Ingenious Games LLP v The Commissioners for HM Revenue and Customs (“HMRC”)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Nugee,Sir David Richards,Lord Justice Phillips |
| Judgment Date | 19 July 2022 |
| Neutral Citation | [2022] EWCA Civ 1015 |
| Docket Number | Case No: CA-2020-000002-D (formerly A3/2020/0007/D) |
| Court | Court of Appeal (Civil Division) |
| Year | 2022 |
[2022] EWCA Civ 1015
Lord Justice Phillips
Lord Justice Nugee
Sir David Richards
Case No: CA-2020-000002-D (formerly A3/2020/0007/D)
IN THE COURT OF APPEAL (CIVIL DIVISION)
ROYAL COURTS OF JUSTICE
STRAND, LONDON, WC2A 2LL
Jonathan Peacock QC, Richard Vallat QC and James Rivett QC, (instructed by White & Case LLP) appeared on behalf of the Applicants
Jonathan Davey QC, Michael Jones QC, Nicholas Macklam and Sam Chandler (Instructed by The General Counsel and Solicitor for HMRC) appeared on behalf of the Respondents
APPROVED JUDGMENT
This is an application under CPR r 52.30(4) for permission to make an application under CPR r 52.30(1) to reopen the refusal of permission to appeal.
Having heard this morning from Mr Jonathan Peacock QC (who appeared with Mr Richard Vallat QC and Mr James Rivett QC for the Appellants) we announced that we did not need to hear from Mr Jonathan Davey QC (who appeared with Mr Michael Jones QC, Mr Nicholas Macklam and Mr Sam Chandler for the Respondents ( “HMRC”)). That was on the basis that we were satisfied that permission should be refused. I now give my reasons for agreeing to that course.
This is a further round in the litigation as to the tax treatment of various Ingenious entities. The Appellants are three LLPs, Ingenious Games LLP, Inside Track Productions LLP and Ingenious Film Partners 2 LLP, the latter two of which were involved in film finance schemes and the first in a similar scheme involving video games. I will refer to them as “the Film LLPs” and “the Games LLP” respectively and to the three of them as “the LLPs”.
It is not necessary to give any account of the background. The parties are very familiar with it and anyone else who is interested can refer to the four decisions which are publicly available, namely two decisions of the First Tier Tribunal ( “the FTT”) at [2016] UKFTT 521 (TC) and [2017] UKFTT 429 (TC), that of the Upper Tribunal ( “the UT”) at [2019] UKUT 226 (TCC), and that of this Court at [2021] EWCA Civ 1180. For present purposes it is sufficient to say that the FTT decided among other things that, on a true analysis of what the LLPs did, their operations were conducted on the so-called 30:30 basis, not the Ingenious basis, and that on that basis the Film LLPs, although not the Games LLP, were trading with a view to profit. The UT agreed with the contractual analysis of the FTT, although their reasoning was not quite the same. But they held that none of the LLPs was trading on that basis, nor had a view to profit.
The LLPs then applied for permission to appeal to this Court. That was a second appeal, to which the Appeals from the Upper Tribunal to the Court of Appeal Order SI 2008/2834 ( “the Appeals Order”) applied. The Appeals Order was made under s. 13 of the Tribunals, Courts and Enforcement Act 2007, and Article 2 of that Order reads as follows:
“Permission to appeal to the Court of Appeal in England and Wales … shall not be granted unless the Upper Tribunal or, where the Upper Tribunal refuses permission, the relevant appellate court, considers that—
(a) the proposed appeal would raise some important point of principle or practice; or
(b) there is some other compelling reason for the relevant appellate court to hear the appeal.”
