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Contact: michael.firth@taxbar.com
Procedure.Tax
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M30: Withdrawing from an appeal
A party can withdraw its case
“(1) Subject to any provision in an enactment relating to withdrawal or settlement of particular proceedings, a party may give notice to the Tribunal of the withdrawal of the case made by it in the Tribunal proceedings, or any part of that case –
by sending or delivering to the Tribunal a written notice of withdrawal; or
orally at a hearing.
(2) The Tribunal must notify each party in writing of its receipt of a withdrawal under this rule.” (FTT Rules rr.17(1) and (2)).
Proposal to withdraw is not a notice of withdrawal
“The phrase “to purpose that these appeals to be withdraw” [in the email of 7 September] must (as already observed) have meant “to propose that these appeals be withdrawn with no direction as to costs” and “we look forward to receiving your response to this proposal”. There is no mention of any response from HMRC, being the only party with an interest in claiming costs from St Annes… The 7 September 2009 e-mail cannot therefore be construed as “a written notice of withdrawal” within rule 17(1)(a).” (St Annes Distributors Ltd v. HMRC [2010] UKUT 458 (TCC), §§20…21).
Subject to any enactment
“As to the second sentence I note first that by virtue of the words in rule 17(1) “Subject to any provision in an enactment relating to withdrawal or settlement of particular proceedings”, s 54 will, if necessary, overrule rule 17. An agreement under s 54 TMA may be made at any time “before the appeal is determined by the Tribunal”: see s 54(1) TMA.” (Patrick v. HMRC [2015] UKFTT 508 (TC), §21).
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Whether withdrawing case automatically terminates the FTT’s jurisdiction to decide the appeal (differing views)
One view is that withdrawal of a case by one party brings the proceedings to a close on the basis of the position applying before the proceedings commenced.
"[15]...If Mr Jafari was withdrawing his appeals to the FTT against all of HMRC’s decisions, then the FTT should have said as much and followed the procedure applicable to withdrawals set out in Rule 17 of the FTT’s rules of procedure (the “FTT Rules”). The result of a complete withdrawal would have been that there was no longer any decision for the FTT to make because HMRC’s decisions were no longer under challenge...
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[31] In my judgment, these considerations support a conclusion that Mr Jafari was withdrawing the entirety of his appeals to the FTT. The FTT should have taken that withdrawal at face value and not gone on to make findings on matters that were no longer in dispute. In my judgment, the correct course for me, given the error of law in the Decision, is to set the Decision aside and remake it in a manner that gives proper effect to Mr Jafari’s withdrawal of the entirety of his case. That consideration means that I will remake the Decision such that all the appeals against HMRC decisions that were before the FTT are to be dismissed." (HMRC v. Jafari [2022] UKUT 119 (TCC), Judge Jonathan Richards)
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“[29] Although Mr Vallat relies on the fact that rule 17 of the Procedure Rules refers to the withdrawal of a party’s “case” as opposed to an “appeal” it is clear from the decision in Orchid, and Vaultdown Ltd and others v HMRC [2015] UKFTT 383 (TC) to which he refers in his skeleton argument, that such a distinction carries little, if any, significance in the context of a withdrawal, where the withdrawal of a case by one party brings the proceedings to a close on the basis of the position applying before the proceedings commenced as though its claim had failed.” (C M Utilities Limited v. HMRC [2016] UKFTT 358 (TC), Judge John Brooks – HMRC wanted the FTT to increase PAYE determinations despite the taxpayer withdrawing its case).
“My decision is that HMRC's application to have Orchid's appeal reinstated must be refused. I have also concluded that there was no agreement under section 54(1) of the TMA to settle the appeal. As a consequence of withdrawing the appeal in the absence of an agreement, Orchid has made itself liable to pay the tax due on the basis of HMRC’s alternative argument with no opportunity to appeal against that decision.” (Orchid Properties v. HMRC [2012] UKFTT 651 (TC), §28).
