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Procedure.Tax
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M32b: Late evidence
FTT rules do not permit a free for all
“We are also anxious to dispel any suggestion that the FTT Procedure Rules envisage a kind of evidential free for all where anything goes. Particularly in heavy and complex cases of the present type, it is important that directions for evidence should be given and adhered to on both sides, and that there should be no dispute about the evidential status of documents placed before the Tribunal. Otherwise, as the present dispute shows, there is much scope for misunderstanding and potential unfairness.” (HMRC v. General Motors (UK) Limited [2015] UKUT 605 (TCC), §109, Henderson J and Judge Sinfield).
Stricter approach following BPP
“Having regard to all the circumstances, in particular that the amended grounds of appeal relying on the A1P1 provisions are dated 5 December 2015 when it would have been known whether Elbrook needed to rely on expert evidence, and adopting the BPP approach to compliance with directions I refuse permission for Elbrook to rely on expert accounting evidence.” (Elbrook (Cash and Carry) Ltd v. HMRC [2017] UKFTT 143 (TC), §29, Judge John Brooks).
Absence of direction re timing of evidence
"[71] We do not accept the submission that the relief from sanctions case law should have been applied by the FTT when deciding whether to admit the RSM letter. There was no particular breach of a direction or the Rules or any given time limit...
...
[73] Therefore, whilst we do not agree with [the taxpayer] that Martland and the breach of sanctions case law directly applies to the admission of evidence in this case, nonetheless, we accept that similar factors are likely to be considered when applying Rule 15 in the light of Rule 2 in deciding whether to admit evidence at a late stage in proceedings: the explanation for its late deployment or service; the significance or relevance of the material to the issue to be decided; and the prejudice it would cause to the other party in addressing it." (Ellis v. HMRC [2022] UKUT 254 (TCC), Judge Greenbank and Judge Rupert Jones)
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Party preparing late evidence should warn other party
“[16]The absence of any explanation left me with the clear impression that Mr Johnson gave other tasks higher priority. That may have been a reasonable thing for him to do, but it does not explain or excuse the failure to tell the appellant’s solicitors or the tribunal what was going on. This was evidence HMRC wished to put in after the expiry of the time limit imposed by tribunal directions, already extended several times, and when they knew that an application for permission would be necessary. A litigant wishing to put in late evidence has a duty to make the application promptly and, in a case such as this where the evidence is being compiled, to forewarn his opponent: it is not a case in which doing so would undermine the purpose of the evidence. HMRC did not forewarn, and took an unexplained amount of time to produce the evidence.” (HMRC v. Atlantic Electronics Ltd [2012] UKUT 423 (TCC), Judge Bishopp).
Failure to warn may lead to exclusion
“[17] The information available to me about the relative prejudice to the parties of admitting or excluding the evidence was rather limited, but I was satisfied that my admitting Mr Johnson’s evidence would cause more than trivial prejudice to the Company. The combination of that prejudice and HMRC’s failure to act openly, in my judgment, outweighed the fact that the evidence is relevant and the prejudice to HMRC of excluding it. For that reason I decided that the overriding objective dictated the exclusion of this evidence.” (HMRC v. Atlantic Electronics Ltd [2012] UKUT 423 (TCC), Judge Bishopp - no appeal against this part of the decision).
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Not admitted simply because of failure to object at first opportunity
“Whilst we accept that the transaction enquiry reports were referred to by Mr Macnab in his opening and in the oral evidence of Ms Parikh, we do not accept that those materials can effectively be regarded as admitted into evidence because Miss Field failed to object at that stage. Miss Field was a self-represented appellant faced with voluminous evidence; any failure on her part to raise the issue cannot be a substitute for a proper application to 14 the FTT, and the exercise of judicial discretion to admit, or refuse to admit, that evidence.” (Eyedial Limited v. HMRC [2013] UKUT 432 (TCC), §41, Judges Berner and Hellier)
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Applying without the evidence sought to be admitted
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No indication that evidence will actually be produced
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“There is no indication that Mr Sood was taking steps which would have resulted in compliance by the date sought. There has been no indication that he has used the time in any meaningful way to progress his case or that if time was granted anything would change in Mr Sood’s circumstances or the arrangements for handling the appellant’s appeal such that the appellant’s witness statements would be prepared and served. Taking account of the need to avoid delay, and to ensure compliance with directions, the lack of any credible explanation for why extra time is required or that it would realistically be made use of, it would not be fair and just to extend time on the facts of this case.” (Tradium Ltd v. HMRC [2014] UKFTT 894 (TC), §§62…63).
