TC09640 - [2025] UKFTT 01114 (TC)

We were told that in December 2023, and in preparation for this case, someone (unnamed) discovered an historic policy file containing documents relating to the scope of Group 7 Schedule 9 VATA which included papers concerning the drafting and introduction of the Value Added Tax (Medical Goods and Services) Order 1979 (Order). The file included the following categories of documents:

HMRC also sought to rely on extracts from Hansard dated 6 April 1973 and 15 March 1984, written answers to Parliament dated 27 June 1978, Fourteenth Report from the Select Committee dated 25 February 1979, and House of Commons Health Committee, Fifth Report of Session 2003-4 dated 19 July 2004 concerning “General Practitioners’ Deputising Services”. Also included was a letter to the Select Committee on Statutory Instruments dated 4 April 1979 and minutes of proceedings of the Select Committee on Statutory Instruments, Session 1978 – 1979 dated 4 April 1979 and Session 1978 – 1979 dated 4 April 1978.

None of these documents was supported by a witness statement, they were however included in HMRC’s list of documents.

HMRC claimed to be entitled to rely on the contents of this file and the Hansard extracts on three grounds:

We note that the Hansard extracts to which HMRC referred could not be admitted under the terms of Pepper v Hart [1993] AC 593 HL(E) (PvH). The 1973 extracts concern deputising services generally, they do not concern the Order and cannot therefore represent a statement of the meaning of Item 5 from a minister or promotor of the Order, irrespective of the clarity of the statements and/or whether or not the terms of Item 5 are ambiguous or obscure or lead to an absurdity. As regards the letter from Solicitor’s Office dated 4 April 1979 and the Minutes of the Select Committee on Statutory Instruments of the same date, there is no reference to Item 5 so they cannot therefore be relevant in any regard to its interpretation.

The Appellant was prepared to accept that, to the extent that the file contained material in the public domain, HMRC may be permitted to include it in the bundle, though further challenge was made to the extent to which it might be used in the interpretation of Item 5.

We admitted the material de bene esse, at least for the purposes of the hearing as we allowed HMRC to take us to the documents at some length in their attempt to demonstrate that they should be admitted and the Appellant, to a significantly lesser extent, referred us to them to demonstrate that they did not support HMRC’s case.

In their challenge to admissibility of the documents in the file, the Appellant referred to R v Secretary of State for the Environment, Transport and the regions, Ex party Spath Holme Ltd [2011] 2 AC 239 (Spath Holme) in which it was stated:

“… To the extent the extraneous material assists in identifying the purpose of the legislation, it is a useful tool.

This is subject to an important caveat. External aids differ significantly from internal aids. Unlike internal aids, external aids are not found within the statute in which Parliament has expressed its intention in the words in question. The difference is of constitutional importance. Citizens with the assistance of their advisers, are intended to be able to understand Parliamentary enactments, so that they can regulate their conduct accordingly. They should be able to rely on what they read in the Act of Parliament. This gives rise to a tension between the need for legal certainty, which is one of the fundamental elements of the rule of law, and the need to give effect to the intention of Parliament, from whatever source that, objectively assessed, intention can be gleaned.”

The Appellant also invites us to apply Bogdanic v Secretary of State for the Home Department [2014] EWHC 2872 (QB) (Bogdanic). That case concerned penalties imposed on vehicles passing through UK border control. The Secretary of State filed evidence providing information about the background to the relevant legislation and its policy intent. In refusing to admit the evidence Sales J stated (paragraph 13):

“… In construing a legislative instrument … it is a basic constitutional principle that the citizen or person subject to the relevant law should have the means of access to any material which is said to provide an aid to construction of that instrument. It is only material which is in the public domain and of clear potential relevance to the issue of interpretation of a legislative instrument which can be treated as having any bearing on the proper construction of that instrument: see Black-Clawson International Limited v Papierwerke Waldhof-Aschaffenburg AG [1975] AC 591 ….”

Further support was said to be drawn from the Supreme Court judgment in In re Agricultural Sector (Wales) Bill [2014] UKSC 43 (Agriculture Wales). In that case the Attorney General had sought to rely on internal correspondence not referenced in Parliament concerning the scope of “agriculture”. The Supreme Court observed (at paragraph 39):

“in our view it would be wholly inconsistent with the transparent and open democratic process under which Parliament enacts legislation to take into account matters that have passed in private between two departments of the Executive … We therefore refused in the hearing of the reference to admit the correspondence. We refer to it no further.”

