Upper Tribunal Tax and Chancery Chamber

UT (Tax & Chancery) UT/2022/000103 - [2024] UKUT 00183 (TCC)

Fecha: 13-Mar-2024

Ground 5 – Abuse of process

Ground 5 – Abuse of process

94.

The FTT set out at [225] the well-known passage from the judgment of Lord Bingham in Gore Wood in relation to abuse of process which we have cited above. It then referred to various other authorities and concluded at [238] that if cause of action estoppel did not apply, and by inference issue estoppel, then it would still be an abuse of process for TTSL to re-litigate the question of whether it was entitled to recover input tax in the Overlap Period. The FTT’s reasoning is set out at [234] – [237] as follows:

234.

I have already found that:

(1)

the purpose of VATA s 85(4) read with subsection (1) is to prevent relitigation, and the Tribunal’s deemed determination of the Assessment Appeal was a decision that the VAT on the investment management fees was irrecoverable, see Issue Three; and

(2)

by including the Overlap Period in the Claim, the Appellant was relitigating the same cause of action, see Issue Five.

235.

It is clear from Virgin at [26] that where cause of action estoppel applies because an identical point has previously been decided, this creates an absolute bar to allowing the new case to proceed.

236.

Even if that were not the position, so that there was no absolute bar, it is only possible to exercise the “broad, merits-based judgment” referred to by Lord Bingham in Gore Wood where a party is raising a new point. Even that will be abusive if the new point is one which should have been put forward in the earlier proceedings, see Gore Wood and Kaza.

237.

In this case, as with the “Arnold exception” to issue estoppel, Mr Jones did not argue that the Claim was based on any new or different points from those set out in the Grounds of Appeal against the Assessment. As noted at §223-224, although PwC referred in the Claim to the UT judgment in University of Cambridge, this was issued in June 2015, before the Assessment was appealed to the FTT, and prima facie should therefore have been raised in those earlier proceedings. I was unable to identify any other arguably new points from the correspondence, and none were referred to in submissions.

Conclusion on abuse of process

238.

The Appellant is barred by cause of action estoppel from proceeding with the part of the Claim which relates to the Overlap Period. As a result, it is unable to argue that there was no abuse of process. Even were I to be wrong on cause of action estoppel, so that a more flexible approach were to be possible, the absence of any factual or legal new point means that relitigation would be an abuse of process.

95.

The FTT’s reasoning on whether there was abuse of process is brief, which possibly reflects the fact that it had already found that TTSL was estopped from appealing either because of cause of action estoppel or issue estoppel. It is not clear to us what the FTT meant at [236] where it said that it is only possible to exercise the “broad, merits-based judgment” where a party is raising a new point. Certainly the FTT did not embark upon a broad merits-based approach to the question of whether, if there was no estoppel, TTSL’s appeal amounted to an abuse of process. It may have been the FTT’s view that, even if there was no estoppel, TTSL should have argued the issue of entitlement to input tax credit in the Assessment Appeal and in the words of Lord Bingham in Gore Wood: “The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all”.

96.

We have heard submissions from both parties as to whether the FTT’s failure to take a broad merits-based approach amounted to an error of law, and if so, how we should re-make the decision. We have decided that, in circumstances where abuse of process is only relevant if we are wrong on Grounds 2 – 4, we should not embark upon a hypothetical examination of whether there would be an abuse of process. The reason why there was no issue estoppel or cause of action estoppel could be a relevant factor in that examination.