R & C Commissioners v Taxpayer
Jurisdiction | UK Non-devolved |
Judgment Date | 10 January 2024 |
Neutral Citation | [2024] UKUT 12 (TCC) |
Court | Upper Tribunal (Tax and Chancery Chamber) |
[2024] UKUT 12 (TCC)
Mrs Justice Bacon, Judge Thomas Scott
Upper Tribunal (Tax and Chancery Chamber)
Income tax – Case management direction that preliminary proceedings in this matter shall be heard in private – Whether direction justified in order to prevent prejudice to the interests of justice – Appeal allowed.
[1] Pursuant to directions issued by the Upper Tribunal (Judge Richards) on 19 December 2022, the proceedings in this appeal have been anonymised. While the hearing before us was in public, in accordance with the direction for anonymity the Respondent is referred to in this decision as the “Taxpayer”, and we do not provide details in this decision which would enable the Respondent to be identified.
[2] The Appellants (“HMRC”) appeal against a direction issued by the First-tier Tribunal (Tax Chamber) (the “FTT”) on 15 September 2021. That direction was that “preliminary proceedings in this matter shall be heard in private”. The reference to “this matter” was to the Taxpayer's substantive appeal against the denial by HMRC of certain tax deductions which he had claimed.
[3] It is helpful to set out the procedural background, both because none of the relevant directions and decisions has been published and because it is material to the issues which we have to determine.
[4] The Taxpayer appealed to the FTT against certain decisions which HMRC had made denying him deductions for income tax purposes. The deductions which had been claimed were said to arise in relation to arrangements which had been challenged by HMRC and which were the subject of two other lead cases (the “Lead Appeals”).
[5] On 23 December 2019, the Taxpayer applied to the FTT for a direction that his appeal be stayed behind the Lead Appeals (the “Stay Application”). HMRC opposed the application.
[6] On 13 July 2021, the Taxpayer made an application to the FTT for the following:
- A direction of the Tribunal that the Appeal be heard in private and that the Tribunal's decision be anonymised.
- A direction of the Tribunal that the Appellant is to be anonymised in continuing proceedings.
- A direction of the Tribunal that the hearings will be held in private.
- A direction of the Tribunal that the preliminary proceedings in this matter be heard in private and anonymised.
- A direction that there be a non-reporting restriction in these proceedings.
- An order restricting publication of information.
[7] We refer below to this application as “the Privacy and Anonymity Application”.
[8] Both the Stay Application and the Privacy and Anonymity Application were considered by the FTT (Judge Sukul) at a hearing which took place in private on 19 July 2021. The FTT released its decision on the applications on 15 September 2021 (the “September 2021 Decision”).
[9] In the September 2021 Decision, the FTT described the reasons given for the directions sought by the Privacy and Anonymity Application as follows:
- That they are necessary to protect the taxpayer's private or family life.
- It is necessary to maintain the confidentiality of sensitive information.
- It will avoid prejudice to the interests of justice.
[10] The FTT issued the following directions in the September 2021 Decision:
- This appeal shall be stayed, under rule 5(3) of the Tribunal Rules, until 60 days after the Tribunal disposes of either of the appeals (the Lead Appeals) of [two identified appeals before the FTT] whether the appeals are disposed of by the Tribunal releasing a decision, the appeals being withdrawn or otherwise.
- Either party may apply at any time for this stay to be lifted.
- Preliminary proceedings in this matter shall be heard in private.
- Both parties shall provide to the Tribunal and each other their final representations on the Appellant's application for anonymity not later than 21 days before the substantive hearing.
[11] In this decision, we shall refer to the third and fourth directions above as Direction 3 and Direction 4 respectively.
[12] The FTT gave its reasons for Directions 3 and 4 as follows:
[16] HMRC strongly oppose the application, submitting that the application does not provide any good reason for displacing the strong presumption in favour of public hearings or departing from the fundamental principle of open justice.
[17] HMRC do not however object to the Appellant's proposal that the Tribunal defer consideration of the application to closer to the substantive hearing date (although they do not concede that interim proceedings should remain anonymised if the application is ultimately refused). I agree with that approach and I have therefore directed, in the interest of fairness and justice, that preliminary proceedings in this matter shall be heard in private to prevent the Appellant's outstanding anonymity application being rendered futile.
