Daniel
| Jurisdiction | UK Non-devolved |
| Judgment Date | 25 September 2014 |
| Neutral Citation | [2014] UKFTT 916 (TC) |
| Date | 25 September 2014 |
| Court | First Tier Tribunal (Tax Chamber) |
[2014] UKFTT 916 (TC)
Judge Roger Berner
Keith Gordon and Ximena Montes Manzano, instructed by Smith & Williamson LLP, appeared for the Appellant
Akash Nawbatt and Christopher Stone, instructed by the General Counsel and Solicitor to HM Revenue and Customs, appeared for the Respondents
Procedure - Application to set aside decision (or part) - Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273), r. 38 - Whether failure to determine an application made following the hearing to admit new evidence and/or the determination by the FTT of an issue that was alleged not to be part of HMRC's case were procedural irregularities - Whether in the interests of justice to set aside decision of FTT or part of it - Application refused.
The First-tier Tribunal (FTT) has refused Mr Daniel's application under the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273) ("the Tribunal Procedure Rules 2009"), r. 38 to set aside the decision by FTT in DanielTAX[2014] TC 03312, finding that although there was a procedural irregularity in the FTT's failure to consider Mr Daniel's application to admit new evidence, no injustice had flowed because the new evidence would not have affected the FTT's conclusions. There was further no procedural irregularity by way of unjustified expansion by the FTT of the issues to include possible negligent conduct by Mr Daniel's advisers, but even if there was, no injustice could be said to have flowed from it because the FTT had reached a conclusion that Mr Daniel's conduct alone had been negligent.
The appellant, Mr Daniel, applied to the FTT under the Tribunal Procedure Rules 2009, r. 38 that the earlier decision of the FTT (dismissing his appeal against a discovery assessment on the grounds that he was "not resident") be set aside on the grounds that there were procedural irregularities such that it was in the interests of justice that the whole of the decision be set aside. The two issues were
(a) the failure to take into account material evidence, and
(b) an unexplained and unjustified expansion of the issues in dispute in the appeal beyond the case put by HMRC.
The FTT noted firstly that for an application under r. 38 to succeed, there had to be not only a procedural irregularity but that it also had to be in the interests of justice to set aside the decision or part of it. It was not sufficient to identify a procedural irregularity and then mount a general and unrelated challenge on the findings of the Tribunal because any such challenge should more properly be made by way of an appeal to the Upper Tribunal (UT); and in considering the interests of justice, the Tribunal should have regard to all the circumstances, not just the procedural irregularity and its consequences, including the availability of an appeal and consideration of whether that would best achieve justice in the particular case. The FTT also noted the need to distinguish between an irregularity of a procedural nature and one which arose as a consequence of the exercise of judicial function, which would constitute an error of law to be remedied by the UT on appeal.
As far as the failure to take into account material evidence, the FTT found that the earlier FTT decision had not dealt with the application by the appellant to admit new evidence (the 1994 documents) which did amount to a procedural irregularity. However, although the FTT's findings were expressed in terms that Mr Daniel had not worked full-time abroad (so could not be "non resident" on that basis) it was plain that their findings were that Mr Daniel had not worked "full-time" anywhere. Accordingly, the 1994 documents would not have affected the FTT's conclusions on the discovery issue as it would remain unreasonable of Mr Daniel to consider that his work could be regarded as "full-time" so as to enable him to be regarded as non-UK resident. Furthermore, if correct in the analysis that the documents did not address the question of what amounts to full-time work abroad either, those documents would have had no impact at all on the FTT's conclusions. There was, therefore, no injustice that could be said to flow from the procedural irregularity surrounding the 1994 documents and it would not be in the interests of justice to set aside the decision, or any part of it, on that ground. Whether the FTT's conclusions were wrong was a matter to be addressed by an application for permission to appeal.
On the expansion issue, the FTT found that, although HMRC's case had related only to Mr Daniel's negligent conduct (and not any negligent conduct on the part of Arthur Anderson), there was no procedural irregularity by the FTT considering collectively the conduct of Mr Daniel and Arthur Anderson, and even if that did amount to a procedural irregularity, no injustice had flowed from it. The FTT had concluded that Mr Daniel was himself guilty of negligent conduct irrespective of any negligent conduct by his advisers. It was, therefore, not in the interests of justice to set aside the decision on the unjust expansion ground either.
