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Discussion, Analysis and Decision
Discussion, Analysis and Decision
Despite the powerful submissions of Mr Watkinson in opposition, I grant permission to appeal in respect of each of the Applicant’s three consolidated grounds of appeal as they hold realistic prospects of success and raise arguably material errors of law in the FTT’s Decision.
I repeat my observation as to the length of the original application and number of grounds of appeal then pursued.
I also note that, as Mr Watkinson pointed out, the additional ground new pursued (new Ground 1) was not pursued in the April nor June 2025 applications made by the Applicant and was only raised a day before the hearing. The argument was available to the Applicant since 21 March 2025 when the Court of Appeal handed down judgment in Innovative Bites, although I accept it was not available to run in its current form before the FTT at the hearing in 2024. I also take into account that no good reason was given for the late raising of the ground. I finally take into account that the Applicant pursued its case before the FTT on a different basis – that the product was a food based on a multi-factorial analysis (“MFA”) rather than it was a food based upon it being a drink in accordance with Note 1 that would therefore render it to be a food. At all times before the FTT it was available for the Applicant to argue that the product was a drink, based upon a MFA, and by virtue of Note 1 that meant it was also a food.
On the basis that Ground 1 is a new point not raised before the FTT, and it is raised at a late stage of the permission applications, I have considered Singh v Dass [2019] EWCA Civ 360 at [15]-[18]:
The following legal principles apply where a party seeks to raise a new point on appeal which was not raised below.
First, an appellate court will be cautious about allowing a new point to be raised on appeal that was not raised before the first instance court.
Second, an appellate court will not, generally, permit a new point to be raised on appeal if that point is such that either (a) it would necessitate new evidence or (b), had it been run below, it would have resulted in the trial being conducted differently with regards to the evidence at the trial (Mullarkey v Broad [2009] EWCA Civ 2 at [30] and [49]).
Third, even where the point might be considered a ‘pure point of law’, the appellate court will only allow it to be raised if three criteria are satisfied: (a) the other party has had adequate time to deal with the point; (b) the other party has not acted to his detriment on the faith of the earlier omission to raise it; and (c) the other party can be adequately protected in costs. (R (on the application of Humphreys) v Parking and Traffic Appeals Service [2017] EWCA Civ 24 at [29]).
I also note the guidance at [107-[111] of Revenue And Customs v Bluecrest Capital Management (UK) LLP [2025] EWCA Civ 23 , beginning at [107]:
107.Salutary though these principles are, they are not in my judgment engaged to any significant extent in the present case. On a tax appeal to the FTT brought within normal time limits, the burden lies on the taxpayer to displace the assessment or determination under appeal. Furthermore, it should always be remembered on both sides that there is a public interest in taxpayers paying the correct amount of tax, such that fresh arguments may be advanced by either side, or by the tribunal of its own motion, subject always to the requirements of fairness and proper case management: see the observations of Lord Walker of Gestingthorpe in Tower MCashback LLP 1 v Revenue and Customs Commissioners [2011] UKSC 19
Taking into account all the circumstances of the case and the interests of justice, I permit the Applicant to amend its original ground 3 / introduce the new ground of appeal as Ground 1. The following matters have weighed in favour of permitting this ground to be pursued: it has arguable merit; it is a pure point of law so the prejudice to HMRC is minimal because it was raised at the permission stage so HMRC will be able to respond with ample notice; it was not available to run before the FTT in the same form as now pursued as the Court of Appeal only gave guidance in March 2025; and a form of the argument was set out in the original third ground of appeal to the UT in April 2025. It remains to be seen, whether if the ground is ultimately found to have merit, it would require remittal to the FTT as to whether the product was a drink or whether the FTT has already made sufficient findings on whether the product was a drink so that if the appeal was allowed on this basis, the decision could be remade. I am therefore satisfied it is in accordance with the overriding objective of justice and fairness to permit the ground to be argued.
Nonetheless, in light of the above, I do consider that the UT which ultimately hears the appeal should consider whether HMRC should have costs protection on this ground – whether, to the extent that Ground 1 might be successful, HMRC should not have to pay the costs of the Applicant in pursuing this ground of appeal. This is for the reasons set out above.