UT (Tax & Chancery) UT/2023/000103 - [2025] UKUT 00102 (TCC)

Mr Simpson submitted that the FTT had made an error of law because it had not properly reflected the evidence given by Mr Morris. However, as Ms Poots correctly pointed out, this is a challenge to the FTT’s findings of fact at [38] and [35] that “Mr Morris was unclear whether the transaction involved a domain name alone, or a domain name plus his website” and that he “thought they were the same thing”.

It is well-established that a challenge to a finding of fact can only succeed if it meets the high thresholds set out in the case law. In Edwards v Bairstow [1956] AC 14, Viscount Symonds said at p 29:

“For it is universally conceded that, though it is a pure finding of fact, it may be set aside on grounds which have been stated in various ways but are, I think, fairly summarised by saying that the court should take that course if it appears that the commissioners have acted without any evidence, or on a view of the facts which could not reasonably be entertained.”

In the same case, Lord Radcliffe said at p 36:

“it may be that the facts found are such that no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal. In those circumstances, too, the court must intervene. It has no option but to assume that there has been some misconception of the law, and that this has been responsible for the determination. So there, too, there has been error in point of law. I do not think that it much matters whether this state of affairs is described as one in which there is no evidence to support the determination, or as one in which the evidence is inconsistent with, and contradictory of, the determination, or as one in which the true and only reasonable conclusion contradicts the determination. Rightly understood, each phrase propounds the same test.”

Lord Hoffman said in Biogen v Medeva [1997] RPC 1, at p 45:

“The need for appellate caution in reversing the judge’s evaluation of the facts is based upon much more solid grounds than professional courtesy. It is because specific findings of fact, even by the most meticulous judge, are inherently an incomplete statement of the impression which was made upon him by the primary evidence. His expressed findings are always surrounded by a penumbra of imprecision as to emphasis, relative weight, minor qualification and nuance…of which time and language do not permit exact expression but which may play an important part in the judge’s overall evaluation.”

In Georgiou v C&E Commrs [1996] STC 463 (“Georgiou”). Evans LJ, with whom Saville and Morritt LJJ (as they then were) agreed, said at p 476:

“There is a well-recognised need for caution in permitting challenges to findings of fact on the ground that they raise this kind of question of law… It is all too easy for a so-called question of law to become no more than a disguised attack on findings of fact which must be accepted by the courts. As this case demonstrates, it is all too easy for the appeals procedure…to be abused in this way. Secondly, the nature of the factual inquiry which an appellate court can and does undertake in a proper case is essentially different from the decision-making process which is undertaken by the tribunal of fact. The question is not, has the party upon whom rests the burden of proof established on the balance of probabilities the facts upon which he relies, but was there evidence before the tribunal which was sufficient to support the finding which it made? In other words, was the finding one which the tribunal was entitled to make? Clearly, if there was no evidence, or the evidence was to the contrary effect, the tribunal was not so entitled.”

Finally, in Megtian v HMRC [2010] STC 840 at [11], Briggs J (as he then was) said:

“The question is not whether the finding was right or wrong, whether it was
against the weight of the evidence, or whether the appeal court would itself have come to a different view. An error of law may be disclosed by a finding based upon no evidence at all, a finding which, on the evidence, is not capable of being rationally or reasonably justified, a finding which is contradicted by all the evidence, or an inference which is not capable of being reasonably drawn from the findings of primary fact.”

We kept all those principles in mind when considering the challenge made by Mr Simpson based on Mr Morris’s evidence. In his witness statement Mr Morris had said:

“Given that our domain name and website was such an essential tool for our
business, £145,000 seemed like a small sum of money in comparison to the turnover it helped generate over the following months and years.”

In evidence-in-chief, Mr Morris was asked “do you recall what the transaction involved”, and he replied “it was the purchase and lease back of the company’s website, Formwise Washrooms Ltd”. However, when asked “at the time in 2009 what did you know about what a domain name actually is”, he said:

“I didn't really have much to do with domain names, websites and so on. To me, it is the same thing: you buy a domain name and that becomes your website.”

We agree with Ms Poots that there is no basis for this Tribunal to interfere with the FTT’s findings of fact about Mr Morris’s understanding as to what was encompassed in the transaction. This is not a case where there was “no evidence” to support the findings, or where the evidence was “inconsistent with, and contradictory of, the determination, or [where] the true and only reasonable conclusion contradicts the determination”. Instead, the FTT placed weight on a different part of Mr Morris’s evidence from that emphasised by Mr Simpson. This was not an error of law.