[2025] UKUT 00315 (TCC)

Ms McArdle submitted that the FTT erred in law in finding or interpreting HMRC’s email dated 27 December 2019 to constitute a promise or agreement to waive the three-year time limit. The correspondence neither provided an unconditional waiver nor a conditional one – that the time limit would be waived so long as the other conditions of entitlement to drawback were met.

Therefore, in either event, she contended that the FTT erred in deciding it was unreasonable for HMRC to rely on the claim being made outside the three year time-limit as a reason for refusing it. Even if HMRC had stated that they would waive the time limit so long as the other conditions for drawback were met, the Appellant had not met them so the waiver could not apply.

Ms McArdle relied upon the fact that the Appellant’s argument is and was framed, as HMRC acting unreasonably by relying upon the time limit in isolation rather than in breach of any legitimate expectation. The Appellant did not argue before the FTT (although it had on requesting a review) that HMRC’s email of 27 December 2019 gave rise to a legitimate expectation that the drawback claim would not be refused on the basis of the time limit. Rather the Appellant argued it rendered the refusal of the drawback claim unreasonable, or an unreasonable exercise of discretion.

Nonetheless, she argued that the same test in law would apply as to whether HMRC had made a plain and unambiguous promise or statement - “it is necessary that the ruling or statement relied upon should be clear, unambiguous and devoid of relevant qualification” (p1559, R v Inland Revenue Commissioners Ex parte MFK Ltd [1990] 1 WLR 1545). While that test was laid down in the legitimate expectation context, equally it would be unreasonable for the purposes of s.16(4) FA 94 for HMRC to act contrary to a clear and unambiguous written statement or promise given to a taxpayer (whether or not relied upon by the taxpayer to their detriment). There does not appear to have been any dispute before the FTT that the Appellant did rely upon the correspondence from HMRC and did subjectively believe that an assurance had been given that the time limit had been waived if the other EGDR conditions had been met.

She argued that the email cannot be read as giving any positive or unambiguous assurance that HMRC would not refuse the drawback solely on the basis of the time limit. The FTT erred in its interpretation or construction of the correspondence and the meaning of HMRC’s email. Alternatively, she submitted that such a finding or interpretation was not open to the FTT - it was a conclusion not properly open to a decision-maker on these facts. On any reasonable reading of the email of 27 December 2019 the FTT erred in finding or construing the correspondence as HMRC giving an assurance that they would not rely on the time limit to refuse a claim.

Ms McArdle argued the officer’s email did not give a plain and unambiguous assurance to the Appellant that the time limit was waived nor that the drawback claim would be granted so long as the conditions for the claim were met. The relevant parts of the email stated:

“…[HMRC’s] Drawback Centre can consider a Drawback claim in this situation even though the condition stated in regulation [7](6) [the three year time limit] has not been met.

However, the claimant would have to show that the goods subject to the drawback claim are the same ones that were subject to the assessment on 1/5/14 (paid 5/6/14)

Also all other drawback conditions and requirements must be fully met to the Commissioners’ satisfaction”

She submitted that the FTT’s interpretation did not accord with the clear or unambiguous meaning of the email’s words. The natural or ordinary meaning of the phrase stating that HMRC “can consider…in this situation” cannot properly be construed as being a promise “to allow” or “grant” the drawback claim or the waive the time limit, if the goods could be shown to be the same ones and other conditions of drawback had been met. The wording provides a statement, assurance or promise that HMRC ‘can consider’ an out of time claim if these other conditions were met. There is nothing else in the context of the other paragraphs of the email or other correspondence between the Appellant and HMRC which would render a different interpretation to the email of 27 December 2019 than the ordinary words. The fact that the later paragraphs of the email went on to specify that other conditions needed to be met did not imply that HMRC was promising to waive the time limit if they were met, only that they were promising to ‘consider’ waiver of the time limit in those circumstances.

Ms McArdle contended that on an ordinary, natural and reasonable reading of the terms of the email, it was an assurance that HMRC ‘can consider’, (i.e it would be open for HMRC to consider) a drawback claim made out of time either unilaterally or if other conditions were met (and proof of the same goods being the subject of the claim as those upon duty was paid). This would accord with the discretion in Reg. 7(1)(a) for HMRC to otherwise allow or waive a condition in the regulations being applied such as the three-year time limit in Reg. 7(6).