The application for permission came before Arnold LJ. Seven grounds of appeal were relied on. By his Order dated 24 February 2020 he granted permission on Grounds 1 (view to profit) and 3 (trading) on the basis that both had a real prospect of success and raised important points of principle. On the other grounds, that is Grounds 2 and 4 to 7, he refused permission. I should read the reasons that he gave in his Order:
“ Ground 2 (contractual construction): although their reasoning was slightly different, both the FTT and the UT came to essentially the same conclusions. Contrary to the Appellants' contention, the UT reached its conclusions applying conventional principles of contractual construction. (As the UT held and the Appellants accept, Ramsay does come in, but at the stage of considering whether the LLPs were trading.) I am doubtful whether the Appellants have a real prospect of success on the construction issues, but in any event this ground raises no important issue of principle or practice.
Ground 4 (incurred): this depends on the Appellants being correct on ground 2. In any event, the FTT and UT reached concurrent conclusions applying what is now a fairly well-established test. This ground has no real prospect of success, and in any event it raises no important issue of principle or practice.
Ground 5 (wholly and exclusively): again, this depends on the Appellants being correct on ground 2. In any event the FTT and UT reached concurrent conclusions applying a very familiar and well-established test. This ground has no real prospect of success, and in any event it raises no important issue of principle or practice.
Ground 6 (GAAP): again, this depends in part on ground 2. In any event, this issue was a matter for the FTT's evaluation of the expert evidence having heard the experts. Moreover, the UT has upheld that evaluation, rightly concluding that the FTT had carefully discharged its task. The Appellants' challenge to those conclusions has no prospect of success.
Ground 7 (capital or income): again, this depends at least in part on ground 2. This ground has no real prospect of success, and in any event it raises no important issue of principle or practice.”
The appeal on Grounds 1 and 3 was then heard over six days by this Court. In its judgment handed down on 4 August 2021 the Court (Henderson and Phillips LJJ and Sir David Richards) dismissed the appeal of the Games LLP but allowed the appeals of the Film LLPs on both Grounds 1 and 3, holding that they were trading with a view to profit. Subject to an outstanding application by the Games LLP for permission to appeal to the Supreme Court, that is a final determination of these issues.
By this application, the LLPs seek to reopen Arnold LJ's dismissal of permission to appeal on Grounds 2 and 4 to 7 under CPR r 52.30. It is not necessary for the purposes of this short permission judgment to conduct an exhaustive analysis of the principles applicable to such applications. They have been repeatedly considered and restated by this Court in numerous judgments. It is sufficient to make the following points:
(1) CPR r 52.30(1) itself reads as follows:
“The Court of Appeal or the High Court will not reopen a final determination of any appeal unless—
(a) it is necessary to do so in order to avoid real injustice;
(b) the circumstances are exceptional and make it appropriate to reopen the appeal; and
(c) there is no alternative effective remedy.”
By r 52.30(2) the same applies to an application to reopen a permission to appeal decision. But CPR r 52.30 is not to be interpreted as conferring a wide-ranging discretion on the Court to decide whether it is appropriate to reopen an appeal in the light of all the circumstances. The CPR do not expand the Court's jurisdiction but regulate it. That was laid down by this Court in Jaffray v The Society of Lloyd's [2007] EWCA Civ 586; see the judgment of Buxton LJ at [7]–[9], where inter alia he says:
“The CPR, being rules of court, cannot extend the jurisdiction of the court from that which the law provides, but can only give directions as to how the existing jurisdiction should be exercised. … And quite apart from that general rule, it is apparent from the wording of CPR r 52.17(1) [the equivalent to what is now r 52.30(1)] (which speaks of a jurisdiction not being exercised unless various conditions, including avoidance of real injustice, are fulfilled) that, as the helpful commentary in Civil Procedure 2007, vol 1, para 52.17.1 explains, it was passed to limit, and not to extend, the operation of the supposed jurisdiction under Taylor v Lawrence.”
In other words, it is not any circumstances which can be characterised as exceptional that engage the rule. It is only those circumstances which are exceptional and make it appropriate to reopen the appeal as exemplified by Taylor v Lawrence and the subsequent cases,...
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Application Under CPR 52.30 Fails In Long-running Tax Scheme Litigation (Ingenious Games LLP And Ors v HMRC)
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