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M31: Reinstating proceedings/case
No reinstatement where Tribunal deemed to have determined appeal (e.g. TMA s.54, VATA s.85)
"[42] In OWD v HMRC [2018] UKFTT 497 (TC), Judge Falk (as she then was) considered the interaction between the Tribunal Rules and VATA s 85. She held, rightly in my view, that where s 85 applies it is not possible for an appeal to be reinstated. That is because s 85 deems the agreement between the parties to have the same consequences as if the Tribunal had come to a decision in the same terms. It is not possible to reinstate an appeal after it has been decided by the Tribunal." (Hussain v. HMRC [2023] UKFTT 40 (TC), Judge Redston)
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See M30: Withdrawal
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REINSTATEMENT FOLLOWING STRIKE OUT/BARRING
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Powers of reinstatement following strike out/lifting barring orders
Power following strike out for not compliance with an unless order
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“(5) If the proceedings, or part of them, have been struck out under paragraphs (1) or (3)(a), the appellant may apply for the proceedings, or part of them, to be reinstated.” (FTT Rules, r.8(5)).
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Time limit: 28 days after notification
“(6) An application under paragraph (5) must be made in writing and received by the Tribunal within 28 days after the date that the Tribunal sent notification of the striking out to the appellant.” (FTT Rules, r.8(6)).
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Power following strike out for lack of prospect of success
“I consider that the overriding objective in rule 2 supports my conclusion that the FTT’s general power under rule 5(2) to set aside an earlier direction in relation to the disposal of proceedings is not displaced by rule 8(5)…Rule 5(2) provides the flexibility to enable the FTT to deal with a situation, such as in this case, where it cannot be said that there is any error of law in the decision to strike out but that decision is challenged on the ground that it arose from a misunderstanding of the nature of the proceedings by the appellant.” (Jumbogate Ltd v. HMRC [2015] UKFTT 0064 (TC), §38).
Power following strike out for lack of co-operation (change of circumstances required)
“On that basis it is open to me to consider setting aside my directions of 4 May 2012 provided I am satisfied that there is a change of circumstances or some other exceptional circumstances, although I should only do so if I am satisfied that in accordance with the overriding objective in Rule 2 of the Rules it is in the interests of justice to do so. In that regard, I must regard the burden on the Applicants as being a heavier one to discharge than in other reinstatement applications, bearing in mind that there is no specific power to reinstate, and the application is made after the lapse of a substantial period of time since the appeal was struck out, that is nearly two years. In other words, there must be truly exceptional circumstances.” (Clear Plc v. Director of Border Revenue PTA/88/2011, §45 Judge Herrington).
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Consider appealing decision to strike out
“I note that Mr Galvin has not appealed against the striking out of his appeal, but has instead applied under Tribunal Rule 8(5) for his appeal to be reinstated. Following the decision of the Court of Appeal in Mitchell, my starting point is that the striking out was properly imposed and complied with the overriding objective. For that reason, I have taken no account of the fact that Mr Galvin was given only 14 days to respond to the Tribunal’s directions.” (Galvin v. HMRC [2016] UKFTT 577 (TC), §64).
Relevant factors
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- General approach similar relief from sanction
"[44] We will apply the same approach as we applied when considering whether to extend time. We will consider the matter in the light of the overriding objective set out in Rule 2 of the FTT Rules and apply the three-stage approach set out in Martland.
[45] We start with an assessment of the seriousness and significance of the Company’s breach of the FTT’s case management directions..." (HMRC v. BMW Shipping Agents Limited [2021] UKUT 91 (TCC), Judge Richards and Judge Cannan)
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“In North Wiltshire the FTT concluded that it was not obliged consider [the criteria formerly set out in CPR 3.9(1) for relief from sanctions] but it accepted that it might well in practice do so. The same reasoning applies to the present case. These criteria were:
- The reasons for the delay, that is to say, whether there is a good reason for it.
- Whether HMRC would be prejudiced by reinstatement.
- Loss to the appellant if reinstatement were refused.
- The issue of legal certainty and whether extending time would be prejudicial to the interests of good administration.
- Consideration of the merits of the proposed appeal so far as they can conveniently and proportionately be ascertained.” (Pierhead Purchasing Ltd v. HMRC [2014] UKUT 0321 (TCC), §23, Proudman J).