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Evidence cannot be provisionally admitted/admissibility should be ruled on before reliance
“We also think it would have been better if the FTT had ruled on the admissibility of the material before permitting Dr Holweg to be cross-examined upon it on a hypothetical basis. And having done so, the FTT should then have taken stock of the position with Mr Puzey, clarified whether he still wished to maintain any objections to the reception of the material in evidence, and (if so) ruled upon the objections without more ado. In general terms, we respectfully endorse the guidance given by Lightman J in the Mobile Export case, although it must now be read in the light of the FTT Procedure Rules.” (HMRC v. General Motors (UK) Limited [2015] UKUT 605 (TCC), §108, Henderson J and Judge Sinfield).
“The tribunal cannot (as it has proposed in the decision) decide to admit evidence on the basis that it can later reverse this decision if it considers it just. The tribunal must (at least in any ordinary case such as the present) make a final decision either way. Pending such a final decision, the tribunal may find it necessary to allow evidence to be read and referred to 'de bene esse' before finally deciding on its admissibility. The availability of this course does not afford a green light to postponing a final decision on admissibility longer than is necessary.” (Mobile Export 365 Ltd v. HMRC [2007] EWHC 1737 (CH), §20(3)).
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FTT should distinguish evidence that updates/clarifies existing evidence from new evidence
“It is also clear, from further remarks made by the judge, that Judge Bishopp himself was mindful of the difference between evidence that corrected something which was already before the tribunal and supplementary evidence. Had the judge appreciated the true position of the transaction enquiry reports, we have no doubt that he would not have admitted them.” (Eyedial Limited v. HMRC [2013] UKUT 432 (TCC), §38, Judges Berner and Hellier).
Updating calculational evidence in response to criticisms during hearing
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“Nevertheless, the fact remains that KPMG’s letter of 13 July 2012 to the FTT gave a basic description of the nature and content of the Disputed Documents. To the extent that the new material corrected acknowledged errors in Mr Robinson’s model, which had been exposed when he gave evidence, it is hard to see how there can have been any prejudice to HMRC. Likewise, the correction of the “rogue” data for 2003 would seem to have removed any objection to using 2003 as one of the fixed FIN 51 data points on the Graph. Whether those fixed data points were sufficient to ground the inferences which the FTT drew from them is another matter, to which we will have to return. To the extent that the new material extended the previous iterations of the model from 2004 to 2011, this was done in response to indications from the Tribunal that it might be helpful, and KPMG clearly explained the limitations on the usefulness of the exercise. In those circumstances, it was in our view legitimate for GMUK to place the material before the FTT, while maintaining their existing case. It was also legitimate, in principle, for the FTT to decide to make use of the new material, even though GMUK placed no reliance upon it.” (HMRC v. General Motors (UK) Limited [2015] UKUT 605 (TCC), §110, Henderson J and Judge Sinfield).
Presumption in favour of admission of relevant evidence approach
Relevance is important factor
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“Since the relevance of evidence sought to be admitted is an important matter to be borne in mind when considering whether or not to admit late evidence (see the observation of Lightman J in Mobile Export 365 Ltd v Revenue and Customs Commissioners [2007] STC 1794 to which I refer below) I came to the conclusion that there was a fatal flaw in the reasoning which compelled me to set aside this part of the decision.” (HMRC v. Atlantic Electronics Ltd [2012] UKUT 423 (TCC), §12).
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“The overriding objective is to deal with the case fairly and justly. That requires me to take account of all the available evidence in order to be able to come to a just and fair result. The form containing the option to tax is clearly probative of an issue before the Tribunal and to exclude it would risk the Tribunal reaching a decision on incorrect facts.” (Clark Hill Ltd v. HMRC [2018] UKFTT 111 (TC), §20(2), Judge Greenbank – late evidence admitted but costs order made against HMRC).
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Main factor considered is relevance
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"[19] Having considered the parties’ submissions, we decided not to admit the evidence for the following reasons. We considered that the evidence was produced too late in the day, without notice and without any sufficient explanation as to why it was not, and could not have been, produced earlier. The main factor we considered was the relevance of the document. There was no evidence offered in support of the document and no witness to speak to its contents; in those circumstances we were left without any 5 knowledge as to what the document was, the circumstances in which it came about or whether it had any relevance to what is typical in the industry. In our view, the relevance is limited to potentially illustrating a point which could be put to a witness in any event without the document." (Jones Bros Ruthin v. HMRC [2022] UKFTT 26 (TC), Judge Dean)
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Presumption in favour of admission of relevant evidence
"[31] The UT adopted the correct approach to the admission of the materials in question. It assessed whether the evidence was relevant and applied the presumption that all relevant evidence should be admitted unless there is a compelling reason to the contrary: Mobile Export 365 Ltd v Commissioners for HMRC [2007] EWHC 2664 (Admin) per Lightman J at [20]. In doing so, it considered all of the Company's submissions which if accepted could have led to the exclusion of the evidence and in particular decided that the submission that the admission of the convictions and the background relating to them would be a significant burden in the time and cost of their investigation was over stated." (Atlantic Electronics Ltd v. HMRC [2013] EWCA Civ 651, Ryder LJ)
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“The presumption must be that all relevant evidence should be admitted unless there is a compelling reason to the contrary.” (Mobile Export 365 Ltd v. HMRC [2007] EWHC 1737 (CH), §20(2)).