This case considered the application of the Tribunal Procedure Rules 2009, r. 38 and power to set aside a decision where it is in the interests of justice to do so and in particular, the condition in r. 38(2)(c) for there to have been a procedural irregularity in the proceedings. In this case, the application was made as a precursor to applying for permission to appeal to the UT, which it was acknowledged could (and would if required) be made. The FTT rejected the application finding that for a decision to be set aside there has to be not only a procedural irregularity but that it must also be in the interests of justice to do so and whilst there was at least one procedural irregularity (if not two), no injustice could be said to have flowed from either because the FTT's conclusions would not have been affected.
[1]This is an application by the Appellant, Mr Daniel, to set aside the decision of the Tribunal (Judge Nowlan and Mrs C Farquharson) ("the FTT") released on 10 February 2014 ("the Decision"), by which the FTT dismissed Mr Daniel's appeal against a discovery assessment in respect of the tax year 1999-2000.
[2]By the Decision, the FTT determined two issues adversely to Mr Daniel. The first was that the FTT found that, in the relevant period, Mr Daniel was resident in the UK. It rejected, for reasons I will describe later, his contention that he was engaged in a full-time and continuous employment abroad for the duration of tax year 1999-2000, and thus should be treated as not resident and not ordinarily resident in the UK in that period. Secondly, it found that the discovery assessment had been validly made, because, having regard to the then-applicable wording of Taxes Management Act 1970 section 29 subsec-or-para 4s 29(4) of the Taxes Management Act 1970 ("TMA"), there had been a loss of tax attributable to negligent conduct on the part of Mr Daniel or a person acting on his behalf.
[3]The application is made under rule 38 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, under which the Tribunal may set aside a decision which disposes of proceedings, or part of such a decision, and re-make the decision, or the relevant part of it, if (a) the Tribunal considers that it is in the interests of justice to do so, and (b) a relevant condition is satisfied, which for these purposes is that there has been a procedural irregularity in the proceedings.
[4]In his application, Mr Daniel refers to what he submits are two fundamental procedural irregularities in the handling of his case, each of which, it is said, have had a major impact on the outcome, such that it is in the interests of justice that the Decision be set aside so far as those issues are concerned. The issues are
(a) the failure to take into account material evidence (to which should also be added the failure to deal with an application, after the hearing, to admit new evidence), and
(b) what is described as an unexplained and unjustified expansion of the issues in dispute in the appeal.
[5]In the application, which was made on 21 February 2014, and thus very shortly after the release of the Decision, the relief sought was the set aside of findings of the FTT confined to Taxes Management Act 1970 section 29 subsec-or-para 2 section 29 subsec-or-para 4s 29(2) and s 29(4) TMA and a re-hearing of those matters as if they were the subject of a discrete appeal. This was thus an application for a set aside of part only of the Decision. However, in the skeleton argument for this hearing, and in oral submissions, Mr Gordon, for Mr Daniel, expanded the application to seek a set aside of the whole of the Decision. No objection was raised by Mr Nawbatt, for HMRC, and the application accordingly proceeded on that basis.
[6]Ordinarily, there are two ways in which an unsuccessful party can seek to challenge a decision of the Tribunal of the nature of the Decision in this case. The first, and most common, is by way of an appeal to the Upper Tribunal on a question of law, under Tribunals, Courts and Enforcement Act 2007 section 11s 11 of the Tribunals, Courts and Enforcement Act 2007. The second is by way of set aside under rule 38 in the case of a procedural irregularity.
[7]In argument, Mr Gordon submitted that, although permission to appeal the Decision could (and would, if required) be made, it was more appropriate and proportionate for the matter to be dealt with by way of a set aside under rule 38. He described the set aside procedure as having a lower threshold that would be the case for an appeal on the ground that the FTT had made an error in law in reaching the conclusion it came to on the facts. I do not agree. As Mr Nawbatt rightly submitted in my view, the test under rule 38 is not aptly described as less onerous, it is simply different.
[8]For an...
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...but I have read the cases of Fraser (as representative partner for Starlight Therapy Equipment Partnership) [2012] TC 01884 and Daniel [2014] TC 04030 (“Daniel”). Whilst these cases are not binding on me I agree with the following general principles which they contain: Rule 38 is intended t......