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"[32] In HMRC v Breen [2023] UKUT 252 (TCC) the Upper Tribunal summarised the test to be applied when considering an application for reinstatement (assuming that I decide to admit the Reinstatement Application):
"88. At FTT[9]-[12] the FTT applied the test provided for by the Upper Tribunal in Martland v HMRC [2018] UKUT 178 (TCC) ("Martland") in considering Mr Breen's application for reinstatement of his appeal. It was common ground before us that this was the correct test to apply. Essentially, Martland laid down a three stage test to be applied to the breaches of the Unless Order: (1) was the delay serious? (2) what were the reasons for the delay? and (3) a consideration of all the relevant circumstances. In considering the third stage of the Martland test particular importance was to be given to the need for litigation to be conducted efficiently and at proportionate cost and to enforce compliance with rules, practice directions and orders.
89. The FTT also referred, at FTT[13], to the decision of this Tribunal in Chappell v The Pensions Regulator [2019] UKUT 2009 ("Chappell"), which concerned an application to reinstate an appeal following a strike out. Chappell provides guidance in applying the usual Martland test when considering an application to reinstate an appeal struck out for non-compliance with an unless order. First, when considering the first stage of the Martland test it is necessary to take account of previous breaches in compliance which led to the granting of an unless order. In addition, the Tribunal should generally take no account of the merits of the underlying appeal where the appeal had been struck out for failure to comply with directions and orders, save in the limited situation where the appellant's case is "unanswerable", such that it would merit HMRC being debarred from resisting the appeal."" (99P Recycling Ltd v. HMRC [2024] UKFTT 13 (TC), Judge Zaman)
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“I gratefully adopt the approach described by Proudman J in Pierhead Purchasing…I consider that the relevant factors that I should take into account when considering whether to set aside the Strike Out are:
(1) whether the appeal is arguable and has a reasonable prospect of success;
(2) the reasons for the Strike Out;
(3) whether there has been any material change since the Strike Out;
(4) whether HMRC would be prejudiced if the Strike out were set aside;
(5) what prejudice would [the appellant] suffer if the Strike Out were not set aside; and
(6) the conduct of the parties.” (Jumbogate Ltd v. HMRC [2015] UKFTT 0064 (TC), §45 – reinstated as tax at stake substantial (£8m), case reasonably arguable, and prejudice to HMRC minor)
- The right to be heard before strike out under r.8(1) and r.8(3)(a) was deliberately omitted (and thus does not argue in favour of reinstatement)
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“In so far as the Revenue’s case suggests that the two directions and the order should not have been made without notice to the parties, who could then have sought to make representations to the tribunal, we think that it is an example of adding an impermissible gloss to the plain meaning of the rules themselves, and would risk giving rise to the kind of over-refinement to which we have referred.” (Compass Contract Services UK Ltd v. HMRC [2014] UKFTT 403 (TC), §103)
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- Merits generally irrelevant (unless unanswerable case apparent)
86. In my view when considering a reinstatement application which is made following the making of an unless order, the Upper Tribunal should, consistently with what was said by the Supreme Court in Global Torch, generally take no account of the strength of the applicant’s case. It is helpful to set out in more detail what Lord Neuburger said at [29] of the judgment in that case: “In my view, the strength of a party’s case on the ultimate merits of the proceedings is generally irrelevant when it comes to case management issues of the sort which were the subject of the decisions of Vos, Norris and Mann JJ in these proceedings. The one possible exception could be where a party has a case whose strength would entitle him to summary judgment….”
87. The case management issue in that case was ultimately whether to grant relief against breach of an unless order which had resulted in the proceedings having been struck out for non-compliance with the order. That is precisely the position in this case.
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[93] Focusing on the position of the applicant and applying by analogy Lord Neuburger’s test of whether the applicant has an unanswerable case by reference to the provisions of Rule 8 of the Rules regarding strike-out, the Tribunal would need to consider whether the applicant’s case, as set out in the reference notice and his Reply, identifies an unanswerable case in relation to an issue that would justify the making of a barring order against TPR. Examples of that might be where the Tribunal would have no jurisdiction because TPR’s action was clearly time-barred or where as a matter of law it was clear that there was no basis for TPR’s contentions that the outcome sought fell within the scope of the relevant legislation so that its case had no reasonable prospect of succeeding.
