UT/2024/000031 - [2025] UKUT 00254 (TCC)

HMRC’s case is that the Upper Tribunal’s jurisdiction to strike out an appeal arises expressly by virtue of Rule 5(2) of The Tribunal Procedure (Upper Tribunal) Rules 2008 (“the Rules”), alternatively by reason of the Tribunal’s implied powers.

Rules 5 and 8 of the Rules contain the relevant express powers of the Upper Tribunal. Rule 5 provides as follows:

Rule 5(3) then goes on to identify certain specific case management powers, for example in relation to extending time for compliance with a direction or rule, in relation to documents and in relation to hearings. There is no express reference in Rule 5(3) to a power to strike out.

Rule 8, in so far as relevant, provides as follows:

It is also worth noting Rule 2 in relation to the overriding objective of dealing with cases fairly and justly:

HMRC submits that the Upper Tribunal has jurisdiction under Rule 5(2) to strike out or otherwise dispose of an appeal where that is consistent with the overriding objective. It contends that the circumstances in which that jurisdiction will arise include appeals which are an abuse of process and may include situations where an appeal is purely academic, even if it is not an abuse of process. Circleplane submits, on the other hand, that Rule 5 is concerned only with matters of procedure and thus cannot confer a jurisdiction to “strike out”.

In construing Rule 5(2), we must give effect to the overriding objective. We bear in mind section 22(4) Tribunals, Courts and Enforcement Act 2007 (“TCEA 2007”) which provides that the power to make Tribunal rules is to be exercised with a view to securing that proceedings are handled quickly and efficiently and that the rules are both simple and simply expressed.

We accept Mr Simpson’s submission for HMRC that against that background, the following factors indicate that Rule 5(2) may be construed as including a power to strike out:

In our view, Rule 5(2) should be construed as including a power to strike out in circumstances which, for whatever reason, do not fall within Rule 8. Indeed, that was the conclusion of Morgan J in Foulser v HM Revenue & Customs [2013] UKUT 038 (TCC).

Foulser is an important case in the context of both express and implied powers to strike out. It was concerned with the First-Tier Tribunal (Tax Chamber) Rules, but for present purposes those rules are identical to Rules 2, 5 and 8 of the Upper Tribunal Rules, save that Rule 8 of the Upper Tribunal Rules does not include a power to strike out where there is no reasonable prospect of success in an appeal. That presumably reflects the fact that permission to appeal is required in the Upper Tribunal. The facts of Foulser were unusual. On the morning of the taxpayers’ hearing before the FTT, HMRC arrested the taxpayers’ adviser who was representing them in the appeal. The hearing was adjourned and the appeal stayed pending an application by the taxpayers for HMRC to be debarred from participating in the proceedings on the grounds of abuse of process. The FTT struck out that application on the grounds that it did not have jurisdiction to grant the relief sought. On appeal to the Upper Tribunal, it was argued that the FTT had been wrong to hold that the taxpayers’ case of abuse of process was of a kind which was not within the jurisdiction of the FTT.

At [35], Morgan J discussed the distinction between two types of cases. Those in which a court concludes that a defendant cannot receive a fair trial and those where it concludes that it would be unfair for the defendant to be tried. In the first category, the alleged abuse directly affects the fairness of the hearing. In the second category, for some reason not affecting the fairness of the hearing, it would be unlawful in public law for a party to the proceedings to ask that they proceed. The FTT in Foulser had understood that the taxpayers’ application to strike out made an allegation in the second category and had correctly held that it had no jurisdiction in that sort of case. However, the FTT had not considered whether it had jurisdiction under the first category.