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"[44] I agree that the seven witness statements are relevant to this appeal.
[45] Therefore, those seven statements should only not be admitted if there is a compelling reason not to admit them. To decide whether there is a compelling reason I must conduct a balancing exercise, taking into account the “likely probative value of the evidence, any unfair prejudice caused to either party, good case management and any other relevant factor”.
[46] In considering this point, I weigh the prejudice to the Respondents, the prejudice to the Appellant, and good case management generally. I also consider the over-riding objective to act fairly and justly." (Ellis v. HMRC [2023] UKFTT 388 (TCC), Judge Bailey)
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“After hearing submissions from both parties we agreed to admit the evidence. Following further submissions during the course of the hearing by Mr Nawbatt for HMRC, it was also agreed that Ms Martin would produce a supplementary witness statement covering certain matters omitted from the original, sufficiently in advance of giving evidence for it to be considered by Mr Nawbatt.” (Professional Game Match Officials Ltd v. HMRC [2018] UKFTT 528 (TC), §6, Judge Falk).
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Balancing exercise
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“Simply put, we have a discretion and we take the view that it is a balancing exercise discouraging ambushes and surprises.” (Aircall International Ltd v. HMRC [2016] UKFTT 406 (TC), §611)
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“The conclusions I draw from these cases and from general considerations of fair hearings are as follows:
[1] Only relevant evidence should be admitted;
[2] Such evidence should nevertheless be excluded where there is a compelling reason to do so;
[3] Whether there is a compelling reason to do so will be a balancing exercise the object of which is to achieve a trial that reaches the correct decision by a process fair to all parties;
[4] To conduct that balancing exercise the Tribunal must consider the likely probative value of the evidence, any unfair prejudice caused to either party, good case management and any other relevant factor;
[5] Unfair prejudice includes the factors listed by Lord Bingham which were particularly relevant in that case but in this case, not being a trial by jury, perhaps of less relevance. Unfair prejudice would include a party being ambushed so that it is strategically disadvantaged or put in a position that it has no time to bring evidence in rebuttal;
[6] Considerations of good case management will include the need for a sanction against a party which adduces late evidence particularly where the evidence could have been produced earlier; it will recognise the desirability of adhering to trial dates and avoiding unnecessary costs.” (Masstech Corporation Limited v. HMRC [2011] UKFTT 649 (TC), §8, Judge Mosedale adopted in Aircall International Ltd v. HMRC [2016] UKFTT 406 (TC), §610 and Allen v. HMRC [2016] UKFTT 571 (TC), §12).
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Relief from sanctions approach
"[42] There had plainly been a failure to comply with the directions, and HMRC are right that I must follow the approach in Denton. This is to:
(1) establish the length of the delay and whether it is serious and/or significant;
(2) establish the reason(s) why the delay occurred; and
(3) evaluate all the circumstances of the case, using a balancing exercise to assess the merits of the reason(s) given for the delay and the prejudice which would be caused to both parties by granting or refusing permission, and in doing so take into account “the particular importance of the need for litigation to be conducted efficiently and at proportionate cost, and for statutory time limits to be respected”." (WM Morrison Supermarkets Plc v. HMRC [2021] UKFTT 106 (TC), Judge Redston approach followed in Willmott Dixon Holdings Limited v. HMRC [2022] UKFTT 6 (TC), Judge Nigel Popplewell)
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Delay
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Two working days before the hearing serious and significant failure
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"[43] I agreed with HMRC for the reasons they gave, that filing and serving Mr Dunne’s witness statement only two full working days before the hearing was a serious and significant failure." (WM Morrison Supermarkets Plc v. HMRC [2021] UKFTT 106 (TC), Judge Redston)
10 months after filing date in directions serious and significant
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"[16]...I find that the disclosure of these documents in October 2021 was seriously and significantly late when tested against the directions for disclosure which required such documents to be disclosed in January 2021." (Willmott Dixon Holdings Limited v. HMRC [2022] UKFTT 6 (TC), Judge Nigel Popplewell)
2 months after deadline and shortly before hearing serious and significant
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"[54] There has again plainly been a failure to comply with the directions. The delay was serious and significant, not only because the witness statement was filed and served more than two months after the 30 November 2020 deadline set by the directions, but also because they were put forward so very close to the hearing." (WM Morrison Supermarkets Plc v. HMRC [2021] UKFTT 106 (TC), Judge Redston)
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Good reason for delay
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Unsupported assertion not accepted