[94] It follows from what I have said that I should not take account of the merits of the case to the extent laid down by Proudman J in Pierhead Purchasing. In that context, I observe that Global Torch was decided after Pierhead Purchasing and as it is a judgment of the Supreme Court I am of course bound to follow it, again applying the principle that the tribunals should adopt by analogy the approach taken in the courts to matters of this kind." (Chappell v. The Pensions Regulator [2019] UKUT 209 (TCC), Judge Herrington)
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- Reinstatement where T not aware of strike out
“If those were the only factors to take into account, I would reinstate the appeal. While the default is not trivial and the appellant and/or his advisor cannot give a full explanation for the default, I am satisfied it was not deliberate and the default did not prejudice HMRC. Taking into account that HMRC do not oppose reinstatement and the importance of the case to the appellant, I would reinstate it.” (Parsanna v. HMRC [2017] UKFTT 699 (TC), §25, Judge Mosedale – the extra issue was whether the appeal had a reasonable prospect of success, which it did).
“The reason for the delay was that the appellant was unaware that the appeal had been struck out. No blame is to be attached to the appellant or is representative for the fact that it was not notified of the striking out.” (Hattons (Southport) Ltd v. HMRC [2016] UKFTT 710 (TC), §29, Judge Herrington)
- No special treatment for HMRC in pursuing tax
“I found the approach of HMRC to compliance to be disturbing. At times it came close to arguing that HMRC, as a State agency, should be treated like a litigant in person and that the constraints of austerity on an agency like the HMRC should in some way excuse unacceptable behaviour. I remind HMRC that even in the tribunals where the flexibility of process is a hallmark of the delivery of specialist justice, a litigant in person is expected to comply with rules and orders and a State party should neither expect to nor work on the basis that it has some preferred status – it does not.” (BPP Holdings v. HMRC [2016] EWCA Civ 121, §39).
“If special account is to be taken of the public interest in the correct payment of tax in a sense which differs from the public interest in the correct determination of civil disputes, then the point must be established elsewhere than at first instance.” (Compass Contract Services UK Ltd v. HMRC [2014] UKFTT 403 (TC), §123)
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- Query whether there is a degree of latitude for litigants in person
“I accept, as did [HMRC] that [the appellant] was effectively a litigant in person at that point. In the circumstances, and bearing in mind the overriding objective, I consider that [the appellant] should be allowed a degree of latitude when its conduct is considered. It appears to me that [the appellant’s] failure to attend the case management hearing and its declared intention not to take part in the appeal were not due to deliberate disregard of its responsibilities but to the difficult financial situation in which it found itself and [the appellant’s] lack of experience in tax appeals.” (Jumbogate Ltd v. HMRC [2015] UKFTT 0064 (TC), §50).
But see general approach to relief from sanctions
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- No leniency for adviser defaults
“…our view is that we must examine the history of Mr Green’s appeals on the basis that it fell to him to ensure that the relevant requirements were complied with and that this was done within the appropriate time limits. Any question as to the lack of adequacy of the service provided by a representative is a matter between the appellant and the representative and cannot be the concern of HMCTS, the Tribunal, or the other party to the appeal.” (Green v. HMRC [2016] UKFTT 421 (TC), §63)
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- Reinstatement only to negotiate settlement counts against reinstatement
“If the only objective of the reinstatement applications was to provide an opportunity to participate in the EBT settlement opportunity then we would concur with HMRC that that would count against the Appellants.” (Vaultdawn Ltd v. HMRC [2015] UKFTT 383 (TC), §96)
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- Location of burden of proof is not a material consideration (no lower standard for T if HMRC bear burden)
