BPP Holdings Ltd v Revenue and Customs Commissioners

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Richards,Lord Justice Moore-Bick,The Senior President of Tribunals
Judgment Date01 March 2016
Neutral Citation[2016] EWCA Civ 121
Date01 March 2016
Docket NumberCase No: A3/2014/4240

[2016] EWCA Civ 121


ON APPEAL FROM the Tax and Chancery Chamber of the Upper Tribunal

Judge Bishopp

Royal Courts of Justice

Strand, London, WC2A 2LL


Lord Justice Moore-Bick

(Vice President of the Court of Appeal, Civil Division)

Lord Justice Richards



Case No: A3/2014/4240

Bpp Holdings
The Commissioners for her Majesty's Revenue and Customs

Mr. Sam Grodzinski QC (instructed by Simmons & Simmons LLP) for the Appellant

Miss Jessica Simor QC (instructed by HMRC Solicitors office) for the Respondent

Hearing date: 16 December 2015

The Senior President of Tribunals

The Senior President of Tribunals:


This is an appeal by BPP Holdings Limited ["BPP"] against a determination made on 3 November 2014 by Judge Bishopp in the Tax and Chancery Chamber of the Upper Tribunal who allowed an appeal against a determination made by Judge Mosedale in the Tax Chamber of the First-tier Tribunal (FtT). It is accordingly a second appeal to which the test in CPR 52.13 applies. Permission to appeal was given by Judge Bishopp who recognised that the key question raised in the appeal is "a matter of considerable importance to practitioners and the tribunals themselves".


The FtT debarred The Commissioners for Her Majesty's Revenue and Customs ["HMRC"] from further participation in the proceedings that were before it and the UT decided that the FtT had made an error of law in that determination so that it was permissible to set it aside and re-make it. The UT decided that HMRC should not be debarred. The issue before us is whether the FtT was right to debar HMRC from further participation in the substantive proceedings before the FtT for their serious and prolonged breach of an order requiring them to give proper particulars of their pleaded case against BPP. The key question is the proper approach of tax tribunals in cases where there has been breach of an order.


The substance of the three cases before the FtT was the chargeability to VAT of the supply of books and other printed materials by the second appellant, BPP Learning Media Limited, in the circumstance that other BPP companies (BPP Professional Education Limited and BPP University College of Professional Studies Limited) made those supplies. It was argued by HMRC that the supply of printed matter and the supply of education were indissociable from each other and accordingly chargeable to VAT as part of a composite standard rated supply of education services. In an ordinary case the supply of books and printed materials would have been zero rated under section 30 and Group 3 of Schedule 8 of the VAT Act 1994 [' VATA 1994'].


Two of the three FtT cases were conceded by HMRC in April 2014 following the decision of the FtT in Kumon Educational UK Co. Ltd v HMRC [2014] UKFTT 109 (TC) but one remains to be determined. It is said that the novelty in that case arises from the fact that from 19 July 2011, section 75(1) of the Finance Act 2011 amended the notes to Group 3, Schedule 8 VATA 1994 to remove zero rating of printed matter in particular circumstances. The remaining case will be the first case to consider the meaning of notes 2 and 3 to Group 3.


The procedural background is set out in full in the FtT and UT judgments and I shall only set out in this judgment a summary of the facts necessary to illustrate the key issue:

a. HMRC delayed service of their Statement of Case and failed to plead the facts on which they relied to justify their contention that the supply should be treated as part of a standard rated supply of education services with the consequence that BPP served a detailed Request for Further Information;

b. HMRC agreed to provide replies to each of the requests but refused to commit themselves to a timetable for the replies. In consequence, Judge Hellier made an order in the FtT on 15 January 2014 directing HMRC to file their replies by 31 January 2014;

c. HMRC failed to comply with Judge Hellier's order and provided replies that were manifestly inadequate with the consequence that BPP applied to the FtT for a debarring order;

d. HMRC failed to remedy their breach for several months causing further delay.


