HMRC’s ‘disturbing’ approach to Tribunal Rules


A recent Court of Appeal case has highlighted what the judge referred to as a ‘disturbing’ approach to Tribunal rules after HMRC came close to arguing that the constraints of austerity on an agency should excuse unacceptable behaviour.

BPP Holdings appealed against a decision of HMRC.  Prior to the First-tier Tribunal (FTT) hearing, HMRC failed to provide the required statement of case and breached a court order directing it to file replies causing several months of delay.  Although HMRC eventually filed a skeleton argument, the appellant was prejudiced by delay and extra expense.  The FTT decided to strike out HMRC’s case by debarring it from taking further part in the proceedings commenting that it had little sympathy for HMRC as it provided no explanation of its failure.  The Upper Tribunal overturned this decision as it might “hand an unwarranted windfall” to the taxpayer as the underlying issue would not be determined.

The Court of Appeal (CA) then considered whether the FTT had erred in law in debarring HMRC. HMRC argued that the weight given by the FTT to the need to ensure compliance with rules and practice was disproportionate as it was the only factor in favour of making a debarring order.

The CA held that the FTT judge did not err in law in affording significant weight to cost and compliance with rules in the interest of the efficient conduct of litigation and in consideration of the overriding objective. 

The CA further held that parties before the Tribunal were bound to comply with procedural obligation and Tribunal’s rules in a like manner to the Civil Procedure Rules in a court.  The Court commented that flexibility of process did not mean a shoddy attitude to delay.

On a regular basis we find our clients being treated in an unreasonable fashion by HMRC without any useful recourse, as complaints are rarely upheld. Hopefully this decision will see an improvement in HMRC’s approach to Tribunals and eventually will see HMRC being required to apply the same standards to their own behaviour as they demand from their ‘customers’.

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