"[129] In our view, the burden of proof should not have been treated as a material factor in assessing whether Mr Breen’s appeal should be reinstated after a considerable history of non-compliance. Insofar as the FTT may have seen the burden of proof and the allegation of deliberate behaviour as relevant to the likelihood of Mr Breen succeeding in his appeal, that is perilously close to considering the merits of the substantive appeal (in a situation where it was not suggested that a strike-out on the basis of no reasonable prospect of success would be forthcoming), contrary to the guidance given by Chappell [5]. Whatever the FTT’s rationale was, we accept Mr Stone’s submission that, by analogy with the reasoning in Chappell and Global Torch, it was not an issue which the FTT should have taken into account since it effectively considers one component of the strength of the taxpayer’s defence. In any event, we observe that it is not uncommon for the burden of proof to rest initially on HMRC to establish the validity of the relevant assessment (which may entail a number of hurdles in relation to a discovery assessment) or penalty, with the burden shifting to the taxpayer to displace the amount assessed once that burden has been discharged by HMRC. In agreement with [HMRC], we do not consider that that is a material factor in deciding whether to reinstate an appeal which has been struck out for breach of an unless order." (HMRC v. Breen [2023] UKUT 252 (TCC), Judges Thomas Scott and Brannan)
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- Consider breach that led to imposition of unless order (but not unrelated breaches)
"[95] As regards the assessment of the seriousness of a breach in respect of which a sanction has been imposed, as Mr Walmsley submitted, the authorities in relation to CPR rule 3.9 demonstrate that although in considering applications for relief from sanctions, earlier breaches of orders committed during the course of the litigation are normally disregarded in determining the seriousness or significance of the breach in respect of which sanction was imposed, where the breaches are of a requirement contained in an “unless” order it is necessary, when assessing the seriousness and significance of that breach, to consider the underlying breach and the failure to carry out the obligation which was imposed by the original order or rule and extended by the “unless” order." (Chappell v. The Pensions Regulator [2019] UKUT 209 (TCC), Judge Herrington)
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- Consider likelihood of future compliance
"[124] In view of Mr Chappell’s conduct to date, there could be no guarantee that the subsequent conduct of the proceedings would proceed smoothly in accordance with the further directions that will be necessary to bring the matter to a hearing. In that regard, it is notable that since the reinstatement application was listed, Mr Chappell and his advisers continued not to engage with either the Tribunal or TPR and failed without any prior explanation to comply with the directions which were made for this hearing, notably the requirement to produce a skeleton argument so that TPR could understand the basis on which Mr Chappell was seeking reinstatement of the reference. " (Chappell v. The Pensions Regulator [2019] UKUT 209 (TCC), Judge Herrington)
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Consider the seriousness of the slip not just its consequences
"[47] We consider, however, that it is possible to exaggerate the seriousness of those failings. We agree with the FTT that the mistake with the NG address was a minor clerical error, even though serious consequences flowed from it. Certainly, Mr Gibbon should have done more to follow up on the progress of the appeal. However, for most representatives who put correct contact details on a notice of appeal, the question of “following up” with the FTT will not typically arise: the appeal will be registered, an HMRC Statement of Case will be produced and the appeal will automatically be set on a path where the representative is notified of a case management timetable. It was because these steps did not follow that Mr Gibbon contacted the Tribunal in May 2017. His failure was not to diarise the appeal for follow up if he did not receive the Statement of Case. That was a matter of oversight on his part which on its own would not have led to significant difficulties. It is the combination of a single clerical error and a single oversight which has led to serious consequences." (HMRC v. BMW Shipping Agents Limited [2021] UKUT 91 (TCC), Judge Richards and Judge Cannan)
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"[22] But the truth of the matter is that the fundamental reason for the delay is that the first email was not sent to HMRC. And it was only the second email which complied with the Unless Order. The reason for this is that Miss McMahon failed to send the first email to HMRC. This was a slip of the keyboard. It was simply a mistake albeit one which had significant consequences. The mistake was remedied in the second email. To our mind this mistake is again a justifiable reason why the deadline set out in the Unless Order was missed." (McFarland v. HMRC [2022] UKFTT 355 (TC), Judge Popplewell)
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Examples
Hattons (Southport) Ltd v. HMRC [2016] UKFTT 710 (TC), Judge Herrington – appeal struck out but taxpayer/adviser not notified. T thought the appeal had been stayed behind a lead case. Reinstatement granted 6 years later as taxpayer/adviser had no reason to make any enquiries in the meantime.
Green v. HMRC [2016] UKFTT 421 (TC) – appeal struck out due to non-compliance with an unless order. Reinstatement refused due to lack of good reason for not taking required steps and an apparent attempt to change the fundamental basis of the appeal.
