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

The FTT erred in law as a matter of principle in concluding, either generally or in the specific circumstances of the present case, that heightened disclosure imposed only on HMRC was appropriate. The FTT’s decision was contrary to the overriding objective and/or the essential principle of placing parties on an equal footing and ensuring, so far as practicable, that the parties are able to participate fully in the proceedings. Further or alternatively, while the FTT has a broad discretion with regards to case management decisions, this is a decision that no reasonable Tribunal, properly directing itself as to the correct legal principles, could have taken. The FTT’s decision was plainly wrong.

The FTT erred in law in its reliance on E Buyer UK Ltd v HMRC [2017] EWCA Civ 1416[ (“E Buyer”) and HMRC v Smart Price Midlands Ltd & another [2019] EWCA Civ 841 (“Smart Price CA”) by way of support for the Heightened Disclosure Direction.

The FTT also erred in law in its reliance on Horizon Contracts Limited (in Liquidation) v HMRC [2024] UKFTT 00348 (“Horizon Contracts”).

While general disclosure ordered in the FTT will normally be reciprocal in practice, that is because disclosure is normally ordered against both parties under Rule 27, not because of some free-standing principle which would prevent a different form of order from being made against one party without it being made simultaneously against all other parties (at [22]).

The purpose of extended disclosure may be equality of access to a document and the avoidance of the litigation disadvantage which would flow from unequal access, but that says nothing about the separate question of whether extended disclosure should or must be made to all parties or not at all (at [22]).

HMRC have not identified any authority to support the proposition, or even assumption, that extended (CPR-style) general disclosure cannot be ordered against one party without it being ordered against all parties (at [23]).

Since a general disclosure order must be informed by the overriding objective and the need for the issues in the proceedings to be properly considered by the FTT, it logically falls to be assessed on the merits on a separate basis for each party (at [23]).

Contrary to [17(1)] of the UT Papers Refusal, HMRC do not contend that the FTT erred in law in ordering “heightened disclosure” against HMRC.

Contrary to [17(2)] of the UT Papers Refusal, HMRC do not contend that the FTT erred in law in failing to order “heightened disclosure” against Ducas, regardless of the level of disclosure ordered against HMRC. HMRC “never asked the FTT to make any such order”.

HMRC’s submission is that, having decided in Ducas’ favour that it should proceed to make orders for disclosure and evidence, the FTT erred in law as a matter of principle by failing to order the same level of disclosure against both parties in relation to the Fraudulent Documents Issue.

At the heart of HMRC’s argument is the proposition that, as a matter of general principle, disclosure in the courts in civil litigation, and in the FTT in its full appellate jurisdiction, is or should be regarded as a matter of reciprocal obligation.

do not argue that the extended disclosure direction against them should not have been made by the FTT;

state that they did not apply for an extended disclosure direction as against Ducas;

make clear that they do not contend that the FTT erred in failing to direct “heightened disclosure” against Ducas, regardless of the level of disclosure directed against HMRC; and

nonetheless contend that because the FTT acceded to Ducas’ application for extended disclosure as against HMRC, the FTT was required as a matter of law to also make the same extended disclosure direction as against Ducas (despite there being no application by HMRC) because it is a “general principle” that “disclosure…should be regarded as a matter of reciprocal obligation”.