UT/2024/000070 - [2025] UKUT 00210 (TCC)

Under this ground the Appellant argues that the FTT was misled by the Court of Appeal’s decision in TUI (which was subsequently overruled by the Supreme Court), leading it to believe that HMRC was not required to produce evidence to meet the Appellant’s case. The Appellant does not appear to dispute that HMRC was entitled not to call evidence, but contends that where the Appellant had produced unchallenged evidence, HMRC was required to respond with something substantive.

Tui concerned a claim by a package holiday-maker, who argued he had become ill from food at an all-inclusive resort. The expert witness on his side had concluded the gastric illnesses were acquired through contaminated food or drink from the resort. The issue raised on appeal was the fairness of the trial judge’s acceptance of the holiday’s company closing submissions that the claimant had failed to prove his case because of deficiencies in the claimant’s expert’s report. The expert evidence was uncontroverted, in that the holiday company neither led evidence of its own nor challenged the claimant’s expert in cross-examination. The Court of Appeal (Asplin and Nugee LJJ in the majority, with Bean LJ dissenting) considered this was not unfair.

In advancing this ground the Appellant referred in particular to [118] of the FTT decision where the FTT agreed with HMRC that:

The FTT included that paragraph from Nugee LJ’s judgment which read as follows:

“81.

As a matter of basic principle it is the function of trial judges to evaluate all the evidence before them in reaching their conclusions on the factual issues. That includes deciding what weight should be given to the evidence. I see nothing in the authorities that suggests that that obligation to assess the evidence falls away if it is uncontroverted; uncontroverted evidence still has to be assessed to see what assistance can be derived from it, viewed in the context of the circumstances of the case as a whole. Uncontroverted evidence may be compelling, but it may not be: it may be inherently weak or unhelpful or of little weight for other reasons.”

Subsequent to the FTT issuing its decision, the Supreme Court issued its decision Griffiths v TUI UK Ltd [2023] UKSC 48, which overturned the Court of Appeal’s decision. At [34], the Supreme Court, having previously referred (at [32]) to Nugee LJ’s comments at [81]) framed the issues as follows:

“(i)

what is the scope of the rule, based on fairness, that a party should challenge by cross-examination evidence that it wishes to impugn in its submissions at the end of the trial? (ii) in particular, does the rule extend to attacks in submissions on the reliability of a witness's recollection and on the reasoning of an expert witness? and (iii) if the rule does so extend, was there unfairness in the way in which the trial judge conducted the trial in this case?”

The Supreme Court accepted that a principle long-stated in Phipson on Evidence was correct: a party is required to cross-examine a witness if it wishes to argue that their evidence should not be accepted. The principle was summarised at [70] of the Supreme Court’s judgment:

“The general rule in civil cases, as stated in Phipson, 20th ed, para 12-12, is that a party is required to challenge by cross-examination the evidence of any witness of the opposing party on a material point which he or she wishes to submit to the court should not be accepted. That rule extends to both witnesses as to fact and expert witnesses.”

The Supreme Court found that the Court of Appeal had erred in limiting the rule to challenges concerning the honesty of a witness.

In the present case, where, for the reasons discussed under Ground 2, the focus was rightly on the documentary evidence that had been obtained by a given point of time, there was no evidence that HMRC were inviting the FTT not to accept. The documentary evidence was accepted for what it was. The issue was whether that evidence was sufficient, within the relevant timeframe, to demonstrate removal. The FTT found that it was not. The evidence was not therefore rejected; rather, its sufficiency was evaluated and found wanting. We do not therefore accept that the FTT was misled in the way suggested. We agree with Ms Rao’s submission that, properly analysed, the issue did not concern non-acceptance of the evidence but the interpretation and evaluation of the evidence. There were limitations in the Appellant’s evidence, which meant that even if taken at face value, it did not establish the necessary facts to meet the burden of proof. That is different from the situation in Tui, where the trial judge had not accepted the expert witness’ conclusion on causation of the illness.

The FTT correctly found that HMRC was not required to produce evidence. That was not because it was rejecting the Appellant’s evidence, but because the evidence, though accepted, did not meet the burden of proof. There is nothing in the Supreme Court’s decision in TUI that undermines the proposition that it is for the party asserting a claim to make out its case.

The Appellant also challenges the FTT’s treatment of the burden of proof. At [117], the FTT stated:

“Mr Southern submitted that once HR has provided substantial and reliable evidence the burden of proof shifts to HMRC. We do not accept that submission and agree with HMRC that there is no ‘reverse burden’ of proof on HMRC to conduct independent investigations to verify or provide evidence which challenges or undermines evidence which HR asserts meets the requirements of VN 725. The burden of proof is on HR to show that they have satisfied the conditions set out in VN 725 to zero-rate their supplies and provided documentation to show that the goods were removed from the UK. We agree with the Tribunal in Angela McCamley v HMRC [2016] UKFTT 0701 (TC) where it stated at [44]:

‘… The requirements for zero-rating supplies of exported goods are set out in legislation; it is not the role of HMRC to make up for the shortcomings of taxable persons in complying with those requirements, as is clear from the Twoh International BV v Staatssecretaris van Financien case, which is binding upon this Tribunal.’”

Mr Southern clarified that he was not arguing before the FTT or before us that there was a “reverse burden of proof”. He rightly acknowledged that the burden of proof remained at all time on the Appellant but that the evidential burden at any given point in the case might shift.

The Appellant’s case before us amounts in essence to a submission that the FTT failed to recognise that in the particular circumstances of the case the evidential burden had shifted to HMRC. However, as we have already found under Ground 2, the FTT was not bound to find that the Appellant had produced sufficient evidence, or that the goods had been removed. There was accordingly no need for HMRC to produce evidence when the evidential burden had not shifted. All the FTT was saying in the passage above was that in the particular circumstances of this case the evidential burden had not shifted to HMRC. It was not purporting to lay down any wider (and incorrect) principle that the evidential burden could never shift to HMRC.

The Appellant also argues the FTT erred in failing to recognise that the HMRC officer (Office Julie Yeomans) who had taken the decision to hold that zero-rating was incorrect was an essential witness who needed to be called to show the decision-making process which had led to the decision to impose the tax. We disagree. There was no requirement for her to be called to give evidence about the decision-making process. The focus of the appeal, as discussed, was on the sufficiency of the evidence. That was ultimately an issue for the FTT in relation to which an HMRC officer’s opinions, or their explanation of the decision-making process would be of no evidential relevance.

We therefore reject Ground 3.