Infocom IT(UK) Ltd v. HMRC [2016] UKFTT 319 (TC) – appeal struck out due to serial non-compliance. Reinstatement refused as taxpayer had failed to engage with appeal process in any meaningful sense thereby rendering it impossible to conduct and progress litigation.
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- Reinstatement where taxpayer unaware of strike out due to clerical error in email address
"[53] In this context, the reasons are not particularly “good” because of the failings, both of Mr Gibbon and of the Company, that led to the breach. However, they are not particularly “bad” because the failings on their own were relatively modest, even though the combination of them led to a serious outcome.
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[56] The final task, therefore, is to weigh all factors in the balance. In our judgment, the balance comes down, albeit by a slender margin, in favour of reinstating the appeal. Strike out of an appeal is a draconian sanction and for that reason it is not exercised without warning. Yet here, the Company received no warning before the appeal was struck out. Certainly neither the Company nor Mr Gibbon was blameless in this regard, but we have already explained our view as to the reasons for the default. In our judgment, not reinstating this appeal would involve imposing a sanction on the Company which is disproportionate to the seriousness of the conduct that led to breach of the FTT’s directions." (HMRC v. BMW Shipping Agents Limited [2021] UKUT 91 (TCC), Judge Richards and Judge Cannan)
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- Reinstatement granted where taxpayer complied with unless order 7 hours late due to a slip of the keyboard
"[24] In our view, as in BMW, the fundamental reason for the breach, namely the failure by Miss McMahon to send the first email to HMRC, was not particularly bad but it had a serious outcome. If we reinstate the appeal, HMRC will suffer no prejudice. As mentioned above, they processed the information provided in the second email and granted hardship. If we reject the application, then the appellant will suffer prejudice in that it will not be able to proceed with this appeal. Whilst this might be an inevitable consequence of its failure to comply with the Unless Order, it is something to which we can give weight when considering the balance of prejudice. Our view when evaluating all the circumstances is the same as the conclusion reached by the Upper Tribunal in BMW. Rejecting the appellant’s strike out application and sanctioning the strike out would be disproportionate to the seriousness of the breach and the reasons for it. Subject to our decision on the out of time application, we allow the appellant’s strike out application." (McFarland v. HMRC [2022] UKFTT 355 (TC), Judge Popplewell)
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- Refused where long history of non-compliance, including 2 unless orders with no reason
"[136] At Stages 1 and 2 of Martland, taking into account the full extent of non-compliance, Mr Breen’s conduct of his appeal has demonstrated a long history of non-compliance. There can be no doubt that the non-compliance was both serious and significant. There were two unless orders with which he had failed to comply and there was a long history of previous non-compliance with the Tribunal’s requirements and requests. We have found that that the continued non-compliance related not just to a list of documents but also to an outline of the factual assertions made by HMRC that he did not accept and to the witness evidence to be produced.
[137] As regards the failures to provide a list of documents, the FTT conclusion was as follows, at FTT[21]:
“As contended by HMRC and by reference to the findings of fact, the Appellant has provided no reason (never mind a good one) for the 26-month failure to provide a list of documents. It is immaterial, at this stage of the Martland test, what gave rise to the failure to comply with the Judge Bailey unless order taken alone.”
[138] Taking into account our findings in relation to the failures to provide a list of points and list of witnesses, on the basis of the facts found by the FTT, this conclusion applies equally to those failures. In other words, there was no good reason for the very lengthy failure in those respects, and that was the relevant failure, not the failure to comply with the Judge Bailey order taken alone.
[139] So, we conclude that the failure to comply with all three requirements for the relevant period was serious and significant, and there was no good reason for it." (HMRC v. Breen [2023] UKUT 252 (TCC), Judges Thomas Scott and Brannan)
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- Refused where T understood unless order re hardship but wanted a different option they had been told was not available
"[54] The communications from 99P do show that 99P considered they ought to be able to proceed differently, ie by agreeing a payment plan with HMRC for the payment of the duty and separately pursue their appeal to the Tribunal. But they were told repeatedly that this was not possible. I have decided that the default cannot be attributed to a failure to understand what they had to do to comply with the Unless Order. They did not want to take the required steps and wanted to pursue a different option (which they had been told was not available to them).
