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Procedure.Tax
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N6: Tribunal's role
(law)
Jurisdiction
Tribunal bound to investigate doubts over jurisdiction
“Any court or tribunal is entitled to consider the question of its own jurisdiction, whether or not it is raised as an issue by the parties. If Miss Ryder was not an assured tenant the FTT would have had no jurisdiction to make a determination in relation to the rent payable under her tenancy pursuant to s.14 of the 1988 Act. Once the doubt over its own jurisdiction had been raised in the mind of the FTT it was necessary for it to satisfy itself on that issue.” (Swanbrae Ltd v. Ryder [2015] UKUT 0069 (LC) §29)
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Tribunal’s duty to apply domestic law correctly, irrespective of the parties’ submissions
“…if the Commissioners are to fulfil their statutory duty under [TMA 1970 s.50] they must in my judgment be free in principle to entertain legal arguments which played no part in reaching the conclusions set out in the closure notice. Subject always to the requirements of fairness and proper case management, such fresh arguments may be advanced by either side, or may be introduced by the Commissioners on their own initiative.” (HMRC v. Tower MCashback LLP 1 [2011] UKSC 19, §15, quoting Henderson J with approval).
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“It seems to me inherent in the appeal system that the tribunal must form its own view on the law without being restricted to what the Revenue state in their conclusion or the taxpayer states in the notice of appeal.” (D’Arcy v. HMRC [2006] STC (SCD) 543, §13, approved in HMRC v. Tower MCashback LLP 1 [2011] UKSC 19, §18).
“it is its duty to examine the determination having regard to its knowledge of the relevant law” (Edwards v. Bairstow 36 TC 207 at 229, Lord Radcliffe, emphasis added);
“I…regret that counsel who argued this case would probably not recognise any part of the judgments as having any relation to the arguments they addressed to us” (Smith v. Smith [1923] P 191 at 202, Scrutton LJ);
“[Counsel for the Revenue] accepted that this court has to decide a question of statutory construction on its own view, unconstrained by pleading points…” (Cooper v. Billingham [2002] STC 1177, §30, Robert Walker LJ in section entitled “Are both sides wrong?”);
“In reaching its decision, therefore, the FTT rejected not only the case argued by Land Securities, but also the case argued by HMRC” (Land Securities v. HMRC [2013] UKUT 0124 (TCC), §3);
“The Tribunal is not bound to accept an interpretation of a statute just because both parties agree on what it means. If authority is needed for that statement it is of the highest. In R v Montila and others [2004] UKHL 50, the Committee said at [32] “Mr Perry for the Crown submitted that it was well settled that a side note in an Act of Parliament does not constitute a legitimate aid to the construction of the section to which it relates. Mr Grenfell QC for the appellants said that he was willing to concede the point. But this is not a concession that can be accepted.”” (Couldwell Concrete Flooring Ltd v. HMRC [2017] UKFTT 85 (TC), §94).
“In particular, it appeared to the Tribunal that the Appellant might have been incorrectly charged VAT on its purchase of the retail vouchers. The Tribunal wished to establish whether this was correct and whether there were any resulting implications for the issue which it was being asked to decide. The parties were not in a position to assist the Tribunal at the hearing on that matter and the Tribunal therefore sought further written submissions from the parties on a number of questions designed to assist it in considering the wider issues.” (Associated Newspapers Ltd v. HMRC [2014] UKFTT 116 (TC), §5).