The taxpayers argued that the FTT had an implied power to strike out under the first category. Morgan J considered the FTT Rules, in particular Rules 2, 5 and 8 and various authorities in relation to the implied powers of statutory tribunals. He concluded at [50]:

It appears to us that in this paragraph Morgan J was at least contemplating that there was an express power for the FTT to deal with a situation where a fair hearing of the appeal was not possible. Alternatively, that there was an implied power. He remitted the appeal to the FTT to determine whether the taxpayer’s complaint fell within the first category which the FTT had not considered. Morgan J went on to state at [55]:

In relation to this issue, Morgan J concluded at [64]:

It may be that what Morgan J said at [64] was not strictly necessary for his decision, although it seems to us that he was giving the FTT a direction in this regard were it to find that there was unfairness in the first category which could not be addressed by means of a lesser order. In any event, we respectfully agree with his conclusion that there is an express power in Rule 5, to debar HMRC from defending an appeal. Debarring HMRC from defending an appeal on the ground of abuse of process can be viewed as the equivalent of striking out an appeal on that ground (see Rule 8(7)).

In the present appeal, we were left unclear as to Mr Eissa’s position on the existence and scope of any implied power. In his skeleton argument he stated that Morgan J had been correct to find that the FTT had an implied power to strike out, but that Morgan J was limiting the implied power to “extremely rare circumstances”. In fact, Morgan J referred at [64] to “exceptional cases” where, for whatever reason, the facts did not come within Rule 8.

In oral submissions, Mr Eissa initially acknowledged the existence of an implied power to strike out for abuse of process, but then stated that he did not formally concede the existence of such a power. His oral submissions did not directly deal with the circumstances in which there is an implied power.

As to the existence of an express power, Mr Eissa submitted that Rule 5 is a purely administrative provision which simply permits the Tribunal to give effect to procedural decisions it has taken pursuant to other provisions in the Rules. He relied on what the Court of Appeal said in Care First Partnership LLP v Roffey [2001] ICR 87. That case concerned the scope to strike out a claim prior to evidence being heard under the Employment Tribunal Rules on the basis that the claim had no reasonable prospect of success. Rule 4 provided an express power to strike out, while rule 7 dealt expressly with what a tribunal may do if it considered a party’s contention to have no real prospect of success. It could require the party to pay a deposit of up to £150 as a condition of being permitted to advance the contention. Rule 9 provided that the tribunal could conduct a hearing in such manner as it considered appropriate and Rule 13 provided that the tribunal could regulate its own procedure. Aldous LJ expressed the view at [23] that given the powers provided in Rule 7, “it would seem inconsistent with that rule if a tribunal could strike out a claim if it considered that it had no reasonable prospect of success before hearing the evidence. At [26] he explained that Rule 9 had to be read “in light of” Rules 7 and 13. He then said this:

Morgan J considered Care First Partnership at [62] and [63] of Foulser but concluded that it was distinguishable. We agree. It was concerned with a different procedural code which contained no reference to the “disposal of proceedings”. Aldous LJ’s observations as to the scope of the case management powers in Rules 9 and 13 were plainly informed by his reading of the other rules (and particularly rule 7) to which he refers. He was not concerned with the question of strike out for abuse of process.

In any event, in making his submissions based on Care First Partnership, Mr Eissa acknowledged, at least in his skeleton, that an implied power could fill any perceived gap in Rule 8(3). We consider that he was right to do so. In our judgment it would be extremely surprising if the Upper Tribunal does not have power to strike out an appeal that is an abuse of process but, for whatever reason, does not fall within the express provisions of Rule 8. Such a power is, in our view, necessary to enable the Upper Tribunal to deal with cases fairly and justly, consistent with the overriding objective. In this regard, Mr Simpson referred us to the opening words of Lord Diplock in Hunter v Chief Constable of West Midlands [1982] AC 529 at p. 536 which support our view:

We were also referred to Shiner v HM Revenue & Customs [2015] UKUT 0596 (TCC) where Mann J records at [55] that the taxpayer did not dispute that the FTT had jurisdiction to strike out a case on the grounds of abuse of process (in this case a Henderson v Henderson type of abuse arising by reason of a previous Court of Appeal decision given in judicial review proceedings). Mann J expressed the view that the taxpayer was correct not to dispute the jurisdiction and (with reference to Foulser) he rejected the taxpayer’s argument that the jurisdiction could be exercised under Rule 5 only in a “special case”. Mann J observed that “Something is either an abuse or it is not, and if it is an abuse it is either a sufficient abuse to justify striking out, or it is not. A case does not have to be special. It has to be sufficient”.