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[57] Taking account of all of the relevant circumstances, I have decided to refuse the Reinstatement Application. In reaching this decision I am mindful that this prejudices 99P, but I consider that this is outweighed by the particular importance of the need to comply with Tribunal directions, and the prejudice to HMRC if the appeal is reinstated. This is in circumstances where 99P had been told repeatedly that it would need to pay the duty or make a hardship application, both by the Tribunal and HMRC, forewarned that failure to do so would result in HMRC applying for the Tribunal to strike out the appeal and ultimately required by the terms of the Unless Order.
(99P Recycling Ltd v. HMRC [2024] UKFTT 13 (TC), Judge Zaman)
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Costs of reinstatement hearing following strike out
“Using only the criterion of whether or not the Appellant has acted unreasonably in making the application for reinstatement, I believe that the Appellant (through its representatives) has acted unreasonably. This is because the extent of the defaults made by the Appellant in the 15 months preceding the striking out of its appeal and the absence of compelling reasons for those defaults means that the Appellant’s application for reinstatement was bound to fail.” (Infocom IT(UK) Ltd v. HMRC [2016] UKFTT 319 (TC), §27)
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REINSTATEMENT FOLLOWING WITHDRAWAL
Right to apply
“(3) A party who has withdrawn their case may apply to the Tribunal for the case to be reinstated.
(4) An application under paragraph (3) must be made in writing and be received by the Tribunal within 28 days after –
(a) the date that the Tribunal received the notice under paragraph 1(a); or
(b) the date of the heading at which the case was withdrawn orally under paragraph (1)(b).” (FTT Rules rr.17(3) and (4)).
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- Only withdrawing party can apply to reinstate
“It is clear from Rule 17(3) that only the party who has withdrawn the appeal can apply for it to be reinstated. HMRC cannot do so.” (Orchid Properties v. HMRC [2012] UKFTT 651 (TC), §20)
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- Matter for the Tribunal’s discretion
“The Upper Tribunal in Pierhead Purchasing is authority for the proposition that reinstatement remains a matter of discretion for the Tribunal and an applicant must still show sufficient reasons to justify reinstatement, taking into account the overriding objective.” (Rolls Group v. HMRC [2015] UKFTT 404 (TC), §69)
- Presumption in favour of reinstatement for appellants acting in good faith and within the time limit
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“The right approach to a rule 17(3) reinstatement application is to proceed on 5 the basis that the Rules give an Appellant who has withdrawn his appeal the right to apply for reinstatement. If the Appellant is using the right to apply for an abusive purpose then the Tribunal may refuse it. It may, for example, be part of a delaying strategy on the part of an appellant to withdraw and then to apply for reinstatement…In my view the events of 7-24 September 2009 should (if the 7 September message really was a notice of withdrawal) be understood as a misplaced withdrawal which, as soon as Mr Sharma saw the implications, he took steps to put right. Both Mr Singh and Mr Sharma were acting in good faith. Their action came within the spirit of rule 17 and the Tribunal’s exercise of its power to allow the application to reinstate falls well within the object that rule 17(3) was designed to achieve.” (St Annes Distributors Ltd v. HMRC [2010] UKUT 458 (TCC), §§40…41)
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“Not only does Rule 17(3) contemplates the likelihood of a change of mind, but that Rule 17(4) allows such a change of mind to be made within the time allowed to make an application to reinstate the appeal. The Tribunal should therefore be slow to deny Mr Hadland the right to have his appeal dealt with fully, even though he had given an effective notice to withdraw.” (Hadland v. HMRC [2018] UKFTT 195 (TC), §74, Judge Poon)
“The factors relevant to whether an appeal should be reinstated on an application pursuant to Rule 17(3) were set out by Proudman J in Pierhead Purchasing v Commissioners of Revenue & Customs [2014] UKUT 321 (TCC). At [23] and [24] the Upper Tribunal set out the following criteria:
‘• The reasons for the delay, that is to say, whether there is a good reason for it.
• Whether HMRC would be prejudiced by reinstatement.
• Loss to the appellant if reinstatement were refused.
• The issue of legal certainty and whether extending time would be prejudicial to the interests of good administration.
