TC02986: Michael Wardle
| Jurisdiction | UK Non-devolved |
| Judgment Date | 22 October 2013 |
| Neutral Citation | [2013] UKFTT 599 (TC) |
| Date | 22 October 2013 |
| Court | First Tier Tribunal (Tax Chamber) |
[2013] UKFTT 599 (TC)
Judge John Brooks, Ian Perry.
Martyn Arthur, of Martyn F Arthur Forensic Accountant Ltd, appeared for the Appellant
John Corbett of HM Revenue and Customs, appeared for the Respondents
Income tax - Appellant incurred costs in claim for unfair dismissal in Employment Tribunal, Employment Appeal Tribunal and Court of Appeal and was ordered to pay respondents costs in Court of Appeal - Whether such costs were deductible expenses under Income Tax (Earnings and Pensions) Act 2003 ("ITEPA 2003"), Income Tax (Earnings and Pensions) Act 2003 section 336s. 336 - No - Appeal Dismissed.
[1]Mr Michael Wardle appeals against a closure notice issued by HM Revenue and Customs ("HMRC") in respect of his 2010-11 self-assessment tax return, under Taxes Management Act 1970 section 28As 28A of the Taxes Management Act 1970, on 23 August 2012. The closure notice, which increased Mr Wardle's liability to income tax by £49,136.98, was upheld by HMRC following a review and Mr Wardle's representative, Mr Martyn Arthur of Martyn F Arthur Forensic Accountant Limited (who appeared before us), was notified of this in a letter dated 8 November 2012. The effect of the amendment was, in essence, to deny a deduction made by Mr Wardle, from his earnings, of:
(2) the costs he incurred in bringing a claim against his former employers for unfair dismissal which proceeded through the Employment Tribunal, the Employment Appeal Tribunal and the Court of Appeal; and
(3) the costs of the respondent that he was required to pay in accordance with an order of the Court of Appeal.
The grounds of appeal were that:
HMRC's decision is based on an unsound hypothesis and is neither sustainable in law, nor on the arguments adduced by HMRC
[2]Although we were provided with a bundle of documents prepared by HMRC (which included the decision of the Employment Tribunal in the proceedings taken by Mr Wardle against his former employers) as it had been stated by Mr Arthur in an email to the Tribunal on 10 May 2013 (and repeated in his letter to the Tribunal, dated 23 May 2013 attached to his email of the same date) that no witnesses were to be called on behalf of the appellant who would be "relying on HMRC's bundle of documents", we requested further clarification regarding the litigation between Mr Wardle and his former employers.
[3]Following a brief adjournment for this purpose, the parties produced a schedule of agreed facts which we have appended to this decision. However, having produced the schedule of agreed facts but before making any submissions Mr Arthur requested that the case be adjourned to enable Mr Wardle to make a witness statement and to enable him (Mr Arthur) to properly prepare for the hearing. This application was opposed by Mr Corbett on the grounds that the issue to be determined was straightforward and there was no reason for any further delay.
[4]After a further adjournment for consideration and having regard to the overriding objective to deal with a case fairly and justly under rule 2 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, which includes "avoiding delay, so far as compatible with proper consideration of the issues", we came to the conclusion that the application for a further adjournment should be refused.
[5]We have already referred to the email and letter from Mr Arthur to the Tribunal dated 10 and 23 May 2013 respectively, in which it was stated that it was not intended to call any witnesses and he would "be relying on HMRC's bundle of documents".
[6]Also, notice of the hearing had been sent to the parties on 18 June 2013. In the circumstances we were satisfied that the parties had been given adequate time to prepare for the hearing and, having been provided with the schedule of agreed facts, we were also satisfied that we were able to give proper consideration to the issues concerned.
[7]The factual background to this appeal is as set out by Elias LJ, with whom the other Court of Appeal judges agreed, in Wardle v Credit Agricole Corporate and Investment BankICR[2011] ICR 1290; [2011] EWCA Civ 545 at [3] to [6] which, although we were not provided with a copy of the judgment by the parties, we gratefully adopt:
[3][Mr Wardle] The claimant was employed by Calyon in a post with the interesting designation of Global Head of Exotic Interest Rate Derivatives Risk Management. He applied to be promoted to Head of Risks Management but the application failed and a French national obtained the post. Had the claimant been promoted, the new job would have taken effect from January 2008. The rejection of his application for promotion was held to be an act of discrimination on the grounds of nationality, which contravenes the Race Relations Act 1976. The claimant was subsequently dismissed with effect from 31 July 2008. The Tribunal held that this dismissal was both unfair and an act of victimisation discrimination under the 1976 Act in that the reason for dismissal was a protected act, namely the fact that he had commenced the promotion proceedings in the Tribunal alleging discrimination under that Act.
[4]In its judgment on remedy, the Employment Tribunal made certain findings which informed its assessment of compensation. The material findings were as follows:
(i) The claimant's salary at the time of his dismissal was £104,000.
(ii) If he had been promoted to Head of IRD Risk Management his salary would have increased from £104,000 to £120,000.
(iii) In that role he would have received a bonus in each of the years 2009 and 2010 of 70% of his salary. (No express finding was made with respect to later years.)
(iv) The claimant secured employment with the Financial Services Authority (FSA) on 3rd November 2008 at a salary of...
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