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Another view is that the FTT may still go on to make a decision:
“ARTG 8460 goes on to say in the last sentence quoted that withdrawal of a case is tantamount to a decision of the tribunal against the withdrawing party. The important word there is “tantamount”, because in practice what happens is that, on being notified of a withdrawal under rule 17, the Tribunal office will simply to put away their papers. But that does not always happen as the Tribunal still has the ability to make a decision which does actually decide the appeal, and in the recent case of Vaultdawn Ltd & ors v HMRC [2015] UKFTT 383 (TC) (“Vaultdawn”), Judge Kempster did just that (see [12]). And I see nothing which suggests that the Tribunal must automatically decide in favour of the non-withdrawing party, particularly if it is the appellant who withdraws but HMRC have the burden of proof…in the light of the above analysis I consider that the appellant did not withdraw his appeals, he withdrew his case in relation to the appeals, that is to say that he had a reasonable excuse for not filing his returns in time. As Vaultdawn shows I could have gone on to make a decision.” (Patrick v. HMRC [2015] UKFTT 508 (TC), §§18…19).
“HMRC have confirmed that they accept the discovery assessments raised on Vaultdown Limited for the accounting periods ended 31 October 1999 and 31 October 2002 [originally stated as 2000 but formally corrected subsequently] were invalid; accordingly, the appeals against those particular assessments will be allowed. My comments in para 4 below relate to the other aspects of the Lead Case appeals…As communicated to the parties by email on 5 November, the emails from the Lead Case Appellants’ representative dated 4 November are taken as a notice of withdrawal of the Lead Case Appellants’ case in the proceedings, pursuant to Rule 17(1). Normally, that would conclude the proceedings without any further action by the Tribunal; however, as these are the lead cases under a Rule 18 Direction, I consider it is best to formalise the position by issuing a decision notice dismissing the appeals (being case references TC/2009/16362, TC/2010/3064, TC/2011/816, TC/2011/1712, and TC/2013/1109 – except for the discovery assessments described in para 3 above) (“the Formal Lead Case Decision”). That will be issued after the expiry of the deadline for any reinstatement application - which I calculate to be 2 December 2013 (Rule 17(4) refers).” (Vaultdawn Limited v. HMRC [2015] UKFTT 383 (TC), §11).
“…the Commissioners, having set before them the duty of ascertaining and settling according to the best of their judgment the sum on which the taxpayer ought to be assessed, are required to make the assessment in accordance with that judgment, and in view of that I find it quite impossible to accept the argument that the giving of the notice of appeal is merely, as it were, a sort of offer, or is merely an act from which the taxpayer can at his discretion at any time resile, subject to his obeying the precepts and so forth, and that he can at any moment prevent the Commissioners from ascertaining and settling the sum to be assessed by the simple process of intimating by word or lay deed that he withdraws from the appeal, or rather that he withdraws the notice of appeal, and that there is no appeal pending at all.” (R v. Special Commissioners of Income Tax (ex p. Elmhirst 20 TC 381 at 393 – taxpayer was trying to avoid assessment being increased).
View that Elmhirst does not apply to FTT
“[23] The current position in relation to appeal proceedings is therefore quite different from that at the time of Elmhirst and, in contrast to a Special Commissioner then, a Tribunal Judge in a tax appeal is clearly “in the position of a judge deciding an issue between two particular parties”, a taxpayer and HMRC, in an adversarial process with its practice and procedure governed by the Procedure Rules which, unlike the procedural rules of the Special and General Commissioners, does have a specific provision, in rule 17, relating to withdrawal.