[13] Following the September 2021 decision, there were various further applications by the parties, in the course of which the FTT set aside these directions, and then reinstated them.
[14] HMRC sought permission to appeal against Direction 3. Permission was refused by the FTT but ultimately granted by the Upper Tribunal (Judge Richards). Permission to appeal was granted on the grounds that the FTT erred in law:
- By directing that preliminary proceedings were to be in private without having received any evidence from the taxpayer dealing with the need for such a direction.
- By failing to take into account, or by failing properly to apply, common law on the principle of open justice which indicated that such proceedings should be in public.
- By failing to consider alternatives to Direction 3 that were more proportionate having regard to the principle of open justice.
[15] By directions released on 19 December 2022, accompanied by detailed and comprehensive reasons, Judge Richards directed that the appeal before this Tribunal should be anonymised, and that all parties and the Tribunal should refer to the Respondent as the Taxpayer.
[16] An appeal to this Tribunal lies only on a point of law1. In addition, the direction under appeal resulted from an exercise by the FTT of its case management powers. In the decision of the Supreme Court in BPP Holdings Ltd v R & C Commrs[2017] BVC 36(‘BPP’) Lord Neuberger, delivering the judgment of the Court, said this, at [33]:
In the words of Lawrence Collins LJ in Walbrook Trustee (Jersey) Ltd v Fattal [2008] EWCA Civ 427, para 33:
[A]n appellate court should not interfere with case management decisions by a judge who has applied the correct principles and who has taken into account matters which should be taken into account and left out of account matters which are irrelevant, unless the court is satisfied that the decision is so plainly wrong that it must be regarded as outside the generous ambit of the discretion entrusted to the judge.
In other words, before they can interfere, appellate judges must not merely disagree with the decision: they must consider that it is unjustifiable.
[17] Earlier in his judgment, at [21], Lord Neuberger said:
However, it would nonetheless be appropriate for an appellate court to interfere with [the FTT's decision], if it could be shown that irrelevant material was taken into account, relevant material was ignored (unless the appellate court was quite satisfied that the error made no difference to the decision), there had been a failure to apply the right principles, or if the decision was one which no reasonable tribunal could have reached.
[18] We have applied this guidance in reaching our decision.
[19] Direction 3 was made by the FTT pursuant to rule 32 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273) (the “FTT Rules”). The relevant parts of Rule 32 state as follows:
Public and private hearings32. (1) Subject to the following paragraphs, all hearings must be held in public.
(2) The Tribunal may give a direction that a hearing, or part of it, is to be held in private if the Tribunal considers that restricting access to the hearing is justified–
- in the interests of public order or national security;
- in order to protect a person's right to respect for their private and family life;
- in order to maintain the confidentiality of sensitive information;
- in order to avoid serious harm to the public interest; or
- because not to do so would prejudice the interests of justice.
…
(6) If the Tribunal publishes a report of a decision resulting from a hearing which was held wholly or partly in private, the Tribunal must, so far as practicable, ensure that the report does not disclose information which was referred to only in a part of the hearing that was held in private (including such information which enables the identification of any person whose affairs were dealt with in the part of the hearing that was held in private) if to do so would undermine the purpose of holding the hearing in private.
[20] As regards matters relating to anonymity covered by Direction 4, rule 32(6) concerns the anonymity of published decisions. Wider powers in relation to anonymity exist under rule 14 of the FTT Rules, which provides as follows:
Use of documents and information[14] The Tribunal may make an order prohibiting the disclosure or publication of–
- specified documents or information relating to the proceedings; or
- any matter likely to lead members of the public to identify any person whom the Tribunal considers should not be identified.
[21] The powers contained in rules 32 and 14 do not fall to be exercised in a vacuum. The starting point in tax cases is that all hearings must be in public. Article 6 of the Human Rights Convention states that “everyone is entitled to a fair and public hearing” in the determination of their civil rights and obligations. That principle is also reflected in rule 32(1) of the FTT Rules.
[22]...
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