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

HMRC have applied to the Upper Tribunal (the “UT”) for permission to appeal against certain case management directions issued by the First-tier Tribunal (Tax Chamber) (the “FTT”) relating to disclosure and evidence in the appeal made by Ducas Ltd (“Ducas”). That application for permission, having been refused by the FTT, was refused on the papers by the UT.

HMRC applied to renew that application at a hearing, and for the hearing of that application to be heard together with the substantive appeal against the FTT’s directions. Ducas did not object to this. While such an approach is unusual, at least outside the judicial review context, as explained below, there is a need to avoid any undue delay in the case management of the substantive appeal by Ducas, and, conscious of that need, the UT heard the application and substantive appeal on that basis (which we refer to as the “rolled-up hearing”). Both parties provided skeleton arguments, served sequentially, in advance of the hearing (the “HMRC UT Skeleton” on 26 September 2025 and the “Ducas UT Skeleton” on 30 September 2025).

There was a transcript of the rolled-up hearing (“TS”).

The substantive appeal to which the case management directions (the “Directions”) relate is an appeal by Ducas against an HMRC decision dated 29 November 2024 issued under section 8 Social Security Contributions (Transfer of Functions, etc) Act 1999, imposing liability for unpaid employer national insurance contributions or NICs (the “section 8 Decision”). It is part of HMRC’s case against Ducas that, in relation to employed earners or persons deemed to be employed earners (the “Workers”) paid via Enix Services Ltd (“Enix”), Ducas has provided its customers (the “Agencies”) with fraudulent documents in connection with the purported deduction or payment of income tax and NICs in connection with the Workers. HMRC’s case is that Ducas is therefore a deemed secondary contributor for the Class 1 NICs due on the payments of earnings to those Workers pursuant to paragraph 2 of Column A and paragraph 2(b) of Column B of Schedule 3 to the Social Security (Categorisation of Earners) Regulations 1978. This allegation in relation to the provision of fraudulent documents is referred to as the “Fraudulent Documents Issue”. HMRC decided that Ducas was liable on this basis for £171,296,046.05 (subsequently amended to £171,222,823.25) for the period 6 December 2020 to 5 October 2024.

Ducas and HMRC both made written applications to the FTT for directions (as described in more detail below) and a case management hearing was held on 26 March 2025 (the “CMH”). The FTT gave the Directions orally at the CMH, which included that the final hearing be listed for 20 days, commencing in April 2026, directions for the service of HMRC’s Statement of Case (the “SOC”), the Reply by Ducas and any Response by HMRC and agreement of a Statement of Agreed Facts and Issues. The directions which related to disclosure and evidence were as follows:

“Disclosure and evidence

8.

The Appellant’s application in respect of disclosure and evidence is granted.

9.

HMRC shall serve on the Appellant their evidence on which they rely (on all issues) in this Appeal (to be presented in the form of witness statements and exhibits) by 24 July 2025. This direction is made without prejudice to any issue as to burden of proof.

10.

HMRC shall provide disclosure of any documents in their possession or control which support the Appellant’s case or undermine HMRC’s case in respect of Schedule 3, Column (B), paragraph 2(b) to the Social Security (Categorisation of Earners) Regulations 1978/1689 by 24 July 2025. Disclosure shall be given by list and provision of copy documents to the Appellant.

11.

The requirement, pursuant to Tribunal Rule 27(2), that the parties file and serve Lists of Documents shall be dispensed with.

12.

The Appellant shall serve on HMRC its evidence on which it relies (on all issues) in this Appeal (to be presented in the form of witness statements and exhibits) by 25 September 2025.

13.

HMRC shall serve on the Appellant any evidence in reply (to be presented in the form of witness statements and exhibits) by 23 October 2025.”

Following an application by HMRC for, inter alia, reasons and for permission to appeal, the FTT issued its written reasons on 22 May 2025 (the “Written Reasons”) and, separately, refused permission to appeal.

HMRC applied to the UT for permission to appeal on 20 June 2025 (the “PTA Application”), setting out three grounds of appeal that were said (at [9] of the PTA Application) to relate to the “Heightened Disclosure Direction” which HMRC described as being the direction (at [10] of the Directions) that HMRC are under an obligation of heightened disclosure on the Fraudulent Documents Issue whereas Ducas is under no such obligation. The PTA Application was refused on the papers by Judge Scott (the “UT Papers Refusal”).

The grounds of appeal as expressed by HMRC are addressed further below as, notwithstanding that by the time of the rolled-up hearing the UT had issued the UT Papers Refusal, which included its understanding of the case being advanced and its reasons for refusing permission, and HMRC had subsequently served the HMRC UT Skeleton, the panel considered (although Mr Tolley did not accept) that Mr Tolley’s oral submissions at the rolled-up hearing differed markedly from HMRC’s case as it had been presented in writing. A key issue which emerged only during the rolled-up hearing was the basis on which any application for extended disclosure against Ducas had been made by HMRC to the FTT during the CMH and whether, in making any such application, HMRC relied only on what it submitted was a general principle of reciprocity that was said to be applicable to orders for disclosure. Was it the case that, as Mr Bedenham submitted at the hearing, HMRC’s position was one of “reciprocity or bust”? It is for this reason that this decision sets out in detail the procedural background to the CMH and to the rolled-up hearing, recognising that, as the issue was not identified until the hearing itself, no request had been made (by the parties or by the UT) for the FTT’s own notes of the CMH.