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UT (Tax & Chancery) UT/2022/000155 - [2025] UKUT 00003 (TCC)
Fecha: 17-Oct-2024
Background and FTT Decision
Background and FTT Decision
References in square brackets [] are to paragraphs within the Decision.
The FTT at [6] began by identifying the nature of HMRC’s application for costs:
6.As set out above, [HMRC’s] application [for costs] is made under rule 10(1)(c) of the Rules on the basis that the proceedings have been allocated as a complex case under rule 23 of the Rules (allocation of cases to categories) and the appellant did not send or deliver a written request to the tribunal, within 28 days of receiving notice that the case had been allocated as a complex case, that the proceedings be excluded from potential liability for costs or expenses under this rule. This case was allocated as complex on 27 July 2016 and the appellant did not make a written request for the proceedings to be excluded from this provision. HMRC made a request for the costs to be summarily assessed.
…
At [8] the FTT identified the issue which was in dispute before it at that time: whether the Appellant had been duly notified of the categorisation of the appeal and its effects. It expressed its conclusion that the Appellant had been duly notified of the allocation and categorisation of its appeal and the effect on its liability for costs by virtue of the application of the Rules:
Was the appellant duly notified of the categorisation of the appeal and its effects?
As set out in its representations submitted to the tribunal dated 22 July 2019, the appellant argues that it was not validly duly notified by the tribunal that the case was allocated to the complex category and that it was not properly informed of the position under rule 10(1)(c). However, in my view, as explained below, it clear that this is not the case according to the procedure under the Rules and the documents in the tribunal’s file for these appeal proceedings.
The FTT then set out its findings in relation to the relevant background facts at [9]:
In outline, the relevant facts are as follows:
The appellant submitted a notice of appeal to the tribunal dated 11 March 2016 in which Accura Accountants Limited is listed as its representative. At the same time the appellant submitted to the tribunal a form authorising that firm to act on its behalf in these proceedings signed on its behalf by Mr B Stoykov. In the notice of appeal, the contact at Accura Accountants Limited was stated to be Melvyn Langley and the address of that firm was given as Langley, House, Park Road, London N2 8EY and the email address was given as [email protected]. The notice of appeal was signed by Mr Langley.
The tribunal sent notification that the case had been allocated to the complex category to Mr Melvyn Langley at Accura Accountants Limited on 21 July 2016 by post and email to the postal and email addresses set out in (1) above.
In the letter the tribunal stated:
“The Tribunal has now re-assigned the above appeal to proceed under the complex category.
In an appeal which has been categorised as “complex” the Tribunal has a general power to award costs and is likely to award costs against the unsuccessful party. If you wish to opt out of this costs regime, you must apply to the Tribunal within 28 days from the date of this letter.”
With the letter of 21 July 2016 the tribunal enclosed directions issued by the tribunal which included a direction re-assigning the case as complex. These directions had been provided by HMRC to the tribunal in draft on 5 July 2016 for the tribunal’s consideration and were approved by the tribunal. No response was received from the appellant or its representative to this letter.
The tribunal received notification by email of a change in the appellant’s representatives on 11 August 2016. The enclosed form signed by Mr Stoykov authorising the new representative to act on behalf of the appellant was dated 27 June 2016 but the change in representative was not notified to the tribunal until 11 August 2016.
[emphasis Added]
It is to be noted that the FTT found at [9(1)] that the Appellant, rather than the Appellant’s then representative, Accura Accountants Limited (“Accura), had ‘submitted’ to the Tribunal the form authorising the representative to act. The form was a standard template issued by the Tribunal and, when completed, becomes authority for the representative, Accura, to act on its behalf in proceedings. It contains the Appellant’s name, with a statement that it authorises its representative to act. It then includes the name and address of the representative. It also includes the name of the signatory, Mr Stoykov, on behalf of the Appellant and his signature together with the date. The form concludes with a caveat ‘Please note that this form is not required if your representative is a legal representative (normally a firm of solicitors)’.
The Appellant’s ground of appeal and evidence provided in the agreed bundle requires us to consider the FTT’s finding at [9(1)] in more detail. We do not have before us the complete bundle of documents that was before the FTT. However, the FTT finding appears to be based specifically on an email dated 11 March 2016 in which Accura was listed as representative and an authorisation form. We do have that email and the attached form before us. The notice of appeal and form of authority on behalf of the Appellant for the representative to act were sent to the Tribunal by email on 11 March 2016 by Robert Blech, director of Accura, and copied to Mr Langley, also of Accura. The covering email from Mr Blech states: ‘Following from your earlier e-mail, I enclose a revised Notice of Appeal for the above. Also find attached 1)…2) Copy of signed authorisation form for us to act on Appellant’s behalf…’
The issue of law in this appeal is the significance of the finding that the Appellant itself ‘submitted’ the form authorising the representative to act when it was the representative who sent the form to the Tribunal by email. The precise nature of this finding was not significant at the time because no point was taken in argument before the FTT as to whether the original representative, Accura, had ‘sent’ to the tribunal the form of authority that the firm was acting rather than the Appellant sending or delivering the document. The focus at that stage was upon whether the Appellant itself had been duly notified of the complex categorisation of its appeal (see [8] and [12] of the Decision), particularly in light of the subsequent change of the Appellant’s representative which was notified to the Tribunal on 11 August 2016 (see [12] below).