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"[44] In relation to the reasons for the delay, I was provided only with the information in the Application that the Appellant “has only recently been able to secure Natural Balance’s agreement to provide a witness statement as part of these proceedings”, together with Mr Simpson’s statement that Morrison’s reopened discussions with Nakd Bars in October 2020, and that in mid-January 2021 the company indicated that they would be willing to provide a witness statement. There was no evidence to support those statements, such as emails between Morrison’s and Nakd Bars to demonstrate why it had taken so long, or where responsibility for the slippage of time actually lay, or why it was only in October 2020 that discussions recommenced; or why there had been a change of view by Natural Balance, given that Mr Simpson had said Nakd Bars were continuing to hold their own discussions with HMRC. I find that there was no good reason for the delay." (WM Morrison Supermarkets Plc v. HMRC [2021] UKFTT 106 (TC), Judge Redston)
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Delay in deciding how to put case not a good reason
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"[55] The failure was caused by the Appellant’s delay in deciding which comparator products it wished to put before the Tribunal as part of its case, and this was not a good reason. By the time of the hearing the parties had been preparing for this appeal for over two years, and there had been plenty of time for the Appellant to consider whether it wished to put forward comparator products and to provide them to HMRC, along with any related witness evidence and submissions." (WM Morrison Supermarkets Plc v. HMRC [2021] UKFTT 106 (TC), Judge Redston)
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Evidence that could not have been produced earlier
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“As I have said, the application to adduce this evidence was made promptly after Mr Ahmed’s conviction. There is thus no basis to exclude it on grounds of dilatoriness. The fact that the application for it to be admitted was late—that is, made after the time for disclosure of evidence had expired—is no more than the inevitable consequence of the timing of the conviction.” (HMRC v. Atlantic Electronics Ltd [2012] UKUT 423 (TCC), §28).
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Documents whose existence the party was not previously aware of
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"[16] Turning first to the 96 pages. Notwithstanding [the taxpayer]’s submission that time should run from the date on which Mr Canney reactivated his email account, I find that the disclosure 4 of these documents in October 2021 was seriously and significantly late when tested against the directions for disclosure which required such documents to be disclosed in January 2021. However, I accept [the taxpayer]’s reasons for this late disclosure, namely that the appellant was not aware of the existence of these documents until Mr Canney reactivated his email account in the summer of 2021, and it was only then that he realised that this was source material on which his witness statement had, in part, been based. It is at the final evaluation stage, however, that I have most difficulty, given that I do not fully understand the relevance of this additional documentation in the context of the issues which are to be canvassed in more detail during the hearing. I fully appreciate that the appellant wishes to assist the Tribunal by providing all relevant material, and that the 96 pages are, in its view, relevant. In view of the overriding objective, it is my view that the documents should be admitted in evidence and that I should wait and see the use to which they are put by the appellant. I can then attribute such weight to the documents as is appropriate, and Mr Nawbatt can make submissions on that too. Furthermore, I do not believe that Mr Nawbatt has been seriously ambushed by these documents. He is an extremely experienced and highly competent advocate, and is thoroughly capable of cross-examining Mr Canney on these documents should they be relied upon in evidence in chief. For these reasons I have decided to admit these documents into evidence in this appeal." (Willmott Dixon Holdings Limited v. HMRC [2022] UKFTT 6 (TC), Judge Nigel Popplewell)
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Evidence supplied in response to request by other party (albeit late)
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"[17] ... However, as has been made clear above, that statement was submitted to provide information which had been sought by HMRC in July 2021. Mr Nawbatt makes the point that lateness should perhaps be tested against that date, and I think that is a good point, notwithstanding that it would clearly take time to conjure a full response, which is what, Mr Mullan submits, has happened in this case. Once Mr Canney had put Mr Dundas on notice that the figures which he had previously submitted to HMRC, looked wrong, it took some time (and holiday intervened) to interrogate the underlying source material and to compile more accurate figures which, Mr Dundas suggests, are contained in the supplemental witness statement. This is a justifiable reason for the lateness. At the final evaluation stage, I take into account the fact that Mr Mullan’s submission is that this evidence is, somewhat oddly, not being relied upon by the appellant. And I wholly accept that if this is the case (and again I was in a somewhat difficult position in testing the relevance of the information in the supplemental witness statement given that I had not heard the issues fully argued at that time) this distinguishes the appellant’s position in this appeal from the appellant’s position in Morrisons. I also accept that in this context, having been asked for information by HMRC, and having seen that the information previously provided was incorrect, it was wholly proper for the appellant to seek to correct that information for the benefit of the Tribunal and for HMRC, and furthers the overriding objective. Mr Mullan’s point is that it is a bit harsh on the appellant in seeking to assist the Tribunal, to be criticised for doing so, or indeed to be criticised for providing an information which was sought by HMRC. And I accept this submission. It is my view that it is only once the issues in this case have been fully aired that I can consider the relevance of the information in the supplemental witness statement..." (Willmott Dixon Holdings Limited v. HMRC [2022] UKFTT 6 (TC), Judge Nigel Popplewell)
