TC09615 - [2025] UKFTT 01016 (TC)

Fecha: 31-Jul-2025

Preliminary issue

Preliminary issue

33.

In my judgment, the scope of the Closure Notices is a preliminary issue. In Wrottesley v. HMRC [2015] UKUT 637 (TCC); [2016] STC 1123 (“Wrottesley”), the UT (Judge Herrington and Judge Falk, as she then was) set out at [28] the approach the Tribunal should take when asked to determine preliminary issues:

“(1)
The matter should be approached on the basis that the power to deal
with matters separately at a preliminary hearing should be exercised with
caution and used sparingly.
(2)
The power should only be exercised where there is a ‘succinct, knockout point’ which will dispose of the case or an aspect of the case. In this context an aspect of the case would normally mean a separate issue rather than a point which is a step in the analysis in arriving at a conclusion on a single issue. In addition, if there is a risk that determination of the preliminary issue may prove to be irrelevant then the point is unlikely to be a ‘knockout’ one.
(3)
An aspect of the requirement that the point must be a succinct one is that it must be capable of being decided after a relatively short hearing (as compared to the rest of the case) and without significant delay. This is unlikely if (a) the issue cannot be entirely divorced from the evidence and submissions relevant to the rest of the case, or (b) if a substantial body of evidence will require to be considered. This point explains why preliminary questions will usually be points of law. The tribunal should be particularly cautious on matters of mixed fact and law.
(4)
Regard should be had to whether there is any risk that determination of the preliminary issue could hinder the tribunal in arriving at a just result at a subsequent hearing of the remainder of the case. This is clearly more likely if the issues overlap in some way—see (3)(a), above.
(5)
Account should be taken of any potential for overall delay, making
allowance for the possibility of a separate appeal on the preliminary issue.
(6)
The possibility that determination of the preliminary issue may result
in there being no need for a further hearing should be considered.
(7)
Consideration should be given to whether determination of the preliminary issue would significantly cut down the cost and time required for pre-trial preparation or for the trial itself, or whether it could in fact increase costs overall.
(8)
The tribunal should at all times have in mind the overall objective of
the tribunal rules, namely to enable the tribunal to deal with cases fairly
and justly.”

34.

In relation to each of those points:

(1)

I approach the issue on the basis that the power to deal with matters separately at a preliminary hearing should be exercised with caution and used sparingly.

(2)

If Mr Tinkler were to succeed, that would dispose of two aspects of the case: the Section 66 Issue and the GAAP Issue.

(3)

Whether the Tribunal has the jurisdiction to hear those Issues can be decided after this one day hearing, and there has been no significant delay. It is essentially a question of law: the only evidence relied upon was that contained in the Closure Notices and the four documents handed up at or just before the hearing.

(4)

Were I to find the Tribunal did not have the relevant jurisdiction, that would not hinder the obtaining of a just result.

(5)

I raised with the parties the risk of delay if either party were to seek permission to appeal (“PTA”) a decision made after this hearing.

(a)

Mr Waldegrave said that if I allowed the Application, HMRC would be likely to apply for PTA and if so, would also apply for the substantive case to be stayed.

(b)

Mr Gordon said that if I refused the Application, Mr Tinkler would similarly be likely to apply for PTA and ask for the substantive appeal to be stayed. However, he said Mr Tinkler would not take that course if the Tribunal extended the appeal rights against this decision so they were aligned with those against the substantive decision.

(c)

Taking into account the position of the parties, I find as follows:

(i)

Were I to refuse the Application but extend Mr Tinkler’s appeal rights, there would be no delay. The Tribunal hearing the substantive appeal would hear and decide all the Issues. If Mr Tinkler were then to lose at the Tribunal on one or both of those Issues, he could appeal both the substantive decision and this decision at the same time; were he to win at the Tribunal, he could apply for the points to be considered by the UT under rule 24 of the Tribunal Procedure (Upper Tribunal) Rules 2008.

(ii)

Were I to allow the Application, there would be a delay whilst HMRC applied for PTA, and depending on the outcome of that application, a further delay while the UT (or a higher court) made a final decision. However, that delay would be no greater than if the Tribunal hearing the substantive case came to the same conclusion, in other words, decided it did not have the jurisdiction to hear the Section 66 Issue and/or the GAAP Issue and in consequence made no related findings. If HMRC successfully appealed on that point, the case would be remitted back to the Tribunal.

(d)

Thus, although there was a risk of delay if the scope of the Closure Notices was decided at this hearing, if HMRC won, that risk could be mitigated by deferring Mr Tinkler’s appeal rights, and if Mr Tinkler won, the risk was unlikely to be greater than if the scope of the Closure Notices was decided at the substantive hearing.

(6)

There would need to be a hearing in any event, but the scope of that substantive hearing would be different depending on the outcome of this hearing.

(7)

Deciding as a preliminary matter whether the Tribunal has jurisdiction to hear and decide the Section 66 Issue and the GAAP Issue was unlikely to increase costs overall. Depending on the outcome, it may reduce costs.

(8)

Taking into account all relevant factors, I decided that it would be in the interests of justice to decide the scope of the Closure Notice as a preliminary issue.