Upper Tribunal Tax and Chancery Chamber

[2025] UKUT 00315 (TCC)

Fecha: 18-Jun-2025

The public law jurisdiction of the FTT

The public law jurisdiction of the FTT

99.

We should briefly explain why we do not need consider Ms McArdle’s submissions on the extent of the FTT’s public law jurisdiction at any length. It is our construction of s.13A(2)(e) and 16(5) FA 94 which has determined the nature of the FTT’s jurisdiction in this appeal: an appeal against HMRC’s decision as to whether the prescribed conditions for a drawback claim have been met and the amount of such drawback or alternatively against HMRC's exercise of discretion not to waive conditions of entitlement.

100.

As set out above, the proper approach is to consider the FTT’s jurisdiction by reference to the statutory context of appeals under s.16 FA 94. This approach is consistent with the principles explained by the Upper Tribunal as to the extent of the FTT’s jurisdiction in R & J Birkett v HMRC [2017] UKUT 89 (TCC) at [30] to [33]:

"[30] The principles that we understand to be derived from these authorities are as follows:

(1)

The FTT is a creature of statute. It was created by s. 3 of the Tribunals, Courts and Enforcement Act 2007 ("TCEA") "for the purpose of exercising the functions conferred on it under or by virtue of this Act or any other Act". Its jurisdiction is therefore entirely statutory: Hok at [36], Noor at [25], BT Trustees at [133].

(2)

The FTT has no judicial review jurisdiction. It has no inherent jurisdiction equivalent to that of the High Court, and no statutory jurisdiction equivalent to that of the UT (which has a limited jurisdiction to deal with certain judicial review claims under ss. 15 and 18 TCEA): Hok at [41]-[43], Noor at [25]-[29], [33], BT Trustees at [143].

(3)

But this does not mean that the FTT never has any jurisdiction to consider public law questions. A court or tribunal that has no judicial review jurisdiction may nevertheless have to decide questions of public law in the course of exercising the jurisdiction which it does have. In Oxfam at [68] Sales J gave as examples county courts, magistrates' courts and employment tribunals, none of which has a judicial review jurisdiction. In Hok at [52] the UT accepted that in certain cases where there was an issue whether a public body's actions had had the effect for which it argued – such as whether rent had been validly increased (Wandsworth LBC v Winder [1985] AC 461), or whether a compulsory purchase order had been vitiated (Rhondda Cynon Taff BC v Watkins [2003] 1 WLR 1864) – such issues could give rise to questions of public law for which judicial review was not the only remedy. In Noor at [73] the UT, similarly constituted, accepted that the tribunal (formerly the VAT Tribunal, now the FTT) would sometimes have to apply public law concepts, but characterised the cases that Sales J had referred to as those where a court had to determine a public law point either in the context of an issue which fell within its jurisdiction and had to be decided before that jurisdiction could be properly exercised, or in the context of whether it had jurisdiction in the first place.

(4)

In each case therefore when assessing whether a particular public law point is one that the FTT can consider, it is necessary to consider the specific jurisdiction that the FTT is exercising, and whether the particular point that is sought to be raised is one that falls to the FTT to consider in either exercising that jurisdiction, or deciding whether it has jurisdiction.

(5)

Since the FTT's jurisdiction is statutory, this is ultimately a question of statutory construction.

[31] Some cases are relatively straightforward. Hok is a good example. The appeal to the FTT was against fixed penalties of £100 per month. The FTT's jurisdiction was given by s. 100B TMA (set out above at paragraph [27]). That only entitled it to determine if the penalties had been incurred and if the amounts were correct. The issue which was sought to be raised (was it unfair of HMRC to levy the penalties because of delay?) did not go to either issue. Hence the FTT had no jurisdiction to consider it.

[32] In other cases the Court may have to construe the statutory provision conferring jurisdiction on the FTT to decide the scope of it. An example is BT Trustees. Here the appeals were against closure notices. The FTT's jurisdiction was given by para 9(7) of sch 1A TMA (set out above at paragraph [29]). That entitled the FTT to determine if the claims for tax credits "should have been allowed". The Court of Appeal held that that was limited to the question whether the claims should have been allowed as a matter of tax law, and as not extending to the question whether the taxpayers should have been allowed the benefit of the extra statutory concession. That must on analysis have been because that was the true construction of para 9(7). Similar decisions have been made in relation to other cases where taxpayers have sought to argue that they should have had the benefit of an extra statutory concession: examples to which we were referred included Prince v HMRC [2012] UKFTT 157, Shanklin Conservative & Unionist Club v HMRC [2016] UKFTT 135 (TC).

