Octagon Green Solutions Ltd v R & C Commissioners
Jurisdiction | UK Non-devolved |
Judgment Date | 06 November 2023 |
Neutral Citation | [2023] UKUT 268 (TCC) |
Court | Upper Tribunal (Tax and Chancery Chamber) |
[2023] UKUT 268 (TCC)
Judge Rupert Jones, Judge Guy Brannan
Upper Tribunal (Tax and Chancery Chamber)
Landfill tax and VAT – Late appeals against assessments linked with criminal investigation – Application for late appeal to be heard allowed for VAT but not for landfill tax – Whether appeal against landfill tax assessments should be allowed in light of new evidence – Yes – Late appeal allowed.
In Octagon Green Solutions Ltd v R & C Commrs [2023] BTC 537, on the basis of new evidence, the Upper Tribunal overturned the First-tier Tribunal’s decision and allowed a late appeal against landfill tax assessments to be heard
The facts
The appellant company (‘Octagon’) operated a landfill site. In 2014, HMRC opened a criminal investigation into Octagon’s operations at the site, suspecting fraudulent evasion of both landfill tax and VAT.
On 9 September 2016, HMRC wrote to Octagon with two sets of assessments – one for landfill tax (charging approximately £57 million) and one for VAT (charging approximately £12 million). One of the two letters relating to the VAT assessments stated that they were effectively protective assessments, separate from the investigation, which would not be enforced until the criminal proceedings were concluded. Significantly, the letter relating to the landfill tax assessments (written by a different HMRC officer, Mr Berry)), while also stating the assessments were separate from the investigation, did not include the passages indicating the stay of enforcement. This information was not communicated to Octagon until 1 November 2016, in a letter that also stated that, once the criminal proceedings were concluded, HMRC would write again outlining the position.
Almost four years later, in August 2020, the CPS informed Octagon and the other suspected parties that no criminal prosecutions would be brought. In December 2020, Octagon appealed to the Tribunal against both sets of assessments.
Largely on the basis of the differences between the two HMRC letters, the FTT decided (to give permission for the late appeal against the VAT assessments to be heard but refused permission for the late appeal against the landfill tax assessments. The recipient of the September 2016 landfill tax letter, the Tribunal ruled, could not have drawn any reason to consider that it had more than the normal 30 days within which to request a review or to appeal. There was therefore no good reason for the delay between 9 September and 1 November 2016.
Octagon applied for permission to appeal to the Upper Tribunal against the FTT’s decision on the landfill tax assessments. This was initially refused but subsequently granted when new evidence was presented, which Octagon was permitted to admit. This comprised e-mails between Octagon and newly appointed accountants (‘Inquesta’) and an internal HMRC e-mail in October 2016 between Mr Berry and a member of HMRC’s criminal-case team. The e-mails between Octagon and Inquesta revealed that the accountants had written and spoken in September and October 2016 to Mr Berry of HMRC at length about the landfill tax assessments and their concern over enforcement while the criminal investigation was ongoing. The internal HMRC e-mail conceded, inter alia, that Mr Berry had not made it clear in his 9 September letter that enforcement would await the conclusion of the investigation.
The appeal to the Upper Tribunal was on two grounds:
- The FTT had been wrong to find that the period from 9 September to 1 November 2016 had been a significant period of delay for which there was no good reason (‘Ground 2’); and
- The FTT had failed to consider all the circumstances in relation to the landfill tax assessment (‘Ground 3’).
The Upper Tribunal’s decision
The new evidence indicated that enquiries had been made of HMRC in the intervening period on Octagon’s behalf, as a result of which Octagon could reasonably have formed the impression that the landfill tax assessments were being held in abeyance pending resolution of the criminal proceedings and that no further procedural steps were necessary at that stage.
Furthermore, since the underlying facts and evidence in relation to the VAT assessments were the same as for the landfill tax assessments, to hold the VAT assessments in abeyance but not the landfill tax assessments would have been a strange conclusion.