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Unsupported assertion not accepted
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"[44] In relation to the reasons for the delay, I was provided only with the information in the Application that the Appellant “has only recently been able to secure Natural Balance’s agreement to provide a witness statement as part of these proceedings”, together with Mr Simpson’s statement that Morrison’s reopened discussions with Nakd Bars in October 2020, and that in mid-January 2021 the company indicated that they would be willing to provide a witness statement. There was no evidence to support those statements, such as emails between Morrison’s and Nakd Bars to demonstrate why it had taken so long, or where responsibility for the slippage of time actually lay, or why it was only in October 2020 that discussions recommenced; or why there had been a change of view by Natural Balance, given that Mr Simpson had said Nakd Bars were continuing to hold their own discussions with HMRC. I find that there was no good reason for the delay." (WM Morrison Supermarkets Plc v. HMRC [2021] UKFTT 106 (TC), Judge Redston)
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All the circumstances: general approach
"[45] The third stage of the Denton approach is to consider all relevant circumstances. I took into account the following factors:
(1) “The need for ‘litigation to be conducted efficiently and at proportionate cost”, and “to enforce compliance with rules, practice directions and orders”, to which “particular importance” must be given, see Martland v HMRC [2018] UKUT 178 (TCC) at [43] citing in particular Denton and BPP v HMRC [2017] UKSC 55.
(2) No good reason had been given for the delay in providing the witness statement.
(3) The evidence was relevant, and in Mobile Export Lightman J said at [20(2)] that “the presumption must be that all relevant evidence should be admitted unless there is a compelling reason to the contrary”. However, Lightman J went on to say at [21] that springing surprises on opponents and the Tribunal was “not acceptable conduct today in any civil proceedings” and was “clearly repugnant to the Overriding Objective” and to the duty of the parties and their legal representatives to help the court to further that objective. The Appellant in this case was “springing surprises” on HMRC.
(4) If the witness statement were to be admitted, it would cause prejudice to HMRC because:
(a) they would have to review how they were approaching their case, not only after the provision of the Statement of Case, but after both parties had served their skeleton arguments;
(b) HMRC had no information as to how the witness statement was going to be approached by Mr Simpson when he came to present the Appellant’s case, because it was not part of the Appellant’s Grounds of Appeal, and formed no part of his skeleton argument;
(c) Mr Watkinson would have had almost no time to prepare his cross-examination of Mr Dunne; and
(d) HMRC might have wished to put forward other evidence to challenge or respond to that in the witness statement, but had had no time to consider doing so.
(5) To the extent that the witness statement was supporting information on the Products’ wrappers about the manufacturing process, the Appellant had already provided some evidence." (WM Morrison Supermarkets Plc v. HMRC [2021] UKFTT 106 (TC), Judge Redston)
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Delay by itself not usually sufficient to exclude: procedural prejudice also required
“Judge Mosedale gave her reasons for concluding that delay, by itself, is not enough to exclude evidence. She referred to Atlantic Electronics and Swain-Mason as authority for the proposition that delay combined with procedural prejudice may lead to late evidence being excluded. She then considered the relevance of the evidence, length of delay, the reason (or lack of it) for the delay and the possible prejudice to each party in the context of the facts of FCC’s appeals. Those factors were derived from the cases discussed. The relevance of those factors is not diminished because the facts of the cases differed from the facts of FCC’s appeals. We consider that Judge Mosedale correctly identified the relevant factors to be considered in deciding whether the 2007 Appeal evidence should be admitted in the 2010 Appeal.” (First Class Communications Ltd v. HMRC [2014] UKUT 244, §34, Judges Sinfield and John Clark).
“HMRC were unable to offer any good reason why Officer McKenna’s report could not have been produced at an earlier date and in accordance with the timetable set out by the Tribunal. It seemed clear to us that no one had taken the trouble to look for it. Furthermore, it seemed to us that there would be considerable prejudice to the appellant. Fairness would dictate that the appellant should be entitled to call evidence to clarify the circumstances of Officer McKenna’s inspection. We were informed that the appellant’s employee responsible for providing samples of the bags to Officer McKenna, Mr Varghese, was no longer employed by the appellant and they did not know when or whether they would be able to contact him. At the very least, it appeared that it would be necessary to abandon the hearing timetable and reschedule a new hearing.” (Euro Packaging Ltd v. HMRC [2017] UKFTT 160 (TC), §39).
