Charles Kendall Freight Ltd [2024] UKFTT 492 (TC);
Jurisdiction | UK Non-devolved |
Judgment Date | 30 May 2024 |
Neutral Citation | [2024] UKFTT 492 (TC) |
Court | First-tier Tribunal (Tax Chamber) |
[2024] UKFTT 492 (TC)
Tribunal Judge Bailey
First-Tier Tribunal (Tax Chamber)
Value added tax – Customs duty – Procedure – Appeal to Tribunal – HMRC had withdrawn underlying decisions due to calculation error before being notified of the Tribunal appeal – Hardship applicable so appeal not categorised by Tribunal – HMRC notified Tribunal that underlying decisions had been withdrawn and asked for appeal to be struck out – Appellant objecting – Whether appeal should be allowed or struck out by Tribunal.
Costs – HMRC had withdrawn underlying decisions before being notified of the Tribunal appeal – Appeal uncategorised but not meeting criteria for allocation to Complex category – No explanation from Appellant of how HMRC's conduct of appeal was unreasonable – Application for costs unsupported by schedule – Whether costs to be awarded
[1] This decision decides two interlocutory issues that remain in dispute between the parties:
- how the Tribunal should formally conclude an appeal where the underlying decisions under appeal have been withdrawn, and
- whether an award of costs should be made in the circumstances of this appeal.
[2] Both parties have agreed that these issues should be decided on the papers as a result of their written submissions.
[3] As this is a lengthy decision, it is appropriate to set out the outcome at the onset.
[4] For the reasons set out below, Issue 1 is decided in favour of HMRC. This appeal is struck out under rule 8(2)(a) of the Tribunal Rules. For all of the reasons set out below, I decide Issue 2 in favour of HMRC. The Appellant's application for costs is refused.
[5] On 30 August 2023, the Tribunal received an in-time appeal filed on behalf of the Appellant by its solicitor. That appeal was against a review decision dated 8 August 2023, upholding the issue of two Post Clearance Demand Notes (C18s) in the total sum of £54,044.82. Those C18s had been issued to the Appellant as a declarant for a Non Established Taxable Person, on the basis that goods declared on import had been undervalued.
[6] In its Notice of Appeal, the Appellant stated that further C18s had been issued and that the total amount in dispute was just under £240,000. Although the amount which the Appellant was required to pay in advance of an appeal was the amount of the two C18s under appeal, the Appellant claimed in its Notice of Appeal that it would suffer hardship if obliged to pay £254,000 before making its appeal to the Tribunal.
[7] On 12 September 2023 (although this was unknown to the Tribunal until later), HMRC withdrew the two C18s that were the subject of this appeal. On an unknown date, the Appellant was notified of this withdrawal and informed that the two C18s were being withdrawn for technical, not substantive, reasons and that replacement C18s would be issued in due course.
[8] On 21 September 2023, the Tribunal acknowledged and served the Notice of Appeal. As hardship had been claimed by the Appellant, the Tribunal directed HMRC to confirm within 28 days that a hardship application had been received by them from the Appellant. Both parties were informed that the appeal could not proceed until the issue of hardship had been resolved, and that the appeal was stayed until that time.
[9] On 25 September 2023, HMRC emailed the Tribunal to confirm a hardship application had been received and was being processed. Later, on 25 September 2023, the Appellant emailed the Tribunal:
We wish to submit that the Appeal is allowed with the Appellant's costs to be paid. The Respondents has cancelled the 2 C18s that are the subject of this Appeal.
[10] On 12 October 2023, HMRC emailed the Tribunal in response to the Appellant's email:
HMRC confirm that the decision under appeal, that is the decision dated 7 July 2023 to issue two post clearance demand notes, was withdrawn by HMRC on 12 September 2023 due to an error in the assessment calculations. A new decision will be issued in due course.
In light of the foregoing, we request that Tribunal close this appeal.
In relation to the Appellant's request for costs to be paid, we note that the Appellant has not made a valid application for costs. The Respondents would object to any application for costs, particularly considering that this appeal is presently in hardship.
[11] It is clear from the Appellant's Notice of Appeal that there were more C18s issued than the two which are under appeal in this specific appeal. As is clear from the review decision supplied with the appeal, and as HMRC have subsequently clarified (in their email of 29 April 2024), the two C18s which are the subject of this appeal were issued on 15 and 19 June 2023, not 7 July 2023. I find that HMRC simply made a mistake in their 12 October 2023 email when specifying the issue date of the withdrawn C18s.