[33] However we do not read the Court of Appeal in BT Trustees as having laid down any general rule as to the FTT's jurisdiction applicable in all cases. It is noticeable that in relation to Sales J's judgment in Oxfam they said (at [141]):

'We have heard no argument about s. 83(1) VATA and therefore express no view about the correctness or otherwise of the judge's interpretation of that section.'

That confirms that they viewed the question whether Sales J was correct on s. 83(1) VATA as a question of interpretation of that section. His view that s. 83(1) was wide enough to include the question of public law argued before him (had HMRC acted in breach of a legitimate expectation?) is to be contrasted with the view of the UT in Noor that the jurisdiction of the FTT under s. 83(1) was limited to the amount of input tax as a matter of the VAT legislation. Like the Court of Appeal in BT Trustees we do not propose to express a view on the jurisdiction of the FTT under s. 83(1), which does not arise in the present appeal; but it can be seen that what is in issue is the correct interpretation of that provision."

101.

In Caerdav v HMRC [2023] UKUT 179 (TCC) the Upper Tribunal considered the line of authority relied upon by Ms McArdle held that there was no discretion involved in respect of a decision relating to the "importation of goods" element of section 83(1)(b) VATA. The Upper Tribunal therefore found there to be no jurisdiction for the FTT to consider legitimate expectation arguments in that case but stated as follows at [152] to [155]:

"[152] The starting point is therefore that appeal grounds which concern public law arguments should be pursued in judicial review proceedings rather than before the FTT. However, we, like the FTT, accept that the FTT may have jurisdiction to consider appeal grounds based on public law arguments (such as legitimate expectation) depending on the statutory provisions under consideration.

[153] Thus, the statutory context is key, as the UT in Henryk [Zeman] explains.

[154] In this appeal, the taxpayer appeals under s.83(1)(b) VATA, which permits appeals to the FTT with respect to "the VAT chargeable… on the importation of goods from a place outside the member States." Like the right of appeal under s.83(1)(c) VATA, the VAT chargeable on the importation of goods is not a matter of discretion but is mandatory and in an appeal the FTT is concerned with whether the conditions prescribed for a charge to arise under the legislation are present and the amount of the charge.

[155] This is in contrast to the manner in which s.83(1)(p) VATA provides a right of appeal against the discretion of HMRC whether to make an assessment under section 73(1). Hence there is a distinction drawn between subsections 83(1)(c) and (p) VATA set in the authority on which the Appellant relies – Henryk [Zeman]:

'We note one point immediately, which is that on the face of it, the scope of section 83(1)(p) is broader than the scope of section 83(1)(c) (the provision in issue both in Oxfam and Noor), because an appeal lies only with respect to the amount of an assessment but instead with respect to "an assessment… under section 73(1)." And the wording of section 73(1), on the face of it, is permissive not mandatory – 'the Commissioners may assess the amount of VAT due to the best of their judgment and notify it.'

There is a discretion inherent in s.83(1)(p) VATA read together with section 73, which were the statutory provisions considered in Henryk [Zeman] which led it to decide public law arguments could be pursued in the FTT appeal. However, there is no discretion conveyed by subsections 83(1)(b) or (c) VATA which are the mandatory provisions concerning the appeals applicable in this case and in Noor respectively."

102.

Even though Ms McArdle is right in submitting that the FTT holds no inherent or general public law jurisdiction when considering or determining appeals, all Zeman states is that the FTT’s jurisdiction is defined by the terms of the statutory provision which is the gateway to the appeal or review. This is not to confer upon the FTT a general public law jurisdiction.

103.

As a matter of simple statutory construction we have found that s.16(5) FA 94 incorporates s.16(4) and does confer upon the FTT the jurisdiction and power to consider the reasonableness of HMRC’s discretionary decisions on waiving conditions as part of an appeal against a drawback entitlement decision under section 13A(2)(e) FA 94. That does not require us to find that the FTT has jurisdiction to consider legitimate expectation arguments or other public law grounds such as abuse of power etc. The FTT did not decide as much as part of the Decision.

104.

It is not necessary therefore to analyse all the antecedent caselaw on the extent or otherwise of the FTT’s public law jurisdiction. Subsection 16(5) FA 94 entitled the FTT to consider both whether the drawback conditions under the EGDR, incorporating EN207, were satisfied as a matter of fact and law but also whether HMRC’s exercise of discretion to refuse to waive those conditions under Regulation 7(1)(a) was reasonable.

105.

This ground of the cross appeal is dismissed.