[24] Given these significant changes I do not accept Mr Vallat’s submission that Tower MCashback, itself an appeal from the Special Commissioner, can be regarded as authority for the proposition that the principle in Elmhirst has survived and that the appeal process once commenced “cannot be stopped by the whim of an appellant”. Rule 17 of the Procedure Rules clearly envisages that an appellant, as a party, may unilaterally withdraw its case without any provision for the other party to apply for that appeal to be reinstated. This may be contrasted with Part 38.4 of the Civil Procedure Rules which does allow a party to apply for reinstatement of a claim that has been discontinued by the other party.” (C M Utilities Limited v. HMRC [2016] UKFTT 358 (TC), Judge John Brooks)
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Alternative decisions appealed
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“As I have already set out above, Orchid had never appealed against any decision that it should pay £74,166. Orchid appealed against HMRC's decision that the partnership's profit should be increased by £1,146,102 or, in the alternative, by £444,996. By the time of the withdrawal, HMRC had conceded its primary case and I consider that the decision under appeal was that the profit should be increased by £444,996. It follows that, under section 54(4), the consequence of Orchid's withdrawal of its appeal is that the decision that the partnership's profit should be increased by £444,996 is upheld without variation.” (Orchid Properties v. HMRC [2012] UKFTT 651 (TC), §28).
Appeal should not usually be heard if there is no longer any dispute
“I am firmly of the view that the court should not continue to hear this appeal. HMRC's first point that the appeal has wide ramifications is simply not a sufficient ground for the court continuing to hear an appeal where there is no longer any issue of substance between the parties as to their private law rights. Subject to very limited exceptions indeed, issues of this nature are much better decided on the basis of adversarial argument where the parties have real opposing commercial interests in the outcome.” (Portland Gas Storage Limited v. HMRC [2015] EWCA Civ 559, §12 – HMRC rejected T’s application to amend its SDLT return as out of time, FTT held it had no jurisdiction over the question, UT held that it did, T withdrew application to amend before CA heard jurisdiction appeal).
Important public law questions unlikely to be otherwise decided
“The factor, however, which appears to have influenced the Court of Appeal in [Don Pasquale] was not so much the analogy with public law but the fact that it would, for technical reasons, be extremely difficult for another appeal to be brought before the court. In such circumstances the court thought it was a sufficiently extreme case for the court to go ahead with the appeal.” (Portland Gas Storage Limited v. HMRC [2015] EWCA Civ 559, §8).
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Tribunal should not make findings on matters no longer in dispute​
"[31] In my judgment, these considerations support a conclusion that Mr Jafari was withdrawing the entirety of his appeals to the FTT. The FTT should have taken that withdrawal at face value and not gone on to make findings on matters that were no longer in dispute. In my judgment, the correct course for me, given the error of law in the Decision, is to set the Decision aside and remake it in a manner that gives proper effect to Mr Jafari’s withdrawal of the entirety of his case. That consideration means that I will remake the Decision such that all the appeals against HMRC decisions that were before the FTT are to be dismissed." (HMRC v. Jafari [2022] UKUT 119 (TCC), Judge Jonathan Richards)
Direct tax: notice of withdrawal to HMRC deemed to be s.54 agreement
"(4) Where—
(a) a person who has given a notice of appeal notifies the inspector or other proper officer of the Crown, whether orally or in writing, that he desires not to proceed with the appeal; and
(b) thirty days have elapsed since the giving of the notification without the inspector or other proper officer giving to the appellant notice in writing indicating that he is unwilling that the appeal should be treated as withdrawn,
the preceding provisions of this section shall have effect as if, at the date of the appellant's notification, the appellant and the inspector or other proper officer had come to an agreement, orally or in writing, as the case may be, that the assessment or decision under appeal should be upheld without variation." (TMA 1970, s.54(4))
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Unless HMRC give notice that they do not accept withdrawal
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See s.54(4)(b), above.
