TC09534 - [2025] UKFTT 00594 (TC)

Mr Chapman’s skeleton argument on behalf of the appellants, which was filed on 15 April 2025 (five working days before the hearing) contained an application to rely on a further witness statement made by Mr Christopher Rashleigh (a partner in the firm of accountants representing the appellants). Although the witness statement is dated 4 April 2025, it had not, at this stage, been provided either to HMRC or to the Tribunal. HMRC emailed the Tribunal on 17 April 2025 to object to the appellants being allowed to rely on the additional witness statement.

On 22 April 2025, the Tribunal directed the appellants to provide the witness statement to the Tribunal and to HMRC by 4pm on that day (which was done) and notified the parties that the application to rely on the witness statement would be dealt with at the start of the hearing.

Both parties agreed that, in deciding whether to admit the witness statement, we should apply the three-stage process deriving from Denton v White [2014] EWCA Civ 90 as explained by the Upper Tribunal (in relation to applications for permission to appeal out of time) in Martland v HMRC [2018] UKUT 178 at [44-45].

This approach was endorsed by the First-tier Tribunal in W M Morrison Supermarkets PLC v HMRC [2021] UKFTT 0106 (TC) at [42] in relation to an application for evidence to be admitted after the time limit for providing that evidence contained in directions made by the Tribunal. We note that, in applying that test, the Tribunal took into account the comments made by Lightman J in Mobile Export 365 Limited v HMRC [2007] EWHC 1727 (Ch) at [20-21] to the effect that there is a presumption that relevant evidence should be admitted unless there is a compelling reason to the contrary, but that it is not acceptable to spring surprises on opponents at a late stage.

The purpose of Mr Rashleigh’s second witness statement is simply to introduce into evidence a number of documents which were exhibited to the witness statement. These documents fall into three categories. The first two categories are historical website pages from the websites of Rushby and Jagers, respectively. The third category constitutes printouts of various resources for teachers and parents to be found on a website known as Twinkl which show that parents and teachers can obtain resources from Twinkl in relation to ballroom and Latin dancing.

Mr Chapman accepts that the Tribunal had made directions requiring witness statements to be provided by 31 January 2023, and that there has therefore been a serious delay. He also accepts that there is no good reason for the delay.

However, when considering all of the circumstances, he notes that the evidence is relevant to an understanding of exactly what classes were being taught by Rushby and Jagers. He also drew attention to the fact that, it is clear from HMRC’s correspondence that not only had they reviewed the Rushby and Jagers websites, they had also relied on some of the material from those websites in making their VAT registration decisions. On this basis, Mr Chapman submits that there is no material prejudice to HMRC in admitting these first two categories of evidence.

As far as the Twinkl documents are concerned, Mr Chapman again submitted that there was no prejudice to HMRC in admitting these documents. In doing so, he made it clear that he could rely on them only as evidence that ballroom and Latin dancing might potentially be taught in schools, given that these materials are available, but that he could not rely on these documents as evidence that those subjects were in fact ordinarily taught in schools.

Mr Marks, on behalf of HMRC, made a number of objections to the admission of any of the documents. His main points were as follows:

Having considered all of the relevant factors, we gave permission for the appellants to rely on the Rushby and Jagers website extracts but not on the Twinkl documents.

Although there has been a significant delay in complying with the Tribunal’s direction, for which there is no good reason and, bearing in mind the need for time limits to be respected and for directions to be complied with, we take the view that the fact that HMRC has clearly seen these website documents (or other website documents which are very similar to them) and have referred to them in their correspondence with Rushby and Jagers, including their decision letters, means that there is no prejudice to HMRC in allowing these documents to be admitted as part of the evidence. They are clearly relevant and it will assist the Tribunal and the parties to be able to refer to them.

As far as the Twinkl documents are concerned, we agree with Mr Marks that these are of no real assistance. As accepted by Mr Chapman, even if they were admitted, they do not provide any evidence as to whether the relevant subjects were commonly taught in schools or universities. In addition, we also accept that there would be prejudice to HMRC if they were admitted, given that these are documents which HMRC have not previously seen and have not had an opportunity to consider. Given that there has been a significant delay for which there is no good reason, we do not consider it would be right to exercise our discretion to admit this additional evidence at such a late stage.