[12] The Appellant replied to HMRC later on 12 October 2023:
Please can HMRC confirm that they agree to allow the Appeal. In terms of costs we will make an application, In terms of the point made, the costs are for taking instructions, reviewing the papers and drafting/lodging the appeal.
[13] HMRC responded on 24 October 2023:
HMRC do not agree that the appeal should be allowed. As the decision under appeal has been withdrawn, HMRC's opinion is that the Tribunal should strike out the proceedings on grounds of lack of jurisdiction.
[14] The Appellant responded the next day:
We still disagree.
- HMRC rejected our client's Request to Review the C18.
- HMRC knew that the C18 was disputed.
- The Appellant had to lodge an Appeal.
- HMRC withdrew after (sic) the C18 after the Appeal was lodged.
- It follows that the Appeal has succeeded and should be allowed with costs.
[15] As the appeal was filed with a copy of the review decision made by HMRC, it cannot be the case that HMRC rejected the Appellant's request for a review. I find, on the balance of probabilities, that what the Appellant intended to convey at point 1 of its understanding of the history of this appeal was that HMRC had not withdrawn the two C18s under appeal at the review stage.
[16] In addition, although the Appellant has noted at its point 4 that the C18s were withdrawn after it had filed an appeal with the Tribunal, it is clear from the parties' statements and HMRC's subsequent clarification email that the C18s were withdrawn on 12 September 2023, prior to this appeal being notified to HMRC on 21 September 2023. Therefore, it does not follow that HMRC's withdrawal of the C18s was as a consequence of the Appellant appealing to the Tribunal – it seems that this would have happened in any event although, of course, the Appellant could not have known this at the time it filed its appeal to the Tribunal.
[17] On 7 November 2023, the Appellant filed a Notice of Application. The Appellant sought an order in the following terms:
- The appeal be allowed in relation to the C18 issued 8 August 2023 and all matters relating to it.
- The Respondent to pay the Appellant's costs of the Appeal to be assessed if not agreed.
[18] As set out in the review decision supplied with the appeal, the two C18s under appeal were issued on 15 and 19 June 2023. I find that the Appellant is here referring to the review decision which upheld the issue of those two C18s.
[19] No schedule was attached to this application, and there was no indication by the Appellant about what its costs totalled or any breakdown of any amounts incurred.
[20] On 15 December 2023, the Tribunal file was referred to me, and I drafted a letter that was sent to the parties. In that 15 December 2023 letter, I asked the parties whether they were content for the issue of how the appeal should be concluded to be decided on the papers, and also directed them to provide written submissions on this issue. I also noted:
I can see also that the Appellant is asking that their costs be paid. In this regard I draw the Appellant's attention to rule 10 of the Tribunal Rules which sets out the requirements for a party applying for costs. The Appellant should bear in mind that this appeal was not allocated to the Complex category. (This appeal had not been categorised, as that was not possible prior to hardship being decided, but it does not fulfil the criteria for a Complex appeal.)
[21] HMRC filed their written submissions on 12 January 2024. The Appellant sought additional time, and filed their submissions on 19 January 2024. Both partis agreed to the issue of how the appeal should be determined being decided on the papers.
[22] The Appellant concluded its written submissions of 19 January 2024 as follows:
In relation to costs, it is accepted that the appeal had not been allocated. However, this is one of many Appeals being issued which falls within Method 6 Group. Further, the Appellant has been forced to issue the Appeal as despite having had 18 months to either issue a correct C18 or not issue on at all, it did and it was wrong (sic).
The Appellant asks that the Appeal is allowed with an order for costs.
[23] No schedule was attached with those written submissions. The Appellant did not make any submissions setting out why it considered that HMRC's conduct of this appeal was unreasonable.
[24] On 8 February 2024, both parties were given the opportunity to file any further written submissions, having by that stage since the submissions of the other party. No further written submissions were received by the Tribunal until 29 April 2024 when the clarification required by the Tribunal (as to which specific C18s had been withdrawn) was provided by HMRC.
[25] I start by setting out the relevant part of Tribunal rule 8. Paragraph (2) provides:
(2) The Tribunal must strike out the whole or a part of the proceedings if the Tribunal–
- does not have jurisdiction in relation to the proceedings or that part of them...
To continue reading
Request your trial