TC09677 - [2025] UKFTT 01282 (TC)

The application before me has been made on the basis that this stay expired on release of the Upper Tribunal’s decision in the Bolt Appeal. I disagree. In my view, a stay until an appeal is finally determined remains in force until all further appeals are determined.

However, as the parties are in dispute regarding the terms of the stay, and the directions include that any party may apply at any time for the direction to be amended, suspended or set aside, I consider it appropriate to determine the current application for an amendment.

In determining this application, I have considered whether the decision in the Bolt Appeal will provide material assistance in resolving the issues in the present appeal and whether it is expedient to continue the stay (see HMRC v RBS Deutschland Holdings GmbH [2006] CSIH 10, [2007] STC 814 at [22]).

I am satisfied that the position remains as it was when the stay was directed on 4 March 2024, that the final determination of the Bolt Appeal will materially assist in resolving the issues in Uber’s appeal. The legal questions are substantially similar, and the Court of Appeal’s judgment will provide authoritative guidance. Proceeding with Uber’s appeal before the Bolt Appeal is finally determined risks unnecessary duplication of effort, additional costs and the possibility of inconsistent outcomes. I agree with HMRC that such a course remains inefficient and not expedient.

Whilst Uber accepts that there are compelling reasons for a continued stay, it objects to an unconditional stay and proposes that the stay be conditional upon HMRC returning the Deposited Sums, paid under section 84(3) VAT Act 1994 to enable its appeal to be entertained.

Uber contends that its appeal is not being entertained within the meaning of section 84(3) VAT Act 1994 because the proceedings have been stayed and have never been listed for hearing. It refers to the FTT decision in SNM Pipelines Ltd v HMRC [2022] UKFTT 231 (TC) (‘SNM’), where the decision refers to an appeal only being “entertained” when it is listed for hearing, and argues that the statutory requirement to deposit tax applies only when the Tribunal is actively engaging with the appeal, not when it is frozen by a stay.

Uber submits that the original expectation was for its appeal to be heard promptly, and the Deposited Sums were paid on that basis. However, since the appeal has been stayed pending the outcome of the Bolt litigation, Uber argues that the legal basis for retaining the Deposited Sums has fallen away. It submits that the Tribunal should revisit the deposit requirement in light of actual events, not hypothetical ones, and that the sums should be returned because the appeal is not currently being entertained.

Uber also submits that HMRC has accepted it will not enforce future assessments while the Bolt Appeal is ongoing, which it says undermines HMRC’s position that the Deposited Sums must be retained. If future appeals do not require deposits due to the stay, Uber argues, then the same logic should apply retrospectively.

I have carefully considered these arguments. However, I agree with HMRC’s submission that Uber’s appeal is being entertained because the Deposited Sums have already been paid in accordance with section 84(3) VAT Act 1994, having considered the wording of the statute and the Supreme Court’s decision in Totel Ltd v HMRC [2018] 1 WLR 4053 (‘Totel’) which confirms at [1] that:

“Traders who wish to appeal against assessments to Value Added Tax (“VAT”) in the United Kingdom are required, by section 84 of the Value Added Tax Act 1994, first to pay or deposit the tax notified by the assessment with HMRC, unless they can demonstrate that to do so would cause them to suffer hardship. Otherwise, their appeal will not be entertained.”

Uber relies on the decision in SNM in support of its contention that an appeal is only “entertained” when it is listed for hearing. The issue in SNM was whether failure to pay the disputed VAT or make a hardship application precludes an appeal being made. The FTT considered that starting proceedings is not the same thing as “entertaining” or “proceeding” with an appeal, and referred to cases that suggested the tribunal only begins to entertain an appeal when it lists it for hearing:

“32.

From the cases referred to above, it seems to me to be clear that the under both FA72 and VATA94 the fact that an appeal cannot be entertained does not mean that it has not been validly made. It does not seem to have been argued in the cases that a tribunal entertained an appeal when it received and acknowledged a notice of appeal. The cases, in particular Hubbard, suggest that the tribunal only begins to entertain an appeal when it lists it for hearing. It might be argued that this followed from the procedural rules that applied at the time, namely the VATT Rules. The statutory provisions in the VATA94 remain the same but the procedural rules have changed. Proceedings in the FTT are now subject to the FTT Rules. The question for me is whether the new rules produce a different answer to the question of whether SNMP made a valid appeal when it filed a notice of appeal without paying the disputed tax or applying for hardship.”

Earlier in the decision (at [20]), the FTT refers to the meaning of the word “entertained” being considered by the Inner House of the Court of Session in Customs and Excise v Hubbard Foundation Scotland [1981] STC 593 (‘Hubbard’).

The FTT goes on to say:

“24.

In Hubbard, the taxpayer’s hardship application was refused but the taxpayer argued in the VAT Tribunal that “entertained” in section 40(3) FA72 should be construed as meaning the hearing of the case on the merits. The VAT Tribunal agreed and HMCE appealed to the Court of Session.

25.

Lord Cameron at page 600 held that:

“…, it would appear clear that when the issue of competency has been decided (when this is put in issue by applications whether under r 6(2) by the commissioners or under r 20 by the taxpayers) the tribunal has begun to ‘entertain’ the appeal. When the tribunal formally decides that it can do so and intimates that decision to the parties then the tribunal has admitted the appeal to its consideration. Where no such application is made and where therefore neither party objects to the appeal being entertained, the position is that the appellant has invited the tribunal to entertain an appeal which it is competent for the tribunal to entertain. Having received that notice of appeal and the implied invitation to entertain the appeal contained in it and on the grounds therein set out, the tribunal not only intimates its acceptance of the invitation but at the same time gives notice under r 23, ‘stating the date and time when and place where such appeal … will be heard not less than 14 days before such date’. Thus, this is not only an acceptance of an invitation to entertain, but intimation of an active and essential step in the process of appeal. In this context and in these circumstances I am clearly of the opinion that entertainment of an appeal begins in the one case when the contested issue of competency is decided in the taxpayer’s favour, and, where no question of competency arises, from the date of service of the requisite notice of hearing in conformity with r 23.”

Having considered Lord Cameron’s comments, it seems clear to me that when the issue of competency has been decided, the tribunal has begun to ‘entertain’ the appeal. When the tribunal formally decides that it can do so and intimates that decision to the parties, then the tribunal has admitted the appeal to its consideration. The notice stating when the appeal will be heard is, in the circumstance of the Hubbard appeal, simply an intimation of an active and essential step in the process of appeal, which is when the entertainment of an appeal begins.

The FTT in SNM also referred to “entertaining” and “proceeding” as meaning the same thing and concluded at [39]:

“notwithstanding the fact that the disputed tax was not paid and no application for hardship was made at that time, it was a valid notification of the appeal. As HMRC have subsequently accepted that SNMP would suffer hardship if it were required to pay the disputed tax, there is no longer any reason why the appeal should not now proceed towards a hearing.”

There is no issue in Uber’s appeal regarding whether a valid appeal was made. Uber submits that it is necessary, as the appeal was never entertained in any sense relevant to section 84 VAT Act 1994, for the obligation to deposit to be reviewed afresh with the knowledge of the actual, not merely expected, events, and while the stay has been or continues to be in place, Uber’s appeals, both past and to come, are not being entertained and the vires for the retention of the Deposited Sums in fact never existed or has fallen away, such that the Tribunal ought to permit a stay only if Uber receives back the sums.

I am unconvinced that the section 84 obligation to deposit must be reviewed afresh with the knowledge of the actual, not merely expected, events. I do not consider the statutory regime or authorities to which I have been referred supports such a proposition.

I also do not accept that HMRC’s decision not to enforce further assessments pending the final determination of the Bolt Appeal has any retrospective impact on whether the current appeal is being entertained.

Totel makes it clear that those who wish to appeal against VAT assessments are required first to pay or deposit the tax notified by the assessment, unless they can demonstrate that to do so would cause them to suffer hardship. Otherwise, their appeal will not be entertained.

I consider that once the deposit is made or hardship application determined, which is an active and essential step in the process of this appeal, the appeal is proceeding and therefore being “entertained” regardless of whether it is subsequently stayed or listed for hearing. There is therefore no basis for finding that the Deposited Sums should be returned because the appeal is not currently being entertained.

Uber contends that the original purpose of the stay, namely, to await a binding legal ruling, has now been fulfilled as the UT’s decision in the Bolt Appeal establishes the applicable law, which, if applied, would result in Uber’s appeal succeeding. Uber refers to the severe financial hardship caused by the continued retention of the Deposited Sums including the significant opportunity costs, financing burdens, and commercial disadvantages it faces, and argues that statutory interest would not adequately compensate for the harm. As Uber’s parent company has offered a guarantee and possesses substantial financial resources to ensure repayment of the Deposited Sums if required, Uber argues that there is no reasonable recovery risk and that HMRC’s concerns are speculative.

I accept Uber’s submissions regarding the financial prejudice caused to them by the continued retention of the Deposited Sums and the limited risk of non-recovery of any final liabilities. However, despite these circumstances, I consider the requirement to deposit sums under section 84(3) VAT Act 1994 remains applicable for their appeal to be entertained.