HMRC submit that they had repeatedly explained the facts they relied upon in pre-litigation correspondence and also that the application of the notes to Group 3 Schedule 8 VATA 1994 were well understood by BPP who had not questioned them for some 14 months after 19 July 2011 when they came into effect. There is no cross appeal by HMRC about what are the relevant procedural facts and, accordingly, those must be taken as read by this court. It is not for this court to re-consider the procedural facts in the absence of a cross appeal.


HMRC also submit that the behaviour of BPP is relevant to the procedural background in that from the outset of the case management issue between the parties, BPP sought to pursue an 'unless order' in the following terms: "If the Respondents fail to comply with [the request for further information within 14 days] the appeals shall be allowed without further order". BPP did not achieve an order in those terms. On 15 January 2014 Judge Hellier granted a conditional order in the following terms:

"If [HMRC] fail to provide replies to each of the questions identified in the Appellants' Request for Further Information by 31 January 2014, [HMRC] may be barred from taking further part in the proceedings."


It is right to observe that the order was not a 'final order' or an 'unless order'. It was a conditional order warning of the possible consequence of non-compliance of the kind described in rule 8(3)(a) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 ['FtT Rules'] (see below). An unless order was within the power of the FtT by reason of rule 8(1). I acknowledge that in making the order that he did, Judge Hellier had declined to make a rule 8(1) order and that as a consequence HMRC were not automatically debarred from taking any further part in the proceedings. BPP's submission, had it been accepted, could have potentially afforded disproportionate weight to non-compliance.


Judge Hellier's order was not appealed and the positive and negative factors that compelled hin to make such an order are not for reconsideration by this court. I do not intend to go behind an un-appealed, regular case management order in effect to determine whether it should have been made. Compliance must begin with the fact that a regular order was made even if one or all of the parties would rather it had not been made. The principle of collective proportionality may demand that an order is made in an individual case that has as one of its purposes the wider interests of justice than those engaged in the individual case before the tribunal.


As respects other factors that were in play, the FtT and the UT were at one in holding that there was no excuse for HMRC's failures. In the FtT Judge Mosedale held without complaint from the UT that:

[75] "I did not leave the hearing with any clear understanding of why this default had occurred […] I consider that anyone reading the Reply should have known it was inadequate as, so far as the Notes (2) and (3) point [i.e. The position following amendment to the VAT Act], as well as other issues, it failed to state a single fact on which HMRC relied.

[77] […] Moreover the Reply as a whole failed to deal with the factual matters HMRC relied on to establish that there was a single supply for the pre-2011 position as well as post 2011 position.

[78] HMRC were represented by HMRC solicitors' office throughout. I consider it should have been obvious to a lawyer that the Reply delivered on the due date did for not comply with Judge Hellier's Order."

In the UT Judge Bishopp held as follows:

[26] "Miss Simor [counsel for HMRC] did not offer any explanation for the default and I agree with Judge Mosedale that a competent lawyer, mindful of the fact that HMRC had agreed to provide the information and of Judge Hellier's direction, should have realised that the reply was insufficient. Miss Simor also offered no explanation of HMRC's failure to remedy the insufficiency when BPP's application for a barring order was issued".


The summary that I have set out from the judgment of Judge Bishopp does not do justice to the firm and critical analysis of HMRC's failures which he sets out at [47] to [51] of his judgment. He described their position as being "difficult if not impossible to understand", "inadequate" and "unhelpful". Their approach demanded an explanation and yet nothing convincing was provided. Accordingly, without application in an appropriate way, and there is no such application, it is not open to HMRC to argue in this court either that there had been de facto compliance or that there was a reason for non-compliance that justified their conduct. It is likewise not open to HMRC to argue in this court that there has been no prejudice consequent upon the default because there is no basis to go behind the conclusions of the FtT and the UT on that question. Judge Mosedale held that:

[73] "There is very clear prejudice to the appellant in not knowing HMRC's case. Litigation is not to be conducted by ambush. The appellant has the right to be put in the position so that it can properly prepare its case: it needs to know HMRC's case not only before it gets to the hearing but before it prepares its witness statements and really before it prepares its list of documents.

[74] It accepts that, since Mr Singh's skeleton was served, it now knows HMRC's case, but it knows it...

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