In the closure notice, Ms Islam expressed the conclusion that 50% of the loan interest should be disallowed (with the obvious implication that 50% should be allowed). It is clear that, subject to concerns which might be addressed through case management, about the other side being ambushed, that additional legal arguments could be raised. There appears to be no reason in principle however as to why that proposition could not extend to a changed view on amount. In principle it is difficult to see why if the amount is legally incorrect (because having reviewed the evidence again there is no basis for it) why that should make a difference. The Tribunal’s jurisdiction still remains as set out in the legislation not only to reduce the assessment or amounts (s 50(6) TMA 1970) but also to increase the assessment (s 50(7) TMA 1970). There appears to be no basis on which the Tribunal is constrained from that function by the figure HMRC have put in their closure notice. There is no issue here of Mr Saheid being ambushed by HMRC’s view as to disallowance of the whole amount of the assessment (this was notified to him in both Mr Mee’s and Mr Agg’s letter and in HMRC’s statement of case.) The appropriateness of HMRC departing from a stated position might in principle be pursued through other forms of redress, such as complaints, the ombudsman, or administrative law remedies but it is not something which in our view binds the Tribunal in the appeal before it.” (Saheid v. HMRC [2016] UKFTT 224 (TC), §18)