Finally, whereas Octagon knew from August 2020 that no criminal prosecutions would be brought, it was not until 15 December 2020 that it had become clear to Octagon that HMRC was arguing that appeals against the landfill tax assessments would be out of time. It had been entitled to rely on the statement in the 1 November letter that HMRC would write again once the criminal proceedings were concluded. No such letter had been written.
The FTT had therefore made an error of law in making factual findings that could not reasonably have been made in the light of all the evidence, including the new evidence. The appeal on Ground 2 would therefore be allowed.
It was consequently unnecessary to deal with Ground 3.
The FTT’s decision would be set aside and Octagon would be granted permission to appeal against the landfill tax assessments out of time.
Even without the new evidence, the FTT’s decision to allow one late appeal and not the other did seem strange. There was sufficient ambiguity in the differing HMRC letters for a reasonable belief that appeals would not be needed until the criminal investigations were concluded.
Comment by Zigurds G Kronbergs, Senior Tax Writer, Croner-i Ltd.
Simon Farrell KC and James Bourne-Arton instructed by Watson Woodhouse Limited appeared for the appellant
James Puzey, Counsel, instructed by the General Counsel and Solicitor to His Majesty's Revenue and Customs appeared for the respondents
[1] This is an appeal against the decision (“the Decision”) of the First-tier Tribunal (the “FTT”). The Decision concerned whether the FTT should give permission to the Appellant, Octagon Green Solutions Limited (“Octagon”), to make a late appeal to the FTT against two assessments raised by the Respondents, HMRC. One of the two assessments, and with which this appeal is concerned, related to Landfill Tax, and the other related to VAT.
[2] The FTT decided that Octagon's application for an extension of time to appeal to the FTT should be refused in relation to the Landfill Tax assessment, but that, in relation to the VAT assessment, it should be granted.
[3] On 11 March 2022, the FTT received an application for permission to appeal to the Upper Tribunal (the “UT”) against the Decision in relation its conclusion in respect of the Landfill Tax assessment. The FTT (Judge Bailey) refused permission to appeal but permission was subsequently granted on two grounds by the UT (Judge Ramshaw) on 13 July 2023. Before Judge Bailey and Judge Ramshaw new evidence (“the New Evidence”) was introduced. This was in the form of certain letters/emails, which, it was argued, indicated that the FTT had made a material error of law in the Decision. Judge Ramshaw gave permission for the New Evidence to be admitted on this appeal.
[4] For the reasons set out below, we allow the appeal and grant permission for Octagon's appeal against the Landfill Tax assessment to be heard out of time.
[5] The following summary of the background to this appeal is largely taken from the Decision at [3]–[13]. References in square brackets are to the Decision unless the context otherwise requires.
[6] Octagon was the operator of a landfill site. In 2014, HMRC commenced an investigation into Octagon's operations at its landfill site. HMRC suspected that there had been fraudulent evasion of Landfill Tax and VAT in connection with the operations at the site. At the same time HMRC also investigated the activities of an associated company called Caird Peckford Ltd at another site.
[7] HMRC seized paperwork from Octagon, conducted observations at the site in February 2015 and September 2015, interrogated Octagon's computers and arrested and interviewed under caution suspects concerned in the operation of the site.
[8] On 9 September 2016, HMRC wrote to Octagon with two assessments: one for Landfill Tax and the other for VAT. The Landfill Tax assessment was for some £57m for the period 28 February 2013 to 30 September 2015. The VAT assessment was for some £12m in respect of the same period.
[9] In relation to the VAT assessment, Mr Longstaff of HMRC wrote two letters to Octagon on 9 September. In the first letter he explained that he was making an assessment following the criminal investigation but that the assessment was separate from that investigation. He considered that the investigation indicated that there was an under-reporting of tax. Mr Longstaff continued:
If you do not agree with my decision to assess you for landfill tax1 detailed above
… you can … ask for a review … or appeal to an independent tribunal.
… If you...
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