It is also to be noted that Melvyn Langley of Accura had signed the Appellant’s notice of appeal to the FTT dated 11 March 2016 checking the box as the legal representative of the Appellant. That was not the correct procedure to follow as neither Mr Langley nor Accura, as a firm of accountants, were legal representatives. Therefore, the Appellant itself (through one of its directors or officers) should have signed the notice of appeal. The FTT’s notice of appeal form specifically instructs parties and representatives as follows (in text contained below the respective boxes for the signature of either the party or their legal representative):
“* ‘legal representative’ is defined in Rule 11(7) of this Tribunal’s rules which may be found on our website
If you are the representative of the appellant but not a legal representative, we will only communicate with you if the appellant signs this form, or if the appellant provides us with written notice of your name and address.”
The Tribunal determined that the Appellant had been validly notified of the allocation of its appeal to the complex category, so that the costs regime in complex cases applied (which provide for general costs shifting between parties). The FTT found at [12]:
I note that, when the tribunal sent the notification [of allocation to the complex category] to Accura Accountants Limited on 26 July 2016:
Under rule 11(4), the tribunal, as a person who received due notice of the appointment of Accura Accountants Limited as the representative of the appellant, was required to provide the representative with that notification (and did not need to provide it to the appellant as the represented party) and to assume that Accura Accountants Limited was and remained authorised as the appellant’s representative until it received written notification that this was not the case. The tribunal did not receive notification of a change in the appellant’s representative until 11 August 2016, around two weeks after it had sent this notification to Accura Accountants Limited.
Under rule 13(5) rules the tribunal was entitled to assume that the postal and email address provided by Accura Accountants Limited, as the appellant’s representative, was and remained the address to which documents such as the notification should be sent or delivered until receiving written notification to the contrary. The tribunal did not receive notification of a change in the relevant addresses until it was notified of the change in the appellant’s representative on 11 August 2016.
Accordingly, in compliance with rules 11 and 13, in making the notification, the tribunal duly informed, Accura Accountants Limited, as the party it had been duly notified was the appellant’s representative in these proceedings, by pre-paid post and email of the categorisation of the appeal as complex and that action was required by the appellant if it wished to opt out of the regime for costs in complex cases.
The FTT concluded that the Tribunal had duly notified the Appellant, through its original representative, of the allocation of its case to the complex category for the purposes of the requirements under the Rules.
At [13]-[16] of the Decision the FTT also found that the Tribunal had given the Appellant sufficient notice, as a non legally represented party, of what it had to do in order to opt out of the costs shifting regime. The FTT found that in its notice of allocation dated 26 July 2016 the Tribunal had effectively notified the Appellant of the effect of the allocation direction on the applicability of the regime for costs in complex cases and that the Appellant could opt out of that regime.
It was not in dispute that neither the Appellant nor either of its representatives (Accura or the subsequent representatives whose appointment was notified on 11 August 2016) at any stage gave notice to the FTT within 28 days of receiving the allocation notification or at all thereafter that it wished to be excluded from potential liability to costs for the purposes of Rule 10(1)(c)(ii). In the absence of notifying any request to opt out of the costs shifting regime, the FTT therefore decided that it had jurisdiction and power to order the Appellant to pay HMRC’s costs of and incidental to the proceedings in the FTT.
Thereafter, at [17]-[19] of the Decision the FTT granted HMRC’s application and ordered the Appellant to pay HMRC’s costs of the FTT proceedings, to be agreed or summarily assessed, having exercised its discretion to make the costs order against the Appellant.
The Appellant originally sought permission to appeal on two grounds of appeal for which the FTT granted permission on 6 April 2022.
The first ground is the one we consider below having heard full argument. The second ground was that the FTT conducted the proceedings in breach of the proper procedures because: i) “Mr Langley had marked himself a legal representative of the Appellant which was obviously not the case”; ii) “at the time the appeal had been made, the representative (as a tax advisor) had requested a review of HMRC’s decision which precluded his right of appeal to the tribunal until after the review had been completed”.
The second ground of appeal has not been pursued by the Appellant so we consider it no further.
The Law
The relevant parts of the Rules are as follows.