[2025] UKUT 00315 (TCC)

Ms McArdle then addressed the construction of s.16(5) FA 94. First, as touched on above, she submitted that the starting point for interpreting s16(5) as it applies to drawback claims, is that language expressly importing a public law jurisdiction must be present before such a jurisdiction may be engaged. Drawback claims do not constitute any enforcement action (rather the taxpayer bringing a drawback claim is doing the opposite, seeking payment from the Respondents).

In finding that the jurisdiction to consider a reasonableness challenge was available to it, the FTT particularly focussed on the words “shall also include” in s16(5), starting at [134]. The words “shall also include” ought to have been interpreted not as importing the s16(4) jurisdiction into s16(5), but as indicating that the other powers, such as for instance wide case management powers, powers to allow or dismiss appeals, or powers to review its own decision under Rule 41 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, were additional to the powers explicitly set out in s16(5).

Far from there being language in s16(5) FA 94 which expressly imports a reasonableness (or any other) public law jurisdiction, she contended that the provision says nothing of the sort. Instead, it adds to the FTT’s powers, not the scope of what it can determine. If Parliament had intended for s16(5) to permit the FTT to consider a reasonableness or other public law challenge, it would have expressly stated so, as it has in other provisions.

She contended that, on an appeal of a drawback claim refusal in the FTT, s16(5), read with s13A(2)(e) FA 94, provides that the jurisdiction extends only to consideration of whether or not a taxpayer is “entitled to any drawback of excise duty by virtue of regulations under section 2 of the Finance (No 2) Act 1992, or the amount of the drawback to which any person is so entitled” (s13A(2)(e)). In other words, the question of whether the legislative requirements have been met (“entitled…by virtue of regulations”) is before the FTT, not any question of whether the Respondents acted reasonably in declining to waive a time limit, or any other condition.

That statutory language in s.13A(2)(e) FA 94 is to be contrasted with ancillary decisions which s16(4) FA 94 applies or applied to, for instance section 18(5) of the Alcoholic Liquor Duties Act 1979, as now repealed:

“s18… (5) The Commissioners may refuse to grant any person a licence as a rectifier in respect of any premises on which, from their situation with respect to a distillery, they think it inexpedient to allow the keeping of a still for rectifying or compounding spirits.”

She submitted that s16(4) FA 94 explicitly permits reasonableness challenges, in the light of the underlying ancillary decisions defined as involving exercises of discretion, in stark contrast to how drawback claims are defined in s13A(2)(e). It is also of assistance to consider the content of Schedule 5 to the FA 94. Paragraphs 1(d) and 1(k), for example, do provide that certain types of waiver are subject to appeal rights, but notably Parliament chose not to include the waiver of drawback conditions as appealable decisions. That, she contended, is no accident and illustrates that there is no FTT appeal jurisdiction on such points.

Similarly, Reg. 7(3) of the EGDR provides that: “Sections 14 to 16 of the Finance Act 1994 shall have effect in relation to any decision of the Commissioners to impose additional conditions under paragraph (2) above as if that decision were a decision of a description specified in Schedule 5 to that Act.” Again, Parliament has been highly prescriptive as to the decisions in relation to which an appeal lies in the FTT, and has not sought to legislate for decisions on the waiver of drawback conditions to give rise to an appeal.

Consequently, she argued, the FTT erred in law in considering that it had jurisdiction to determine the reasonableness of the exercise of public law powers in relation to the refusal to waive time limits and all other conditions.

Mr Thornton submitted that the FTT made no error of law in the Decision and came to the right conclusion for the reasons it gave.