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If HMRC object, the original decision appealed stands
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“[28] Although it is possible to distinguish Orchid on the facts as, unlike the present case, HMRC did not object to the withdrawal by Orchid of its case under rule 17 of the Procedure Rules, the finding by Judge Sinfield that in the absence of an agreement under s 54(1) TMA the original decision appealed against stood is, in my judgment, clearly applicable to the present case where the Company has withdrawn its case, under Rule 17 of the Procedure Rules, and where, albeit by reason of HMRC’s objection to that withdrawal, there is no agreement under s 54(1) TMA.” (C M Utilities Limited v. HMRC [2016] UKFTT 358 (TC), Judge John Brooks)
Effect of s.54 agreement
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See Chapter M34: Settling appeals by agreement
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VAT: notice of withdrawal to HMRC deemed to be s.85 agreement
"(4) Where—
(a) a person who has given a notice of appeal notifies HMRC, whether orally or in writing, that he desires not to proceed with the appeal; and
(b) 30 days have elapsed since the giving of the notification without HMRC giving to the appellant notice in writing indicating that they are unwilling that the appeal should be treated as withdrawn,
the preceding provisions of this section shall have effect as if, at the date of the appellant's notification, the appellant and HMRC had come to an agreement, orally or in writing, as the case may be, that the decision under appeal should be upheld without variation.
(5) References in this section to an agreement being come to with an appellant and the giving of notice or notification to or by an appellant include references to an agreement being come to with, and the giving of notice or notification to or by, a person acting on behalf of the appellant in relation to the appeal." (VATA 1995, s.85(4), (5))
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Does not apply where HMRC withdraw their decision first
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"[176] However, it is instructive to consider why s 85(4) was not considered by either party, by the FTT, or by the High Court, given that (a) s 85(1) was plainly in issue and (b) Matalan had withdrawn its appeal. My view is as follows:
(1) Section 85(4) provides that, on a withdrawal, the parties are deemed to have come to an agreement that “that the decision under appeal should be upheld without variation”.
(2) It is a necessary element of that deeming provision that at the time of the withdrawal there is a “decision under appeal”.
(3) Matalan did not withdraw its appeal until after HMRC had “withdrawn the disputed decision”. There was thus no “decision under appeal” on which the deeming provision could operate.
(4) Thus, although Matalan withdrew its appeal, s 85(4) could not operate to deem the parties to have come to an agreement confirming a decision which was no longer extant. Such an outcome would, to borrow the language of Lord Briggs in Fowler, be an unjust, absurd and anomalous result." (Telent Technology Services Limited v. HMRC [2022] UKFTT 147 (TC), Judge Redston)
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Unless HMRC give notice that they do not accept withdrawal
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See s.85(4)(b), above.
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No change of mind after 30 days
“[32] Section 85 is quite clear in its terms. If an appellant, or someone on its behalf, notifies HMRC that it desires not to proceed with an appeal and there is no objection from HMRC under s 85(4)(b), then the parties are deemed to have agreed that the appeal is upheld, with the same consequences as if the Tribunal had determined it. This is the effect of s 85(4), read with s 85(1.) The only caveat to this is where the appellant notifies HMRC within 30 days of the original notification (being the date of the deemed agreement) that it no longer wishes to withdraw. In that case the effect of s 85(2) is that the deemed Tribunal determination created by the withdrawal does not take effect. There is no power in s 85 for this 30 day time limit to be extended, and in my view rules 5 and 17 of the Tribunal Rules cannot supply such a power.” (OWD Ltd v. HMRC, Judge Falk).
“Had it been made either within the 28 days stated by the Tribunal Rules or within the 30 days permitted by s 85 VATA I would have been minded to grant the application to reinstate the appeal. However, as Judge Falk observed in OWD there is no power in s 85 VATA for this 30 day time limit to be extended. I agree with her that rules 5 and 17 of the Procedure Rules cannot supply such a power.”(Libby’s Market Place Ltd v. HMRC [2018] UKFTT 563 (TC), §14 Judge Brooks).