She rejected Mr Thornton’s argument that HMRC’s interpretation means that the communication did no more than state the law and thus it was useless to the Appellant as it was already aware of the law. It is true that the email reaffirmed the existence of the discretion to waive the time limit but HMRC are not required to do more and give advance or binding advance indications or advice as to the future decisions they will make. The terms of the email did not permit the FTT, directing itself properly, to consider that there was an unequivocal waiver pursuant to Reg. 7(1)(a) of the time limit condition in Reg. 7(6) so long as the other conditions were complied with.

Ms McArdle noted that the FTT relied on five reasons at [30] for its interpretation and it is right to note that the Appellant was seeking as part of its correspondence a specific assurance that the time limit condition would be waived. However, the terms and purpose of the Appellant’s request to HMRC and the overall context of the correspondence does not alter or change the plain and ordinary meaning of HMRC’s reply.

HMRC throughout retained the power under Reg. 7(1)(a) to waive non-compliance with any and all conditions of a drawback claim. Therefore, the Appellant’s alternative interpretation of the words, as constituting a promise to grant or allow a drawback claim if EGDR conditions other than the time limit were met, would equally cause the unlawful fettering of HMRC’s discretion. To make such a promise would bind the future decision-maker, who would have all the information and evidence in support of the claim, in considering the claim whereas the initial team offering such a ‘promise’ could not be aware of the full circumstances of the case. It would therefore be surprising if HMRC would do so.

Thus, on the proper interpretation of the correspondence of 27 December 2019, HMRC’s assurance would have allowed HMRC to consider the Appellant’s claim out of time but decide, as it did in the original and review decisions, that the claim should not be granted as no good reason had been provided for making such a late claim. Further and in any event, even if a conditional waiver had been granted by HMRC the Appellant had failed to comply with the other conditions of making the claim so it would not be unreasonable for HMRC to rely on the time limit for refusing the claim. Of course, HMRC’s discretion to refuse to waive the time limit condition would have to be exercised rationally but the original and review decisions included rational reasons for the refusal – the lack of good reason for the lateness of the claim.

She also rejected Mr Thornton’s suggestion that the FTT erred and that HMRC was required to call evidence from the author of the email of 27 December 2019 as to its meaning. The law requires an objective reading of the correspondence as to its natural meaning and not evidence as to the subjective intentions or understandings of the parties engaging in the correspondence. Documents of this nature are to be interpreted objectively, considering their ordinary English meaning and how a reasonable person would understand the words used (see for instance the case law on legitimate expectation).

What the email’s author might have had in mind has no bearing on the outcome. Even if the FTT had jurisdiction to consider a reasonableness challenge on appeal, the only evidence that would be relevant would be that from the original and review decision makers. The approach of HMRC’s decision makers Officers O’Rourke and Ramsay was in issue in the light of the email’s content, not the subjective views of Officer McKirdy, the email’s author. Both officers properly considered the terms of the email. As HMRC made clear before the FTT at [57], Officer McKirdy was not approached to give evidence given her subjective opinion’s lack of relevance. There was no scope for an adverse inference as there was a perfectly normal explanation for her absence as a witness. See Wisniewski v Central Manchester HA [1998] PIQR p324, at p.340: “(4) If the reason for the witness's absence or silence satisfies the court, then no such adverse inference may be drawn. If, on the other hand, there is some credible explanation given, even if it is not wholly satisfactory, the potentially detrimental effect of his/her absence or silence may be reduced or nullified”.

Further, there is no dispute of fact as to the content of the email which the officer could add to, or the communications preceding it. If, as a matter of fact, the words printed amount to a waiver without caveat, it does not matter if the author did not intend that, and if she intended no caveat, but the words include one, her intention is irrelevant and the caveat applies. Officer McKirdy’s decision making was not challenged in the FTT and there would be no right of appeal from it.

Ms McArdle therefore submitted that the FTT erred in finding or interpreting the meaning of the correspondence as HMRC unambiguously waiving the time limit or conditionally promising that it would waive the time limit if the other conditions were met.