TC09640 - [2025] UKFTT 01114 (TC)

The Appellant served witness statements on behalf of Jacqueline Humphries dated 9 August 2024 and Holly Smith dated 12 August 2024.

The date on which the appeal was listed for hearing was notified to the parties on 21 November 2024. The date was fixed according to the availability of the parties. However, on 9 May 2025 the Appellant applied for a postponement of the hearing. One of the reasons for the request was that, despite HMRC having indicated that they intended to cross examine the witnesses, neither witness would be available to attend the hearing and had withdrawn. The Appellants applied for the statements to stand as hearsay evidence with the Tribunal placing such weight on the evidence as was considered appropriate in accordance with our wide discretion to admit evidence under rule 15 FTT Rules. The statements were said to be contextual and exhibiting documents on which we were entitled to rely in reaching our decision.

HMRC objected to the reliance on the witness statements as hearsay evidence. They referred to the case management directions as requiring that each party seeking to rely on a witness statement was required to call that witness to be available for cross-examination by the other party unless that other party had notified that the witness was not required. HMRC had notified a requirement to make the witnesses available for cross-examination and as such, the Appellant should be precluded from relying on the witness statements at all. In the alternative, if the Appellant was entitled to rely on the witness statements no weight should be given to them. In this regard, HMRC relied on section 4(1) and (2) Civil Evidence Act 1995 which sets out the considerations relevant to weighing hearsay evidence. In particular, that reliance on the statements as hearsay was impermissible as neither statement was contemporaneous to the period prior to August 2021 and both statements were caveated, the witnesses confirming that their knowledge of specific issues was limited and derived from others (thereby constituting multiple hearsay). Further, deficiencies were identified in the witness statements and HMRC claimed that they would be prejudiced if any weight was placed on the statements.

We did not read the witness statements prior to hearing the submissions of the parties as to their admissibility. During the hearing we determined that the Appellant would not be entitled to rely on the witness statements whether as hearsay evidence or otherwise. We were satisfied that HMRC’s concerns were such that there would be material prejudice to HMRC if the evidence was admitted. Further, we were not satisfied as to the relevance of the statements in any event given the nature of the task before us. On the Appellant’s own submission the statements provided only context and introduced documents. We considered that context was largely irrelevant to the issues we must determine. This is so, not least of all, because the Appellant has no right of recourse for recovery of VAT incurred from HMRC. HMRC will have the right to challenge whether particular supplies were made, and VAT paid on them, as and when the supplier to the Appellant seeks to recover the VAT from HMRC by way of a section 80 VATA claim. We note that, for all periods up to the date on which HMRC gave their Decision, any claim for recovery of such VAT would now be out of time unless it has already been submitted.

We therefore proceed without consideration of the witness statements themselves.