Upper Tribunal Tax and Chancery Chamber

UT (Tax & Chancery) UT/2023/000096 - [2024] UKUT 00203 (TCC)

Fecha: 02-May-2024

Appellants’ submissions

Appellants’ submissions

47.

Mr Woolf submitted that it was unclear whether the FTT had purported to amend the Original Decision under Rule 37 or Rule 41, or even if they had intended the changes to be made at all, drawing attention to:

(1)

the letter of 25 September 2023 enclosing the Revised Decision referred to it as having been amended under Rule 37;

(2)

the PTA Decision of the same date says at [17] “the proposed revisions will not be made”, whereas many were, submitting that the inclusion of the changes may itself have been an accidental slip by the FTT; and

(3)

the end of the Revised Decision refers to Rule 41, and the release date of the Revised Decision had been updated.

48.

The Appellants’ submissions related to three of the changes which had been made by the Revised Decision (and Mr Woolf confirmed that these were the only changes which were relied upon as errors of law). Mr Woolf confirmed that all three of these changes had been included in the May 2023 Draft which had been sent to the parties, and the Appellants had made representations on them. Those changes were (with additions being underlined and deletions in square brackets):

(1)

[116] – The FTT had described parts of the Montpelier Materials, the need for a trade and that a loan is advanced:

“116.

In our view, on the balance of probability, given that evidence and Judge Sinfield’s analysis, it is unlikely that either [neither] appellant would have had any reason to believe that even if there had been a loan that it would be repayable.”

(2)

[143] – At [142] the FTT had set out that the Montpelier Materials focused on a two-stage process, establishing a trade and then incurring losses:

“143.

Unfortunately for the appellants that part of the message does not appear to have been acted upon [understood] by them. As Judge Richards makes very clear (in relation to an email but the same point is made in the Montpelier slides and speaking notes) at paragraph 51 of Thomson:

“This email indicates that Montpelier intended the Pendulum arrangements to function as a device to deliver a trading loss to a user of the scheme but that, before such a loss could be delivered, the user first needed to commence a trade of dealing in derivatives.”

The appellants did not commence any trade first.”

(3)

[149] – The FTT had referred to the timing of entry into the Pendulum Contracts, made findings as to whether the Appellants had entered into other transactions, and concluded at [148] that they did not accept that either Appellant was trading in CFDs. This was then followed by:

“149.

If you do not have a trade, as Montpelier made very clear, you cannot relieve any losses. [In any event, the losses could only be created if there was a loan.]”

49.

Mr Woolf submitted that the changes which had been made to these three paragraphs were not corrections capable of falling within Rule 37. He did accept in his oral submissions that the changes to [116] were capable of being made under Rule 41 if we were to conclude that there had been such a review. However, Mr Woolf submitted that the changes which had been made to [143] and [149] were not appropriate even following a review under Rule 41.

50.

Mr Woolf relied on the decision of the Upper Tribunal (Administrative Appeals Chamber) in JS v Secretary of State for Work and Pensions [2013] UKUT 100 (AAC) (“JS”) (with paragraphs of that decision being referred to as JS[x], and a similar approach being adopted for the reference to paragraphs of other decisions to which we subsequently refer). Mr Woolf relied on the Upper Tribunal’s statements that “the power of review must not be used in a way that subverts the appeal process and bypasses the proper function of the Upper Tribunal” (at JS[28]) and that it must not be used “to correct defective reasoning or to provide commentary on the grounds of appeal” (at JS[36]). The Upper Tribunal in JS decided that the safeguards within the power to review a decision were both procedural and substantive, stating at JS[45] that the substantive safeguard is “to interpret ‘amend’” in a way that minimises the risk and apparent dangers inherent in the process and to confine it to cases that properly fulfil the purposes of the provision. So it is limited to cases in which it would be proper to amend the reasons rather than set aside the decision… It covers cases where there is some objective guarantee that the reason have not drifted into justification.”

51.

Mr Woolf also relied on Vital Nut Co. Ltd v HMRC [2017] UKUT 192 (TCC) (“Vital Nut”) where the Upper Tribunal adopted the review of relevant authorities in JS and said at Vital Nut[45(9)] that “whilst it is perfectly permissible for the FTT to use the review process to clarify what has already been decided, the FTT should refrain from seeking to justify its decision on other, even better, grounds or from seeking to defend its decision in advance from an attack that is anticipated in an appeal”.

52.

Mr Woolf submitted that the changes which had been made by the FTT to [143] and [149] were not appropriate on a review of a decision, emphasising in particular:

(1)

the change in [143] is not appropriate to be made two years after a hearing, and was made in consequence of contentions in the PTA Application that the FTT was using objective reasoning; and

(2)

the change in [149] was trying to change the FTT’s reasoning retrospectively, seeking to defeat a challenge based on an error of law.

53.

Mr Woolf’s submission was that these two changes should not have been made and that when reaching our decision on the Appellants’ other grounds of appeal, we should reach that decision by reference to the Revised Decision without these two changes having been made.