UT (Tax & Chancery) UT/2025/000047 - [2025] UKUT 00362 (TCC)

We do not consider that the authorities to which we were taken support a conclusion that, as a matter of general principle, where an order for extended disclosure is made against one party, an equivalent order in respect of that issue must or should then be ordered against the other party (or parties).

Such a principle is not evidenced in appeals before the FTT or in civil litigation. There is no general principle of reciprocity. Nor do we consider that it would be appropriate for us to endorse such a principle; as we have explained, an order for disclosure is to be informed by the circumstances of a particular party against the background of the primary pleaded issues, not by the order made against the other party or parties.

To the extent that Ground 1 is based on a submission that, having ordered extended disclosure against HMRC, the FTT erred in law by not recognising that extended disclosure must then be ordered against Ducas to reflect a general principle of reciprocity, we find that there is no such general principle of reciprocity and accordingly there was no error of law.

As Ground 3 of its appeal, HMRC submitted that the FTT further erred in law in its reliance on Horizon Contracts. Since the only reliance placed on that decision by the FTT was in the course of reaching its decision not to accept HMRC’s proposition that, as matter of principle, the default position was reciprocity, it follows that that gave rise to no error of law.

HMRC submit as a separate ground of appeal (Ground 2) that the FTT erred in law by relying on E Buyer and Smart Price CA to support the extended disclosure order against HMRC.

The reasons given by HMRC in support of this ground were addressed in the UT Papers Refusal and, whilst we have taken account of the submissions made in the HMRC UT Skeleton, the UT agrees with the reasoning set out therein, namely:

“33.

In relation to Ebuyer, the PTA Application points out various factual differences between that case and this appeal. It records that the Court of Appeal did not order extended disclosure against HMRC, and that the Court of Appeal “did not decide that there were circumstances in which any such heightened disclosure should apply only to HMRC”. HMRC state that, in any event, the facts that fraud was not alleged against the taxpayer itself, and that HMRC had gathered material relevant information are “entirely different” from the present case. HMRC say that the issue in this case is not constructive knowledge but actual knowledge and control of relevant documents. Finally, say HMRC, unlike Ebuyer, Ducas has been ordered to preserve all relevant documents by the freezing injunction.

34.

In considering these points, it is necessary to look at the reliance in fact placed by the FTT on Ebuyer in the Decision. It is hardly surprising that the FTT should refer to Ebuyer and Smart Price in deciding an application for extended disclosure. They are leading authorities in relation to the FTT’s powers in that context. At [17] the FTT quoted a passage from the Court of Appeal’s decision which referred specifically to various factual issues and ended by stating:

If fraud or dishonesty had been alleged, there is, as I have said, authority for the proposition that CPR-style disclosure would have been appropriate, but all that is alleged here is knowledge of a fraud, not direct dishonest participation in a fraud.

35.

At [18], The FTT then stated that “as fraud on the part of the Appellant has been alleged in this appeal, with £171m at stake, in a complex case, of great importance to the taxpayer, I consider CPR-style disclosure is appropriate”.

36.

There was no error of law, arguable or otherwise, in the FTT considering this passage, and then setting out its conclusion at [18]. Far from making any of the errors asserted by HMRC, the FTT showed that it was fully aware of the factual differences, in particular as to the allegation of direct fraud. It clearly did not rely on factual similarities with the facts in Ebuyer. It did not refer to or rely on Ebuyer in relation to whether or not to order reciprocal disclosure. Rather, it referred to the allegation of fraud in this case (engaging the statement set out above at the closing sentence of [94] of Ebuyer), and factors in common with the “third reason” given by the Upper Tribunal, which was described by the Court as “the most important”. The preservation of documents was not a factor referred to in Ebuyer, but the FTT did not say or indicate that it was.

37.

I do not consider it arguable that the FTT made any error of law by reference to what is said in the Decision relating to Ebuyer.

38.