“A party is entitled to rely on the Employment Tribunal to apply the law correctly (whilst sympathising with an Employment Tribunal which does not receive full assistance from counsel appearing before them” (Yorkshire Housing Ltd v. Cuerden 2010 WL 2786912);
Perhaps limited to obvious points
“The appellate authorities should of course focus primarily on the arguments adduced before them, whether these are to be found in the oral argument before the special adjudicator or, so far as the Tribunal is concerned, in the written grounds of appeal on which leave to appeal is sought. They are not required to engage in a search for new points. If there is readily discernible an obvious point of Convention law which favours the applicant although he has not taken it, then the special adjudicator should apply it in his favour, but he should feel under no obligation to prolong the hearing by asking the parties for submissions on points which they have not taken but which could be properly categorised as merely "arguable" as opposed to "obvious". Similarly, if when the Tribunal reads the Special Adjudicator's decision there is an obvious point of Convention law favourable to the asylum-seeker which does not appear in the decision, it should grant leave to appeal. If it does not do so, there will be a danger that this country will be in breach of its obligations under the Convention. When we refer to an obvious point we mean a point which has a strong prospect of success if it is argued. Nothing less will do.” (R v. Secretary of State for the Home Department, ex p. Robinson [1997] EWCA Civ 3090 §39)
Tribunal refusing to decide a question of law raised by a party
“We are aware that there are many decisions of the courts relating to the requirement to give reasons, but none of these were cited nor discussed before us. In the absence of properly reasoned argument, we cannot reach any decision on whether HMRC are under an obligation to give taxpayers reasons for any decision they may make to raise a discovery assessment” (Manisty v. HMRC [2011] UKFTT 507 (TC), §67 (point raised by litigant in person);
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Adversarial
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Not for the Tribunal to make out a case for one of the parties
“It is not open to an appellant simply to take no part in the proceedings, and to expect the tribunal to undertake its own analysis. That, in effect, is expecting the tribunal to stand in the shoes of the appellant and to make out a case for the appellant before making a determination as between that case and the case put forward by the Respondents. That is not the nature of these proceedings, which are of their nature adversarial…In the absence of a case put by a party, the tribunal does not and cannot carry out its own investigation or any independent legal analysis in the way that a legal representative would do for a party...Where…the Appellant does not participate, in the sense that it does not put forward any counter-argument to the case put forward by the Respondents, the inevitable consequence is that the appeal must be determined in favour of the Respondents.” (Jumbogate Ltd v. HMRC [2015] UKFTT 0064 (TC), §17, Judge Berner, agreed by Judge Sinfield at §40).
Tribunal usually restricted to the issues raised
“A decision of this Tribunal would usually be restricted to the issues raised and the arguments addressed to the Tribunal” (Percival v. HMRC [2013] UKFTT 240 (TC), §18, Judge Gammie);
“Accordingly, the Special Commissioner should not have embarked on the process of finding the facts necessary in order to decide an issue not raised by the parties…In my judgment, on a matter involving potentially-disputed issues of fact, the Special Commissioner was not entitled to go behind the Trustees’ concession and seek to decide the matter. It was an error of law for him to do so.” (HMRC v. Barclays [2006] EWHC 2118 (Ch), §§24 – 25);
“If the FTT did mean to suggest that as a matter of law the Agility contract was a contract for the sale of goods on deferred terms within Art 14(2)(b)…then I would agree that this was not a conclusion they were entitled to come to when this had not been HMRC’s case.” (Mercedes Benz Financial Services UK Ltd v. HMRC [2014] UKUT 0200 (TCC), §70).
Tribunal may assist litigant in person
“[U]nfortunately…that…the Company was not represented …We have in the circumstances undertaken additionally some analysis of our own of the relevant principles” (Hok v. HMRC [2013] UKUT 363 (TCC), §4).
“There could be cases where a tribunal was troubled about a concession which a party had made or was proposing to make. This might particularly be so where the party did not have the benefit of proper professional advice. In such a case, the tribunal might well invite the party to consider carefully is position. If the party maintained its position, it would not be for the tribunal to insist on pursuing the issue.” (HMRC v. Barclays [2006] EWHC 2118 (Ch), §26).
“It is possible for the Tribunal in such a case to hear the appellant’s account of the facts and to consider this together with all of the evidence presented by the parties, and for the Tribunal to satisfy itself as to the facts, and to determine for itself whether the HMRC decision is in accordance with the facts and the law. In such a case, even if it should turn out that the appeal was hopeless, the unrepresented appellant at least has the satisfaction of knowing that his or her case has been considered by an independent judicial body.” (Garland v. HMRC [2016] UKFTT 573 (TC), §16, Judge Staker, agreed with in Hill v. HMRC [2017] UKFTT 18 (TC), §65).
“Where an appellant is not represented or is represented by an agent who does not profess to be a tax expert the Tribunal will take a generous view of the grounds of appeal that may be argued, and will in appropriate cases consider arguments that an appellant might have brought forward but did not.” (Patrick v. HMRC [2015] UKFTT 508 (TC), §75).
“Neither party raised the issue of human rights. As Mr Ames was unrepresented, we thought it right to consider this possible argument in the context of how we should read the statutory provisions.” (Ames v. HMRC [2015] UKFTT 337 (TC), §67).
