In a recent decision the Upper Tax Tribunal (The Honourable Mrs Justice Asplin and Judge Colin Bishopp) dealt with the factors to be considered by the First Tier Tax Tribunal (“FTT”) in deciding an application under rule 17 of the Rule Tribunal Procedure (First-Tier Tribunal) (Tax Chamber) Rules 2009 (whether to reinstate an appeal).

The factors requiring reinstatement were somewhat unusual.  The Appellant imported e-cigarettes and e-liquid. The issue between the parties related to the correct classification of e-liquid for customs duty purposes.  HMRC took the view that a different classification applied to e-liquid to that designated by the Appellant, a classification attracting a higher rate of duty.  That decision was upheld by a review letter of 17 April 2015, and the Appellant appealed to the FTT on 15 May 2015. On 25 July 2016 the Appellant’s solicitors sent an email to the FTT in which they said that they were instructed to withdraw the appeal, and that the hearing on 29 July 2016 should therefore be vacated. The email was copied by the solicitors to HMRC. However, by an email sent on the following day, the solicitors filed an application, pursuant to rule 17(3) of the Tribunal Procedure (First-Tier Tribunal) (Tax Chamber) Rules 2009 (“the Rules”), by which they sought to have the appeal reinstated. The substantive reason given was that the notice of withdrawal of 25 July 2016 had been: “… sent in error.” The Appellant’s solicitor had thought the matter related to another client.

Rule 17(3) states that “A party who has withdrawn their case may apply to the Tribunal for the case to be reinstated.” Other provisions set out the procedure to be followed, but give no guidance on the approach to be adopted by the FTT.  The remedy is discretionary. Some guidance had been provided by Proudman J in Pierhead Purchasing v Revenue and Customs Commissioners [2014] UKUT 321 (TCC).  The criteria are:

  • 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.

The FTT affirmed the approach taken in Pierhead Purchasing. The Tribunal also went on to state that the guidance given in Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537 , [2014] 2 All ER 430, [2014] 1 WLR 795 in relation to relief from sanctions was helpful and should be considered.  This is presumably a reference to the case as interpreted by the decision in Denton v TH White [2014] EWCA Civ 906

Fairness in each case depended on the facts; all the circumstances need to be considered and there should be no gloss on the overriding objective. In the instant case the FTT had been making what was effectively a determinative ruling.  The FTT Judge had fallen into error.  Once she had formed the initial view that the application should be refused she should have asked the Appellant’s solicitors whether they were content to have the application determined by reference to their written submissions and, if so, she should have given them the opportunity of making further submissions. If they were not so content she should have offered a hearing. The Tribunal noted the similarities with the case of Frey & others v Labrouche [2012] EWCA Civ 881, [2012] 1 WLR 3160; and the principle to be derived from what the Master of the Rolls said is that there is a presumption in favour of a hearing when a draconian step—there striking out, here refusal to reinstate—is in contemplation.

The appeal was allowed and the case remitted back to FTT for re-consideration.

Bart Casella

26 June 2017

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