In relation to Smart Price, The PTA Application again refers to the issue and jurisdiction in that case. It then describes the Court of Appeal’s rationale for ordering extended disclosure against HMRC. HMRC state that the case was “entirely different”, because (1) this case is a full merits appeal, (2) this case concerns fraudulent documents in the control of Ducas, and (3) the High Court has accepted that HMRC have produced prima facie evidence of fraud. It is said that the FTT also erred because Smart Price does not justify one-way extended disclosure.

39.

Starting again with the Decision, it is clear that the FTT was aware of the nature of the jurisdiction in that case; it refers to it specifically in the opening words of [19] and it is referred to in the paragraph quoted. The FTT then sets out a passage from Smart Price which is clearly relevant to its decision in relation to disclosure against HMRC. That passage refers to a justification for extended disclosure against HMRC in appeals “where HMRC have access to many documents of which the applicant may be unaware”.

40.

The FTT states at [19] that it has “considered” Smart Price, and at [20] accepts Ducas’ submission that extended disclosure should be ordered against HMRC in the interests of fairness and justice as “this case differs from the norm because HMRC bear the burden of proving the serious allegation of fraud, and following HMRC’s investigations with the Appellant’s clients…it is likely that HMRC will have access to documents of which the Appellant is unaware”.

41.

None of the arguments under Ground 2 in relation to Smart Price are made out. The FTT was aware that in Smart Price the jurisdiction of the FTT was different. The other points raised by HMRC relate to the case for disclosure against Ducas/reciprocal disclosure, and the FTT did not rely on or refer to Smart Price in that context. At [20], in reaching its decision to order extended disclosure against HMRC it is not arguable that the FTT took into account an irrelevant factor, failed to take into account a relevant factor, or reached a conclusion which was plainly wrong.

42.

Further, in relation to the FTT’s consideration of both Ebuyer and Smart Price, the relevance of those cases derives not from any detailed comparison with the facts of this appeal, but in the judicial discussion of principles relevant to extended disclosure as contrasted to Rule 27 disclosure.”

Moreover, HMRC rely on Ground 2 to challenge the heightened disclosure obligation which was imposed on HMRC, albeit emphasising the “one-way” nature of that obligation, and we consider that this is immaterial to the real challenge being made by HMRC which is to the absence of a reciprocal disclosure obligation being imposed on Ducas.

We have concluded that Ground 2 does not identify an arguable error of law in the FTT’s case management decision and we therefore refuse permission to appeal under Ground 2.

HMRC emphasised why in their submission it would have furthered the overriding objective for the FTT to have ordered extended disclosure against Ducas in relation to the Fraudulent Documents Issue.

We can see that there are good reasons in this case which could have justified the FTT making an order for extended disclosure against Ducas in respect of the Fraudulent Documents Issue. In particular, this would have assisted in ensuring that the FTT hearing the substantive appeal would have before it all documents which are relevant to the pleaded issues in order to make findings on critical issues of fact.

However, we must resist the temptation to determine this appeal on the basis of an application which HMRC could have made to the FTT but did not, or on the basis of reasoning which HMRC could have advanced to the FTT but did not, or on the basis of arguments which could have been raised in this appeal but were not. This appeal is not a “do-over”, and it is for the FTT and not the UT to case manage Ducas’ appeal.

We take account of the basis on which the oral application was made to the FTT, and in particular HMRC’s emphasis on the principle of reciprocity and the premise of its oral application. The Written Reasons show that the FTT engaged with the case as presented to it; and Mr Tolley acknowledged that the reasoning at [21] and [22] was a response to HMRC’s case.

The context of the CMH is also significant, namely that the FTT was considering a package of case management directions, of which the disclosure directions formed only one part, intended to keep the appeal on track for its lengthy listing window.

Finally, the FTT expressly contemplated at [23] of the Written Reasons that HMRC were at liberty to make an application for specific disclosure, and we observe that they remain at liberty to do so.

We should not interfere with a case management direction simply because we might have reached a different conclusion. We must assess whether the decision was outside the generous ambit of the FTT’s case management discretion or plainly wrong, in all the circumstances of this case. We do not consider that the Directions were outside the generous ambit of the FTT’s case management discretion or were plainly wrong.

For the reasons given above: