TC09657 - [2025] UKFTT 01208 (TC)

It is not at all obvious to me why Judge Citron would have thought it worthwhile having the location of the burden of proof on a “straightforward issue of quantum” determined as a preliminary issue if the position here is as obvious as Ms McArdle says it is.

Judge Citron’s wording of the burden of proof issue just asks where “the legal burden of proof in the relevant appeal” lies; it does not specify any particular question or issue. In his reasons (at [39](3)) he says that resolving the preliminary issues “will materially smoothen the path to the substantive hearing, and the course of the hearing itself, so saving cost and time”, and (at [39](2)) that it will meet the requirement of “basic fairness and justice of enabling a party to know whether it bears the legal burden of proof, when preparing its case”. It seems to me that what Judge Citron wanted us to do was to get to a point where the location of the burden of proof on any relevant issue relating to these “consignorless bikes” in category (c) had been resolved (if it was not already clear) to facilitate efficient preparation for the substantive hearing. Leaving the burden of proof unaddressed on such an important point as the fundamental basis for including such bikes in the C18s would do nothing to meet his objectives.

Looking at the extracts from the pleadings referred to in Judge Citron’s reasons (at [32]-[33]), the fundamental question, whether there is “a lawful basis” for including in the C18s bikes which HMRC could not prove were consigned by City Cycle, was clearly in issue. At [35] he referred to Part E of the amended grounds of appeal which deals with “burden of proof” issues. This acknowledges the provisions of section 16(6) FA 1994, but asserts that “in relation to specific allegations, the burden is upon the Respondents to make out their case”. HMRC’s statement of case responds to this. These passages are not confined to “quantum issues” (whatever they might be – see below) and Judge Citron was clearly conscious of this.

I cannot see Judge Citron drawing any distinction between a “quantum” issue and any other issue when it comes to the burden of proof, nor am I at all persuaded that such a distinction exists. In one sense all open issues in a tax appeal are “quantum” issues as they could impact on the amount found to be owing. If there is a category of minor computational issues where the location of the burden of proof is settled, as I have already observed, I cannot see Judge Citron adverting to it (still less limiting the burden of proof issue to it). For what it is worth, I cannot see any clear blue water between Ms McArdle’s articulation of the question (“where we have blank entries in the MSS data or entries which do not identify City Cycle, whether or not those entries are, correctly, part of the calculation of the debts or not” – see [6] above), which she says Judge Citron approved as a preliminary issue, and the Appellants’ (“The quantum of the C18s is incorrect as it includes […] importations in respect of which HMRC have not identified any basis for liability” – paragraph 14.f of their re-amended grounds of appeal). Both give as the reason why the asserted customs duty debt might be wrong that the “consignorless bikes” should not have been included.

Ms McArdle says that the preliminary issue was explicitly proposed as a quantum issue. As I have just explained, I do not consider that anything turns on this label. In any event, whilst I can see (for example in the Appellants’ re-amended grounds of appeal) that the Appellants have dealt with this question under the heading “Quantum”, it is quite clear what their real ground/complaint is (that the quantum of the C18s is wrong because they include “importations in respect of which HMRC have not identified any basis for liability”) and this goes way beyond the type of issue being considered in the burden of proof discussion in Build-A-Bear.

Ms McArdle says that asking where the burden of proof lies on the extended time limit is a superficial question, because it is nuanced and is dangerous and difficult territory I should skirt around. However, I am not sure that an issue not being straightforward is a reason why it cannot be a preliminary issue (indeed, quite the contrary, a circumscribed but difficult legal issue may be ripe for treatment as a preliminary issue if it eases the parties’ preparation for the substantive hearing) or why I should try to avoid answering it.