• Consideration of the merits of the proposed appeal so far as they can conveniently and proportionately be ascertained.’ “(Rolls Group v. HMRC [2015] UKFTT 404 (TC), §11)
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- Rule 17 not a weapon to cull unmeritorious appeals of non-cooperative traders
“Rule 17(3) and (4) are there to protect the Appellant who for some reason has, deliberately and in good faith, withdrawn his appeal but, for an acceptable reason (e.g. because he has insufficient funds to continue the fight or has come to see the implications of withdrawal), has applied to reinstate the appeal within the 28 day cooling off period. Rule 17 is not a weapon to enable the Tribunal to cull unmeritorious appeals of non-cooperative traders. That may be a subsidiary consideration in refusing the application to reinstate; but it cannot be the principal reason.” (St Annes Distributors Ltd v. HMRC [2010] UKUT 458 (TCC), §39)
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Relevant factors
- Lack of consultation by representative with appellant before withdrawal by representative only a factor
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“From Training in Compliance we understand that there is no justification for drawing distinctions between a party and its representative; that we should take account as a fact of any lack of client consent but that that is not conclusive; and that the effect on the other party (here, HMRC) is equally important. From Mullock we understand that the obligation to co-operate with the Tribunal (Rule 2(4) refers) is on the Appellants “irrespective of the help and advice they are or are not receiving”; and that “a party should not shield behind his representatives”. (Vaultdawn Ltd v. HMRC [2015] UKFTT 383 (TC), §82)
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- Whether the appellant understood the consequences of withdrawal is relevant
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“It seems to me that, as I have said, the FTT in this case reached its conclusion on the assumption that counsel had not advised the appellant of the risk that its WOWGR licence might be withdrawn. It also made its findings on the basis that the appellant did not appreciate or even think about the risk. It is the necessary corollary that the appellant might have made a different decision on 30 withdrawal had that risk been considered. Having taken into account the circumstances in which the appeal was withdrawn, on the basis of those assumptions, the exercise by the FTT of its discretion is not in my judgment capable of being interfered with on appeal. It is important in my view to uphold robust case management decisions at first instance, and I do so.” (Pierhead Purchasing Ltd v. HMRC [2014] UKUT 321 (TCC), §35, Proudman J)
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“This is not a case such as Pierhead Purchasing where the appellant did not receive advice on the consequences of withdrawal. There is no suggestion that the appellants did not appreciate the consequences of withdrawal. Namely that they could not pursue the Appeals unless the Appeals were reinstated. Deloitte advised the appellants in terms that withdrawal would mean giving up on the matter. At that stage the appellants had an opportunity to consider the advice they had received, to take soundings within the industry or to raise the matter with AMS, their previous adviser whom they knew was sharing fees with Deloitte.” (Rolls Group v. HMRC [2015] UKFTT 404 (TC), §70).
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- Incompetent advice is a factor
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“[The taxpayer] submitted that the appellants were entitled to rely on the advice of a leading firm of professional advisers. I accept that is a factor to take into account, but for reasons given above it is also relevant to consider whether the advice was such that no reasonably competent professional adviser could have given it. If the advice was reasonable, then reliance on the advice would not really support the appellants’ case on reinstatement. The grounds for seeking reinstatement could then fairly be described as subsequently taking a different view as to the prospects of success of the Appeals.” (Rolls Group v. HMRC [2015] UKFTT 404 (TC), §74 – but note that the Judge also said (§§15 – 19) that an application to reinstate was more akin to setting aside a default judgment and thus he should take into account the Court of Appeal’s decision in Mullock v. Price [2009] EWCA Civ 1222 to the effect that a party should not in general be allowed to shield behind his representative)
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- Delay beyond 28 days is a factor pointing against reinstatement
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“With each day that passes after a stipulated time limit, the effect of legal certainty strengthens its hold. The principle of legal certainty is central to the administration of justice, without which there can be no finality in dispute resolution. Where there is no finality in litigation, there can be no ultimate enforcement of justice, and the legal system would cease to command the respect of all concerned.” (Hadland v. HMRC [2018] UKFTT 195 (TC), §85, Judge Poon – 4 months’ delay caused serious prejudice, reinstatement refused).
“I take into account the period of time which has passed since the appeals were withdrawn and the prejudice to both parties which I have described above.” (Rolls Group v. HMRC [2015] UKFTT 404 (TC), §70)
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