“Although apologetic for the late service of evidence, the only reason or explanation advanced by Mr Paulin for HMRC’s non-compliance with the instructions contained in the Tribunal’s letter of 22 September 2015 was that the provision of grounds on which the application was opposed and evidence in support was regarded by HMRC as a “satellite” affair to the continuation of the enquiry. Such a cavalier approach to the provision of such information is simply not good enough and as Lightman J said “clearly repugnant to the Overriding Objective”…In the circumstances, as there was insufficient time for the evidence to be properly considered by or on behalf of Mr Nichols and Mr French, I found the extremely late submission of the evidence to be a compelling reason not to admit it.” (Nichols v. HMRC [2016] UKFTT 155 (TC), §§12…13).
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All the circumstances: specific factors and examples
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Repeated delay despite warnings leading to exclusion
“The tribunal must have the power to impose a deadline or cut-off date by which evidence is to be served. Otherwise it would be impossible to manage cases efficiently and effectively. Given that it has such a power, the tribunal must also have the corollary power to refuse to allow an applicant to rely on evidence provided after the cut-off date, as otherwise its directions would be no more than aspirations which could be ignored. Whether it is appropriate in a particular case to exercise that power is a matter for the tribunal and depends on all the circumstances.” (ToTel Ltd v HMRC [2014] UKUT 485 (TCC), §74, Nugee J).
Application refused where it would derail hearing date
“In summary, although I accept that the appellants will suffer prejudice if the Application is not granted, the respondents and the public purse will suffer considerable prejudice if the Application is granted.” (Biffin Ltd v. HMRC [2018] UKFTT 506 (TC), §66, Judge Poon).
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Other party has served late evidence (factor in favour of admitting evidence)
“As the directions in this case did not specify any sanction for failing to serve witness statements by the due date and as the specified date for service in the case of HMRC was repeatedly extended without sanction or condition being imposed, I consider that it would be neither just nor fair to refuse LCC’s application to serve and rely on the further evidence.” (London Cellular Communications Ltd v. HMRC [2014] UKFTT 272 (TC), §25)
Evidence casting doubt on the validity of the other party’s evidence
“Since the purpose of the respondents' additional documents is to cast doubt on the validity of some of the appellant's documents it seems to me that it is not surprising that they were served out of time. Miss Simler also referred to the appellant amending his schedule of days in various countries and some changes to his witness statements.” (Businessman v. HMRC [2008] STC (SCD) 1151, §3 - evidence suggesting the taxpayer had altered documents submitted 10 days before hearing).
Impractical to exclude where appeals to be heard together
“Having regard to all the circumstances of the case it is apparent from the submissions of Mr Jones that the evidence of Fukhera Khalid and Amjad Khalid, both directors of Elbrook, would give the Tribunal a greater understanding of how the company operates. As there is no doubt that they would be able to give evidence in relation to the First and Second VAT appeals and given my decision that these appeals should be heard contemporaneously with the WOWGR appeal, I consider it would be impractical to restrict the evidence of Fukhera Khalid and Amjad Khalid to the VAT appeals especially as there are matters in those appeals that are common to the WOWGR appeal. Also, the appeals are listed to be heard in August 2017, I consider the admission of such evidence unlikely to be prejudicial to HMRC if it is served in sufficient time before the hearing to enable it to be properly considered.” (Elbrook (Cash and Carry) Ltd v. HMRC [2017] UKFTT 143 (TC), §24, Judge John Brooks).
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Excluding irrelevant late evidence
“…I allowed Mr Mantle’s objection to those invoices being admitted late for the purpose of the preliminary issues hearing, not only because there the application to admit them was made at a late stage without good reason but also because I did not consider the question as to whether or not Carbondesk did cease to trade for a short period to be relevant for the determination of the preliminary issue and I make no findings on that point…” (Carbondesk Group Plc v. HMRC [2015] UKFTT 367 (TC), §29).
Excluding poor quality evidence
“Given the lack of specification in the witness statement and the inherent inconsistencies and inaccuracies it is of very doubtful relevance and of limited probative value. Unfair prejudice would be caused to HMRC were it to be admitted because based on that witness statement the probability would be that new and possibly different evidence would be elicited in cross-examination and HMRC would therefore be ambushed since they would have limited or no time to investigate any such evidence.” (Allen v. HMRC [2016] UKFTT 571 (TC), §52).