In considering the relevant legal principles, I am guided by the UT’s decision in HMRC v. Elbrook (Cash & Carry) Limited [2017] UKUT 181 (TCC) at [19]:

“We turn first to the legal principles. It is clear that s 84 VATA is intended to strike a balance between, on the one hand, the desire to prevent abuse of the appeal mechanism by employing it to delay payment of the disputed tax, and on the other to provide relief from the stricture of an appellant having to pay or deposit the disputed sum as the price for entering the appeal process, where to do so would cause hardship. That may… be apt to prevent a meritorious appeal being stifled, but we should say that there is nothing in s 84 which requires the merits of an appeal to be considered, and it would not be appropriate for the FTT on a hardship application to concern itself with the merits of the underlying appeal. What is material is the right of the taxpayer to appeal a relevant decision and the risk of that right being stifled by a requirement that would cause hardship, and not whether or not the appeal is meritorious.”

The purpose of section 84 VAT Act 1994 is therefore to strike a balance between preventing abuse of the appeal mechanism and providing relief from the stricture of having to pay the disputed sum before appeal, to prevent a meritorious appeal being stifled. I do not consider there to be a risk of Uber’s right to appeal being stifled by a requirement that would cause hardship in the circumstances of this case.

Further, section 84(3B) applies in “a case where the amount determined to be payable as VAT or the amount notified by the recovery assessment has not been paid or deposited”. The relevant sums in this case have already been deposited without any hardship application being made to HMRC, the refusal of which could have been considered by the FTT. I accept HMRC’s submission that there is no hardship provision pursuant to which I can direct that those sums are now returned.

Uber submits that a condition of the stay requiring HMRC to repay the Deposited Sums would give proper effect to the overriding objective of dealing with cases fairly and justly. They contend that the continued retention by HMRC of the Deposited Sums is unjust and inconsistent with the current law, as set out in the UT’s decision and binding precedent in the Bolt Appeal. Uber argues that the continuation of the stay, coupled with HMRC’s refusal to return the Deposited Sums, amounts to a denial of its right of access to the Tribunal and submits that access to justice encompasses not only the right to initiate proceedings but also the right to have those proceedings adjudicated within a reasonable timeframe.

Uber further submits that the inability to access the Deposited Sums causes severe and irreparable financial prejudice, which is not mitigated by HMRC’s undertaking not to enforce future assessments, and that HMRC’s position lacks coherence as fairness requires a consistent approach to both past and future liabilities. Uber refers to HMRC’s guidance (at VRM10000), which states that repayment should ordinarily be made following an adverse decision in a lead case unless there are reasonable grounds to believe the claimant cannot repay, and contends that it has provided sufficient evidence of financial capacity meaning that HMRC’s refusal to repay is inconsistent with its own stated policy and principles of fairness.

In support of these submissions, Uber refers to various legal authorities, including:

I accept the principles set out in these authorities. However, having found no statutory provision pursuant to which I can direct that the Deposited Sums are returned, I accept HMRC’s submission that fairness must operate within the bounds of statutory authority and that the Tribunal cannot override Parliament’s intention by imposing conditions that effectively circumvent the statutory framework.

Uber argues, and I accept, that should Uber’s appeal succeed, receiving these funds in one to four years with statutory interest is unlikely to mitigate the serious financial harm suffered. However, the award of simple interest is an appropriate remedy for being held out of money over time whether the claimant is HMRC, when a taxpayer fails to pay his tax in a timely manner, or the claimant is the taxpayer, when tax has been unduly levied (see Littlewoods Retail Ltd and others v HMRC [2017] UKSC 70 at [72]).

I accept that Uber faces significant financial prejudice arising from its inability to access the Deposited Sums. However, while the UT’s decision in the Bolt Appeal is favourable to Uber, the final outcome of the Bolt Appeal remains uncertain, and although I have found it likely that Uber will be able to pay their liabilities to HMRC should their appeal ultimately be unsuccessful, I consider HMRC’s concerns regarding protection of the revenue to be reasonable, given the scale of the sums involved, the potential for unforeseen events and the inherent uncertainty of litigation. I also accept HMRC’s submission that their commitment not to enforce further assessments pending the final determination of the Bolt Appeal provides a fair balance between the parties in the circumstances.

I consider the position remains as it was when the stay was directed on 4 March 2024, and I have concluded that the outcome of the Bolt Appeal will be of material assistance to the FTT in determining Uber’s appeal and that it would be expedient to stay Uber’s appeal. I am mindful that the overriding objective to deal with cases fairly and justly includes avoiding delay, so far as compatible with proper consideration of the issues, and that granting the stay will inevitably cause a delay. However, I consider granting the application is clearly compatible with proper consideration of the issues in Uber’s appeal, and I am not persuaded by Uber’s submission that the overriding objective requires the imposition of a condition for the repayment of the Deposited Sums.

For the reasons set out above, I grant HMRC’s application and DIRECT that:

This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.