Notwithstanding his concession, the taxpayer attempted to run a new point at the hearing which appeared to cut across (at least to some degree) the scope of that concession. This is recorded in paragraphs [69] and [70] of the judgment and led to Mann J considering further the powers of the FTT to strike out on the ground of abuse of process, and specifically whether those powers extended beyond the scope of Rule 8. At [72], Mann J expressed the view that Rule 8(3) is not exhaustive of the potential abuses that might exist and he said this:

The parties did not refer us to the Court of Appeal judgment in Shiner v HM Revenue & Customs [2018] EWCA Civ 31 where Patten and Sales LJJ considered the jurisdiction to strike out for abuse of process at [19]–[21]:

Following the hearing, we invited the parties to provide written submissions on the Court of Appeal judgment in Shiner. We accept Mr Simpson’s submission that there is no reason why the conclusion that Rule 5(1) of the FTT rules encompasses a power to strike out for abuse of process should not equally apply to the Upper Tribunal rules. HMRC put its case at the hearing on the basis of Rule 5(2), but we accept that whether one puts the point by reference to Rule 5(1) or 5(2), the Rules plainly provide an express power to strike out for abuse. That arises, as Mr Simpson submits, either because the power under rule 5(1) for the Upper Tribunal to regulate its own procedure is given effect, inter alia, through rule 5(2), such that Shiner is (by analogy) authority for the proposition that there is an express power to strike out for abuse of process under rule 5(2); or because (again by analogy with Shiner), rule 5(1) itself provides that express power. We do not accept Mr Eissa’s submission that the Court of Appeal judgment is of no relevance in the present appeal.

During the hearing, we also drew the parties’ attention to section 25 TCEA 2007 which provides as follows:

HMRC submitted that in the absence of an express or implied power to strike out, the Upper Tribunal could strike out pursuant to its powers under section 25(2)(c). Mr Eissa acknowledged that we would have all the powers of the High Court in relation to incidental matters, but submitted that when permission to appeal has been granted we should be slow to utilise that power. That, of course, is a separate question to the existence of a power.

Whilst we did not have full submissions on this point, we consider that a power to strike out for abuse of process or because an appeal has become purely academic can be seen as incidental to the Upper Tribunal’s function of dealing with cases fairly and justly. Whether the power should be exercised will depend on all the circumstances, including the fact that permission to appeal has been granted.

We also drew the parties’ attention to Universal Enterprises (EU) Limited v HM Revenue & Customs[2015] UKUT 311 (TCC). In that case, a number of separate appellants in what are known as “MTIC appeals” were seeking to argue points of law which HMRC contended had already been determined by the Court of Appeal in Mobilx Limited v HM Revenue & Customs [2010] EWCA Civ 517 and subsequent cases. HMRC applied to set aside or vary permissions to appeal which had been granted on those grounds. HMRC argued that the Upper Tribunal had jurisdiction to make such a direction pursuant to Rule 5(3)(c) which provides that it can require a party to amend a document.

The Upper Tribunal (Judge Bishopp) held at [11] that the power under Rule 5(3)(c) could not be used to circumvent the limits on the power to strike out under Rule 8. In particular, there was no power to strike out any part of an appellant’s case for which permission to appeal had been granted on the grounds that it had no prospect of success.

In Universal Enterprises, HMRC also relied on section 25 TCEA 2007. The Upper Tribunal at [13] considered that such reliance was misplaced because Rule 8(3)(c) was an express limitation on the power to strike out within section 25(3)(b):

Universal Enterprises was not cited in Shiner and it does not specifically deal with the power to strike out for an abuse of process or where an appeal has become academic. In so far as it is inconsistent with Foulser and Shiner, we prefer the reasoning in those cases.

For these reasons we are satisfied that there is an express power to strike out for abuse of process pursuant to Rule 5. If that is wrong, we are satisfied that the Upper Tribunal would have an implied power to do so and we did not understand Mr Eissa seriously to contend otherwise. Further, there is no reason that the power to strike out should not extend to an appeal which is academic, if to strike out would be consistent with the overriding objective.