“This Tribunal ought not to dismiss Mr Percival’s appeal just because Mr Percival has been persuaded to abandon certain arguments if the Tribunal believes that those arguments should properly be considered in arriving at a decision…” (Percival v. HMRC [2013] UKFTT 240 (TC), §18, Judge Gammie);
But no transfer of responsibility to the tribunal
“Whether a person has professional representation before the Special Commissioners is a matter for the person to decide, but if he decides to dispense with professional representation, although a tribunal will other things being equal be anxious to prevent any unfair advantage being taken of his lack of experience and expertise, nevertheless the person subjects himself to the normal legal process and there is no transfer of responsibility from the litigant however unversed in the technicalities of the law he may be to the tribunal…of the obligations of each side to make their case before the tribunal.” (Kingsley v. Billingham [1992] STC 132 at 138);
“The record shows that he was given every opportunity to present his case and was pressed as to various matters which, if addressed by him fully, might have added to the weight of his explanations. If he was at a disadvantage as a litigant in person, and no doubt in a broad sense he was, it was inherent in his position.” (Hurley v. Taylor [1999] STC 1 at 18, Potter LJ);
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Tribunal entitled to raise new points
“I should say something about the proper approach for a judge to adopt when he is proposing to decide a case on the basis of a point which was not argued, or in a way, or to an extent, which is more favourable to a party than the case which that party advanced in court…The first point to make is that, at least as a matter of principle, a judge is entitled to take such a course. After all, a judge must decide a case according to the facts and the law as he believes them to be. Accordingly, subject to any particular reason to the contrary in the particular case, there is no reason for objecting in principle to a judge taking such a course.” (Murphy v. Wyatt [2011] EWCA Civ 408, §§13…14).
“It also happens from time to time that the court itself takes a new point, either because it appears to be of general importance or because justice appears to require it to be addressed. This may be particularly important where a party was unrepresented below.” (Miskovic v Secretary of State or Work in Pensions, [2011] EWCA Civ 16 §110).
Unless prevented by pleadings or concession
“…however, there may be particular reasons why such a course is not open to the judge in a particular case. For instance, the course he wishes to take may not be open on the pleadings, or it may be precluded by virtue of a concession which has not been, or cannot be, withdrawn. Equally, a finding of primary fact, or even a finding of secondary fact or an assessment of a witness or expert evidence, may simply not, on analysis, be open to the judge on the evidence before him.” (Murphy v. Wyatt [2011] EWCA Civ 408, §15).
Parties can agree facts that yield only one answer when the law is applied
“It will often be valuable that he should do so, because parties, and the court, should not be left to speculate upon the relevance in law of a purely factual narrative. At the same time, however, the judge was, with respect, plainly right in the doubt that he expressed in paragraph 23 of his judgment as to whether, if an averment of law does appear in a pleading, the full rigour of CPR 16.5(5) applies to it. That is because of the well-worn principle that the parties cannot, and certainly cannot within the confines of particular litigation, by agreement withdraw from the court the decision of a question of law: see e.g. Alderson B in Scott v Avery(1856) 5 HL Cas 811 at p 845, cited by Denning LJ in Lee v Showmans Guild [1952] 2 QB 329 at 342; and a fortiori that cannot be done by the "agreement" that arises from a failure to plead to an allegation. What the parties can do, and as Mr Blohm demonstrated they are to be taken to have done in this case, is actually or inferentially so to agree the facts that the law when applied to them yields only one answer.” (Loveridge v. Healey [2004] EWCA Civ 173, §29).
Tribunal overriding concession of law because facts not agreed
“Mr Burke’s answer to the Tribunal’s question amounted to his acceptance that the condition in s 144(4)(a) had been met and therefore his agreement with the appellant as to the law. I do not understand what facts it was that he was said to have agreed. There was no agreement that there was a contract in existence which imposed the condition.” (Couldwell Concrete Flooring Ltd v. HMRC [2017] UKFTT 85 (TC), §88, Judge Thomas).
National courts required to raise points of EU law of their own motion
“Moreover, even though European Union law is not relied upon by the parties, the national court must raise of its own motion points of law based on binding European Union law rules where, under national law, the national courts must or may do so in relation to a binding rule of national law…” (Maks Pen EOOD C-18/13, §34).
“It Is to be noted that, while Community law does not require national courts to raise of their own motion a plea alleging infringement of Community provisions where examination of that plea would oblige them to go beyond the ambit of the dispute as defined by the parties, they are obliged to raise of their own motion points of law based on binding Community rules where, under national law, they must or may do so in relation to a binding rule of national law.” (Kempter C-2/06, §45).