No duty on Tribunal to consider whether assessment too high or too low
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"[147] Where, as here, an appeal has been withdrawn before the hearing, HMRC’s decision is deemed to have been upheld “without variation”. As the UT said in Albert House, the provisions relating to the consequences of withdrawal are an express statutory exception to the Tribunal’s general duty to consider whether the assessment is too high or too low. It is, instead, the decision itself which is deemed to have been agreed as between the parties." (Telent Technology Services Limited v. HMRC [2022] UKFTT 147 (TC), Judge Redston)
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Effect of s.85 agreement
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See Chapter M33: Settling appeals by agreement
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Applies where HMRC notified of withdrawal by Tribunal
"[44] However, in Mr Hussain’s case, Ms Greene did not notify HMRC. Instead, she gave notice to the Tribunal, and the Tribunal told HMRC the appeal was withdrawn. I considered whether that indirect notification was sufficient for s 85 to take effect.
[45] A similar situation was considered in Albert House v HMRC [2020] UKUT 373 (TCC) in relation to Sch 10, para 37 of Finance Act 2003; that appeal concerned stamp duty land tax (“SDLT”), but the wording of the relevant provision is the same as that in VATA s 85.
[46] In Albert House, the appellant had withdrawn its appeal, but HMRC objected to the withdrawal and wanted the case to proceed. VATA s 85(4) and the equivalent SDLT provision both state that if HMRC wish to prevent a withdrawal taking effect, they must give the appellant notice in writing to that effect. In Albert House, HMRC had not given notice to the appellant; instead, they had only written to the Tribunal, and the Tribunal had informed the appellant. The appellant’s case was that this was insufficient to meet the statutory requirements, and that s 85 required the parties to notify each other directly, as summarised by the UT at [66]:
“That statutory provision…contained a strict requirement that HMRC actually gave notice of its objection directly to an appellant and this requirement was not satisfied by using an unauthorised proxy (i.e. the FTT or the FTT's administration), even where the notice was then passed on to, and received by, the appellant in time.”
[47] The UT rejected that submission, holding at [74] that the purpose of the provision was that “an appellant who seeks to withdraw its appeal should know within 30 days whether HMRC are objecting to that withdrawal and should be told this in writing so that there is a record”. It went on to hold at [88] (emphases in original):
“The real question is whether HMRC gave notice to the Appellants. In our view, HMRC did indeed give notice to the Appellants. The Appellants clearly received, within the 30 day period, a written notice from which they were able to understand that HMRC were objecting to the withdrawal of the appeals. When the statute requires that HMRC must “give the appellant notice in writing” (paragraph 37(4)(b)), construed purposively, the word “give” looks at the position of an appellant (the intended recipient of the notice) and asks: has the intended recipient actually received the written notice?”
[48] In my judgment, the position is the same here. Ms Greene wrote to the Tribunal on 8 May 2019 withdrawing the appeal, and the Tribunal informed HMRC of the withdrawal by letter on 29 May 2019. There was no doubt that HMRC had been told about the withdrawal; this was the purpose of the provision. Section 85 therefore applied; as a result, the First Appeal was deemed to have been decided by the Tribunal, and no reinstatement was possible." (Hussain v. HMRC [2023] UKFTT 40 (TC), Judge Redston)
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Abuse of process to relitigate matter following withdrawal
“Therefore, on 18 April 2011, as a result of withdrawing its appeal there was in effect a binding Tribunal determination that Meridian’s claims for input tax for 04/06 and 05/06 was incorrect as it was overstated and had no right to deduct input tax attributable to the transactions for which its recovery had been denied on the basis that it knew or should have known that these transaction were connected to fraud. This therefore disposes of the issue of whether the 04/06 and 05/06 returns are correct and, as such, Meridian is estopped from advancing the same arguments in the present appeal. In addition we find that it would be an abuse of process were it to be allowed to do so.” (Meridian Defence & Security Ltd v. HMRC [2014] UKFTT 300 (TC), §24, Judge John Brooks).
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