HMRC contended that these authorities were not apposite in the present case.

Support for HMRC’s invitation to apply the mischief rule was said to be found in the Supreme Court judgment in Recovery of Medical Costs for Asbestos Diseases (Wales) Bill [2015] UKSC 3, in which the Supreme Court had confirmed that the context of a legislative measure may be determined, under a rule quite distinct from that in PvH, by examining background materials. In the context of adopting a purposive interpretation to EU derived UK legislation, it was contended, relying on the observations of Clarke J in Three Rivers District Council and others v Bank of England (No 2) [1996] All ER 363 that a “somewhat more flexible approach than that laid down in Pepper v Hart” should be adopted to the admissibility of explanations of the government.

In response to HMRC’s submissions in this regard the Appellant identified that the Supreme Court had released its judgment in the matter of Darwall and another v Dartmoor National Park Authority [2025] UKSC 20 (Darwall)on 21 May 2025. In that judgement the Supreme Court has now clarified that the only means of accessing the statements of promoters of a Bill presented to Parliament is through the strict application of the PvH rule:

“41.

As for the alternative basis of admissibility for which the appellants contend, they cited Bennion, Bailey and Norbury on Statutory Interpretation, 8th ed (2020), section 24.12 in support of their submission. In fact, in that passage the authors express scepticism about whether reference to Hansard in this way is legitimate. The authors state:

“As mentioned in Code [section] 24.3(purpose for which external aids may be used), where the aim is to resolve ambiguity it seems open to question whether the distinction between referring to legislative debates for the general background, or the mischief at which an Act is aimed, and referring to legislative debates as an aid to the construction of particular words is sustainable. It may also be queried whether it is consistent with the decision in Pepper v Hart itself.”

42.

This scepticism appears to us to be justified. …”

We are satisfied, in light of the guidance now provided by the Supreme Court in Darwall, that there is no basis on which Parliamentary statements are admissible save through the PvH gateway. On that basis, it would be astonishing if there were a more relaxed gateway for the admission of non-parliamentary, departmental or private material. As clearly articulated in Spath Holme, Bogdanic, and Agriculture Wales it is only right that the meaning of statutory instruments can be discerned from publicly available material.

Should that be our conclusion, HMRC sought to contend that the correspondence between HMRC and the BMA Deputising Service had been sufficiently widely distributed to represent publicly available information. We reject that submission. The correspondence was private to the parties to it. HMRC would not have been entitled to share the correspondence with any other taxpayers and whilst the BMA Deputising Service may have chosen, as some of the correspondence indicates, to advise others of its contents that, in our view, falls well short of the material being public information and certainly not material of which it could possibly have been argued that the Appellant would have been aware.

We therefore refuse to admit any of the material contained within the file or the Hansard extracts other than the Explanatory Note and the Explanatory Memorandum.

We are comforted that our approach is consistent with that taken by Lord Hodge (with whom Lords Briggs and Stephens and Lady Rose agreed) in R (O) v Secretary of State for the Home Department [2022] UKSC 3 (R(O)) in which it is stated (at paragraph 30):

“external aids to interpretation therefore must play a secondary role. Explanatory notes, prepared under the authority of Parliament, may cast light on the meaning of particular statutory provisions. Other sources, such as Law Commission reports, reports of Royal Commissions and advisory committees, and Government White Papers may disclose the background to a statute and assist the court to identify not only the mischief which it addresses but also the purpose of the legislation, thereby assisting a purposive interpretation of a particular statutory provision. The context disclosed by such materials is relevant to assist the court to ascertain the meaning of the statute, whether or not there is ambiguity and uncertainty, and indeed may reveal ambiguity or uncertainty … But none of these external aids displace the meaning conveyed by the words of a statute that, after consideration of that context, are clear and unambiguous and do not produce absurdity …”

Lord Hodge went on to exclude as inadmissible Parliamentary statements that did not meet the PvH test.

We note that the list of supporting material referenced is limited to publicly available parliamentary material. This is despite Lady Arden, in her concurring judgment, indicating that recourse to pre-legislative material could, in appropriate circumstances, assist the judge to better perform his or her role in finding the intention of Parliament in respect of a particular enactment. The absence of any reference to Lady Arden’s judgment is also to be noted in the recent adoption of paragraph 30 of R(O) in Re For Women of Scotland v Scottish Ministers [2025] SCUK 16 (see paragraphs 8 – 14).