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Tribunal must give parties proper opportunity of dealing with new points identified by Tribunal
“circumstances of the decision are a little unusual in that the FTT, in dismissing the appeal…, did so on a ground of statutory construction which was not argued by either of the parties of the hearing, but which was advanced by the FTT itself, and on which the FTT invited the parties to make written submissions after the hearing and before it reached its decision” (Land Securities v. HMRC [2013] UKUT 0124 (TCC), §3); “The special commissioner reached a conclusion which had not been contended for by either side, which is an adventurous course to take in a complex tax case…” (Tower MCashback LLP v. HMRC, [2011] STC 1143, §54, Lord Walker);
“…it is clear that, save perhaps in very exceptional circumstances (which I find it very hard to envisage), he must ensure that the parties are given a fair opportunity to deal with the point. If the point is, on analysis, a bad one, it is fairer to the parties and less embarrassing for the judge that this is established before the judgment is available, rather than the parties either having a hearing at which the judge has to withdraw or amend the judgment or suffering the delay and expense of an appeal…But there is an even more important reason for the requirement that the parties are given a proper opportunity to deal with the judge's point, namely procedural fairness. It is simply unfair on a party if she loses a case because of a point thought up by the judge, which she or her representatives have not properly been able to address. In this case, a major factor which (if I may say so, correctly) influenced Mummery LJ when giving the defendant permission to appeal, was that her representatives stated that they had not been given a proper opportunity of dealing with the two reasons advanced by the Judge for holding that the 1983 Act did not apply.” (Murphy v. Wyatt [2011] EWCA Civ 408, §§16…17).
“This conclusion arises from an argument which came to my mind after the close of the argument…Accordingly, I notified counsel that I wished them to address me about it…” (Thorpe v. HMRC [2009] EWHC 611 (Ch), §20).
“I am aware that in coming to my conclusions I have referred to material – such as that relating to the jurisdiction of the Social Entitlement Chamber – which was additional to that provided by the parties and the BBC. Had my decision rested only on this Issue, I would have considered whether to ask for further submissions in relation to that new material.” (Paya Ltd and Tim Wilcox Ltd v. HMRC [2016] UKFTT 660 (TC), §136).
Unless, perhaps, it is authority for a proposition in line with the submissions of the parties
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“This comment [in JSC BTA Bank v. Ablyazov (No.8)] was not cited to us but it is entirely in line with the submissions made to us by HMRC.” (HMRC v. CCA Distribution (in administration) Ltd [2015] UKUT 513 (TCC), §91).
Appropriate way of giving opportunity depends on the circumstances
“How a judge ensures that parties have an opportunity to deal with a point which he has thought of must depend on the circumstances. If the point occurs to him before or during the hearing, he should obviously raise it in court in clear terms with the parties, ideally ensuring that it is reduced to writing, and give the parties a fair opportunity to deal with it. Sometimes it can be fully disposed of at the hearing; on other occasions, it may be only fair to give the parties time, and subsequent written submissions may be the appropriate course. If the point occurs to the judge after the hearing, it would, I think, normally be sufficient if he writes to the parties or their representatives, giving them the opportunity of dealing with the point in written submissions (sometimes with the opportunity for counter-submissions). Occasionally, a further hearing may be appropriate, but it would normally be disproportionate.” (Murphy v. Wyatt [2011] EWCA Civ 408, §18).
Fuller opportunity if outcome turns on the point
“Where (as here) the judge's point is crucial in the sense that, without it, the decision would be different, it is obviously of particular importance that the parties are given a full opportunity to deal with it. Where the point represents a further reason to those which have been advanced and accepted by the judge as reasons for finding for the successful party, it would still normally be fair and sensible to give the parties an opportunity to deal with it, but, in such a case, a relatively short procedure may be justifiable.” (Murphy v. Wyatt [2011] EWCA Civ 408, §19).
Tribunal criticism of the law
“We cannot leave this appeal without expressing some disquiet that it should have reached us at all. It is common ground that the College is a charity, and that the bulk of its income is derived from public funds. Because that public funding does not cover all of its costs it is compelled to seek income from other sources; but its doing so does not alter the fact that it remains a charity providing education 35 for young people. If, by careful management or good fortune, it can earn its further income in one way rather than another, or can keep the extent of the income earned in particular ways below an arbitrary threshold, it can escape a tax burden on the construction of a building intended for its charitable purpose, but if it is unable to do so, even to a trivial extent, it is compelled to suffer not some but all of that tax burden. We think it unlikely that Parliament intended such a capricious system. We consider it unlikely, too, that Parliament would consider it a sensible use of public money for the parties to litigate this dispute twice before the FTT and now twice before this tribunal. We do not blame the parties; the College is obliged to maximise the resources available to it for the pursuit of its 45 charitable activities, just as HMRC are obliged to collect tax which is due. Rather, we think the legislation should be reconsidered. It cannot be impossible to relieve charities of an unintended tax burden while at the same time protecting commercial organisations from unfair competition and preventing abuse.” (HMRC v. Wakefield College [2016] UKUT 19 (TCC), §56, Barling J and Judge Bishopp).