Foulser v HM Revenue and Customs
| Jurisdiction | UK Non-devolved |
| Judgment Date | 25 January 2013 |
| Neutral Citation | [2013] UKUT 38 (TCC) |
| Date | 25 January 2013 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
[2013] UKUT 38 (TCC).
Upper Tribunal (Tax and Chancery Chamber).
Morgan J.
Alun Jones QC (instructed by Keystone Law) for the appellants.
Fiona Dewar (instructed by the Solicitor for HM Revenue) for the respondents.
The following cases were referred to in the judgment:
Care First Partnership Ltd v RoffeyICR [2001] ICR 87
Daniel v R & C CommrsUNKTAX [2012] EWCA Civ 1741; [2013] BTC 18
Kelly v Ingersoll-Rand Co LtdICR [1982] ICR 476
O'Keefe v Southampton City CouncilICR [1988] ICR 419
R v Belmarsh Magistrates' Court, ex parte WattsUNK [1999] 2 Cr App R 188
R v Chief Constable of Warwickshire, ex parte FitzpatrickWLR [1999] 1 WLR 564
R v Horseferry Road Magistrates' Court, ex parte BennettELR [1994] 1 AC 42
R (on the application of Chief Constable of Nottinghamshire) v Nottingham Magistrates' CourtUNK [2009] EWHC 3182 (Admin)
R (on the application of Davies) v R & C Commrs; R (on the application of Gaines-Cooper) v R & C CommrsTAXWLR [2011] UKSC 47; [2011] BTC 610; [2011] 1 WLR 2625
R (on the application of Ebrahim) v Feltham Magistrates' CourtWLR [2001] 1 WLR 1293
R (on the application of Secretary of State for the Home Department) v Immigration Appeal TribunalELR [2001] QB 1224
R (on the application of V) v Asylum and Immigration TribunalUNK [2009] EWHC 1902 (Admin)
Capital gains tax - Procedure - First-tier Tribunal - Jurisdiction - Abuse of process - First-tier Tribunal's jurisdiction to deal with alleged abuse of process affecting fair hearing of tax appeal - Express and implied powers under procedure rules - Jurisdiction to consider alleged misconduct by public authority - Tribunal misunderstanding taxpayers' case - Taxpayers' appeal allowed - Case remitted to First-tier Tribunal - Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.
This was an appeal by the taxpayers against a decision of the First-tier Tribunal ([2011] UKFTT 642 (TC); [2011] TC 01484) granting an application by HM Revenue and Customs for an order striking out, or summarily dismissing, an application which had been made by the taxpayers for an order effectively debarring HMRC from taking any further part in the taxpayers' appeal to the FTT against an assessment to capital gains tax.
The taxpayers had appealed unsuccessfully against amendments to their self-assessments disallowing claims to hold-over relief under s. 165 of TCGA 1992 (see [2007] BTC 95, CA). The result was that the taxpayers were liable to pay capital gains tax. The amount of the tax payable was not agreed and therefore fell to be determined by the FTT. The hearing before the FTT began on 28 September 2010. The taxpayers' case was that on the following day their tax adviser had been arrested on suspicion of cheating the Revenue and false accounting; he was told that HMRC had a warrant to search his premises; despite informing the HMRC officers that he was on his way to the FTT for the hearing, he had been taken to the police station where he was questioned before being released on bail that evening; his premises had been searched under the warrant. There had been no further hearing of the appeal and the taxpayers had applied for an order effectively debarring HMRC from taking any further part in the appeal on the basis that that would amount to an abuse of process in the circumstances. HMRC applied to strike out the taxpayers' application on the grounds that the FTT did not have jurisdiction to make the order sought and in any event the application was bound to fail on the facts. The FTT acceded to HMRC's application and dismissed the taxpayers' application on the ground that it had no jurisdiction to make the order they sought. No such power existed under the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 or could be implied. Claims of misconduct by public authorities were a matter for the High Court and not the lower courts ([2011] UKFTT 642 (TC); [2011] TC 01484). The taxpayers appealed against that decision.
Held, allowing the taxpayers' appeal and remitting the case to the FTT:
1.It appeared from the decision of the FTT that it had understood that the taxpayers did not rely on any submission that the proceedings could not be fairly conducted, but instead put their case on the ground that HMRC had been guilty of such serious misbehaviour that they should not be allowed to benefit to the detriment of the taxpayers. That understanding by the FTT was central to its reasoning. It now appeared and HMRC accepted that the taxpayers' case had always included a submission that the events of 29 September 2010 meant that a fair hearing of the tax appeal was no longer possible. On that basis the appeal had to be allowed and both applications remitted to the FTT.
2.The FTT plainly had jurisdiction, pursuant to TMA 1970, to determine the facts and the law necessary to determine the tax appeal before it. But the FTT, which was created by s. 3 of the Tribunals, Courts and Enforcement Act 2007, did not have a judicial review jurisdiction. Such jurisdiction was given to the Upper Tribunal, but not the FTT, by s. 15 of the 2007 Act. By s. 15(1), the Upper Tribunal's powers to grant relief in a judicial review case included a power to make "a prohibiting order". Thus, if a taxpayer wished to contend that HMRC had acted unlawfully in public law so that the taxpayer was entitled to judicial review and that the appropriate relief was a prohibiting order preventing HMRC from a particular course of conduct, such a claim was within the jurisdiction of the Upper Tribunal and within the jurisdiction of the High Court. Section 18 of the 2007 Act contained provisions which dealt with whether the application for judicial review should be brought in the Upper Tribunal rather than in the High Court. A claim of that character was not within the jurisdiction of the FTT.