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Evidence from the taxpayer's own website produced by HMRC two weeks before the hearing admitted
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"[72] In deciding whether to admit the evidence, I took into account that it had been filed and served after the date given in the directions and that no reason had been given as to why HMRC had not put it forward earlier. Having given significant weight to those factors, I nevertheless found that the balance of factors favoured admitting the evidence, because:
(1) Mr Watkinson had invited the Appellant to agree or object to the Appendix, and had said that if the Appellant objected, HMRC would make a formal application. No such objection was made during the following two weeks. HMRC had reasonably proceeded on the basis that the Appellant did not object;
(2) the evidence was already known to the Appellant as it was taken from its own website and that of Natural Balance;
(3) the Appellant had had two weeks to consider the evidence in the context of its own submissions;
(4) if the Appellant had thought that HMRC’s selection was unbalanced, it could have objected and/or asked for other website evidence to be admitted; and
(5) the possibility that the Appellant might object was raised for the first time on the middle of the second day of the hearing, shortly before the conclusion of Mr Simpson’s submissions; in other words, on the same day that Mr Watkinson was expecting to do his opening, which was procedurally unfair." (WM Morrison Supermarkets Plc v. HMRC [2021] UKFTT 106 (TC), Judge Redston)
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Evidence of limited relevance sought to be introduced on first day of hearing not admitted
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"[19] Having considered the parties’ submissions, we decided not to admit the evidence for the following reasons. We considered that the evidence was produced too late in the day, without notice and without any sufficient explanation as to why it was not, and could not have been, produced earlier. The main factor we considered was the relevance of the document. There was no evidence offered in support of the document and no witness to speak to its contents; in those circumstances we were left without any knowledge as to what the document was, the circumstances in which it came about or whether it had any relevance to what is typical in the industry. In our view, the relevance is limited to potentially illustrating a point which could be put to a witness in any event without the document." (Jones Bros Ruthin v. HMRC [2022] UKFTT 26 (TC), Judge Dean)
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- Excluded where large quantity served during the period immediately prior to trial
"[49] HMRC said in their email of 11 April 2023 that the late evidence is prejudicial to them because the Appellant’s 50 page witness statement is “not an insignificant document” and will “need a significant amount of additional work” during a period when HMRC should be preparing their skeleton in response to the existing evidence and to Mr Hickey’s submissions based on that evidence. It is also likely that Officer Bland would, at this very late stage, have to give a further witness statement. I agree that there is significant prejudice to HMRC for the reasons given in that email.
The hearing
[50] If the Tribunal were to admit this late evidence, it would be unfair and unjust to HMRC to require them to consider and respond by way of a skeleton argument in the very short time remaining. It would also be unfair and unjust for them to have to file and serve a further witness statement from Officer Bland, within the same limited time period.
[51] Even or to the extent that HMRC were able to consider and respond to the new evidence, the timetable for the hearing is likely to be inadequate: there would be a further witness, Ms Sattar, who would be required to be tendered for cross-examination, and the Appellant’s own witness statement has been expanded by some fifty pages; the material in the 13th LoD is also additional.
[52] For all those reasons, if the new evidence were to be admitted, the overriding objective would require the Tribunal to vacate the hearing and relist it. That would plainly not be in the interests of justice." (Mohammed v. HMRC [2023] UKFTT 375 (TC), Judge Redston)
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- Highly relevant accounts served a week before hearing permitted
"[5] The Tribunal concluded that the accounting documents should be admitted notwithstanding the fact that they had been served late because it appeared to the Tribunal that the accounts for both the Partnership and the Company were potentially highly relevant to the issues under appeal. Any disadvantage to HMRC could be mitigated by allowing HMRC time during the short adjournment on the first day of the hearing to consider the documents and raise any queries." (O'Neil v. HMRC [2023] UKFTT 290 (TC), Judge Short)
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- Accounting standard permitted to be used to cross-examine expert
"[41] I consider the rules and principles applying to the preparation of accounts to be in evidence, whether referred to specifically or not, by virtue of Mr Powie’s report. Further, as FRS 18 appears to be relevant, I consider that it should be admitted in the absence of any compelling reason to the contrary (see Mobile Export 365 LTD v HMRC [2007] EWHC 1737 (Ch) at [20]). I also do not agree that allowing the application seeks to amend HMRC’s statement of case. Part of HMRC’s case is that the accounts were not prepared in accordance with GAAP and HMRC’s statement of case sets out their position on whether the RT transfers expense is in accordance with GAAP. Although their statement of case does not refer specifically to FRS 18, I do not consider its inclusion to fundamentally alter HMRC’s basic position, as contended by Ms Brown, such that an amendment to the statement of case is necessary.
[42] On the question of whether it is in the interest of fairness and justice to allow the application, Ms Brown makes reference to HMRC previously making a number of applications at short notice that have disrupted preparation and argues that is a much more significant factor in the case of an individual appellant, with limited resources and support, than it is for HMRC. In respect of this application, I accept Ms Belgrano’s explanation that the late timing of the application was unavoidable due to the issue arising whilst preparing for cross-examination. On balance, I consider the potential prejudice to HMRC from refusing to allow relevant cross-examination to outweigh the potential prejudice to Mr Northwood’s case by the lateness of the application. I consider it to be in the interests of fairness and justice to allow the cross-examination and the application is therefore granted." (Northwood v. HMRC [2023] UKFTT 351 (TC), Judge Sukul)
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- Supplemental statement served after skeletons but could have been served months before not admitted
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"[13] We find that there was a 6 month delay in serving the supplemental witness statement. There was no good reason for doing so as the information was available at the latest in November 2022, three months before Mr Davies' first statement was served. We accept for these purposes that the Appellant was trying to make another batch but that had no connection to the issues in this supplemental statement other than the convenience of grouping matters in the same statement. Even then the point does not in our view hold water given the Appellant was yet to serve Mr Davies' first statement and could have added the evidence it now wishes to adduce into that statement. We agree that there is some prejudice to HMRC in having to consider the HFSS Regulations with only three weeks' notice.
[14] We therefore direct that the supplemental witness statement and associated exhibits is not admitted." (Duelfuel Nutrition Limited v. HMRC [2024] UKFTT 104 (TC), Judge Hyde)
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Admission subject to conditions
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Admission conditional on applying party making good costs
“I cannot order HMRC to make good the prejudice in costs: this is a complex case but one in respect of which the Appellant has opted out of the costs regime. Therefore, my order was that only if HMRC give an undertaking to make good the Appellant’s costs as specified by me as arising out of the late admission of this evidence will the evidence be admitted.” (Masstech Corporation Limited v. HMRC [2011] UKFTT 649 (TC), §32, Judge Mosedale).
Admission conditional on case being adjourned for another reason
“Nevertheless, the witness statement was of probative value and the only bar to its admission was that the Appellant did not have time to deal with it properly. Therefore I directed that if the hearing was adjourned for another reason (such as the Appellant’s exercise of its right to an adjournment under my direction in relation to the admission of the Paris server witness statements) then this witness statement should be admitted. Otherwise it is not admitted.” (Masstech Corporation Limited v. HMRC [2011] UKFTT 649 (TC), §38, Judge Mosedale).
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Very late evidence (after the hearing)
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- Evidence after appeal heard but before decision not admitted
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“Whilst we have a discretion to admit late evidence, we decline to exercise it in favour of the Appellant in this case in relation to the documents provided on 31 March 2017. Those documents could and should have been disclosed sooner. Mr Tipping had been professionally advised and represented throughout this appeal. His failure to have disclosed these documents was serious and significant, and there was no good reason for it. The documents were self-evidently relevant in an appeal which obviously turned in large measure of what Mr Tipping knew, and when. The appeal had been conducted, by both parties, on a particular footing, and it would be unfair (especially taking into account HMRC's repeated inquiries as to whether there were more documents) to admit the documents into evidence. HMRC was entitled to rely on the assurance which it had been given by the Appellant's representatives. Accordingly, we have had no regard to those documents in our determination of this appeal.” (Tipping v. HMRC [2017] UKFTT 485 (TC), §12, Judge McNall)
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- Further evidence after the hearing at the request of the Tribunal
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“after we retired to consider our decision it became apparent that we did not have sufficient information about the work which had been carried out to the building…to enable us to reach a conclusion. Accordingly we arranged a second hearing, which took place on 19 April 2013, when additional plans and photographs were provided to us, and we heard further explanations from the appellant.” (Pearson v. HMRC [2013] UKFTT 332 (TC), §6, Judge Bishopp)
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- HMRC permitted to produce evidence that information notice approved by authorised officer after hearing
"[15] It is unarguable that, if HMRC could not show that the Notice had been approved by an authorised officer, the Notice could not require the production of any documents that were more than six years old at the time of the issue of the Notice. However, if HMRC could show approval by an authorised officer, I did not consider that they should be prevented from obtaining these documents simply because the only evidence put forward at the hearing was Officer Andrews' assertion in his witness statement.
[16] In accordance with these directions, I received a witness statement from Officer O'Neil, dated 3 April 2024, stating that he held the role of authorised officer and that he approved the Notice on 6 October 2021. Mr Jones objected to the production of the witness statement on several grounds, but I have decided to admit it, for the reasons that follow.
[17] In his post-hearing written submissions, Mr Jones said that it was procedurally irregular for a judge to direct a party to adduce additional evidence to improve its case, and that this is capable of being characterised as apparent bias.
[18] I do not accept this submission. Officer Andrews had already given evidence, in his witness statement, that the requirement was satisfied. That statement was not challenged in cross-examination but, having heard Mr Jones's submissions that the statement was insufficient, HMRC asked to adduce further evidence in the form of a chain of emails. This was a video hearing so it was not possible for this evidence to be handed up as might have happened at a face-to-face hearing. After the hearing I decided that I would prefer to receive this evidence by directing the production of a witness statement, as I am entitled to do under Rule 15(1)(e)(ii) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. In my view a witness statement would be a more reliable form of evidence of the relevant facts than a chain of emails." (Sangha v. HMRC [2024] UKFTT 564 (TC), Judge Gauke)
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