3.The FTT proceeded on the basis that the taxpayers' case did not include a contention that the events of 29 September 2010 had made a fair hearing of the tax appeal impossible. The FTT therefore understood that they contended instead that HMRC was guilty of an abuse of process in the sense of unlawful behaviour in public law. On that basis, the FTT was right to hold that such a contention was not within the jurisdiction of the FTT. However, it had now been established that their case did involve the contention that the events of 29 September 2010 had made a fair hearing of the tax appeal impossible. On that basis, the FTT did have jurisdiction to deal with and determine that contention.
4.If the taxpayers contended that the events of 29 September 2010 had made a fair hearing of the tax appeal impossible or that safeguards against possible unfairness had to be provided, then the FTT could deal with that contention and could exercise the express powers conferred by the 2009 Rules to deal with possible unfairness or to provide safeguards. The width of the express powers conferred by the 2009 Rules ought to be sufficient for those purposes. If it should turn out that the express powers conferred by the 2009 Rules were not sufficient, then the FTT could consider whether it had, and whether it ought to exercise, some implied power which might exist to enable it to achieve fairness in its procedures and/or to observe the rules of natural justice. Conversely, if the FTT considered that the events of 29 September 2010 did not make a fair hearing of the tax appeal impossible, with or without further safeguards, then any contention that HMRC had acted unlawfully in public law had to be put forward by way of an application for judicial review and such an application was not within the jurisdiction of the FTT.
5.HMRC argued that it must have been intended that the only circumstances in which a claim could be struck out or a debarring order made by the FTT were those stated in r. 7 and 8 of the 2009 Rules. However, the Upper Tribunal was not persuaded that it should hold that the FTT could not produce the desired just result by using its power under r. 5 to regulate its procedure, particularly to deal with the case fairly and justly. Accordingly, the Upper Tribunal was not prepared to accept the submission of HMRC that the FTT could not make a debarring order against HMRC if, on the facts, the FTT considered that the only way to deal with the case fairly and justly was to make such an order.
Morgan J: The background to the appeal
1.This is an appeal from the decision of Tribunal Judge Roger Berner, sitting in the First-tier Tribunal (Tax Chamber) ("the FTT"). The decision was released on 4 October 2011 ([2011] UKFTT 642 (TC); [2011] TC 01484). The appeal is brought with the permission of the FTT granted on 10 February 2012. The appeal is on a point of law only, pursuant to Tribunals, Courts and Enforcement Act 2007 section 11s. 11 of the Tribunals, Courts and Enforcement Act 2007.
2.In summary, the matter which was before the FTT was an application by Her Majesty's Revenue and Customs ("HMRC") for an order striking out, or summarily dismissing, an application which had been made by Mr and Mrs Foulser for an order effectively debarring HMRC from taking any further part in the appeal brought by Mr and Mrs Foulser to the FTT against an assessment to tax made by HMRC.
3.The FTT acceded to the application made by HMRC and dismissed the application made by Mr and Mrs Foulser on the ground that the FTT had no jurisdiction to make the order which Mr and Mrs Foulser sought. They now appeal against the dismissal of their application.
4.The substantive proceedings which were before the FTT, and which had earlier been before the Special Commissioners, have a long history. Some of that history was briefly referred to in the evidence what was served in relation to the applications referred to in paragraphs 2 and 3 above. More information about the earlier proceedings can be found in the decisions of the Special...
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Financial Conduct Authority GC 5264 2014
...is entirely independent and (in terms of the primary relief sought) would conduct a full rehearing on the merits: cf. Foulser v IRC [2013] UKUT 38 (TCC) at [50]. In any event, although Mr Popplewell’s skeleton argument for these appeals to me, in summarising the allegations of procedural un......
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...of the tax appeal are fair. That appears from [27] of the decision of Morgan J sitting in the Upper Tribunal in Foulser v HMRC [2013] UKUT 038 (TCC). Morgan J went on to say that the phrase “abuse of process” has been used to describe two different things which he explained at [35] as “…I c......
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Ian Shiner and David Sheinman v The Commissioners for Her Majesty's Revenue and Customs
...case one could achieve the same result under Rule 5, which provides for case management powers. He referred me to Foulser v HMRC [2013] UKUT 038 (TCC). His appeal to me did not complain that the FTT was exercising a jurisdiction that it did not have. Nor did he really explain what “special”......
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Ian Shiner and David Sheinman v The Commissioners for HM Revenue and Customs
...case one could achieve the same result under Rule 5, which provides for case management powers. He referred me to Foulser v HMRC [2013] UKUT 038 (TCC). His appeal to me did not complain that the FTT was exercising a jurisdiction that it did not have. Nor did he really explain what “special”......