UT (Tax & Chancery) UT/000097/2023 - [2025] UKUT 00211 (TCC)

The Applicant objects to the proposed amendment on three broad grounds:

The Applicant also observes that the Authority has provided no evidence of discussions with the Danish Tax Authority or that it has decided not to impose a penalty. I do not consider that evidence going beyond what is said in the application is necessary. I am prepared to accept at face value the reasons put forward by the Authority in the application for seeking to withdraw the penalty decision. That is consistent with the overriding objective of dealing with cases fairly and justly, which includes dealing with matters in a proportionate way.

Section 389 FSMA 2000 provides as follows:

The Applicant says that the Authority cannot discontinue enforcement proceedings in relation to the penalty without issuing a notice of discontinuance. It is also said that in the absence of a notice of discontinuance, the Tribunal has no power to consent to the proposed amendment to the statement of case. In the alternative, as a matter of discretion the Tribunal should refuse permission for the amendment because of the failure to follow section 389.

I agree with the Authority that section 389, on its true construction, requires the Authority to issue a notice of discontinuance only where it decides not to take any action at all in relation to a decision notice. In other words, where the proceedings are being discontinued in full. The section refers to a decision by the Authority not to take “the action” to which the decision notice relates rather than “an action”. That would be a more natural way of describing the position if the Applicant is right that a notice of discontinuance must be served if the Authority decides not to take one of the actions described in a decision notice whilst continuing with other actions described in the notice. I also take into account that the provision appears under a heading “conclusion of proceedings” which at least suggests that it relates to decisions which have the effect of concluding not just one aspect of enforcement action being taken by the Authority but all the actions in a decision notice which may be said to comprise the proceedings. In this case, whilst the Authority is not pursuing the penalty, the proceedings will continue in relation to the prohibition referred to in the decision notice.

I do not consider that this construction gives rise to any unfairness for persons who are subject to enforcement action by way of decision notices. The proceedings will effectively terminate if the Authority serves a notice of discontinuance, or they will continue in respect of those actions which the Authority seeks to maintain by reference to the decision notice.

The Applicant says that the distinction is important in relation to how the Authority publicises a decision not to take the action specified in a decision notice. Section 391 deals with publicity, both generally and specifically in relation to a notice of discontinuance:

I do not consider that the question of what is published in relation to a notice of discontinuance has any bearing on how section 389 should be construed. Where the Authority decides not to take any of the action described in a decision notice, then a notice of discontinuance must be issued and there is provision in relation to publication. If the decision is not to take some of the action then the proceedings will continue. As I shall explain below, there can still be provision for publicity. There is no unfairness to the Applicant in relation to publicity on the Authority’s construction of section 389.

That is sufficient to address the Applicant’s first objection. The Authority also submitted in the alternative that even if section 389 does require it to serve a notice of discontinuance, such a notice could only be served after the Tribunal had permitted the proposed amendments.

It does not affect my conclusion on this aspect of the application, but I do not accept that submission. The provision states clearly that if the Authority decides not to take the action described in a decision notice then it “must” serve a notice of discontinuance. There is no suggestion that the position is any different where the decision notice has been referred to the Tribunal.

The Authority also submitted that once a decision notice had been referred to the Tribunal, the Tribunal assumed sole responsibility for determining what if any action ought to be taken in relation to the matter. It relied on section 133(5) FSMA 2000 which provides that on a disciplinary reference (such as a penalty), the Tribunal must determine what action it is appropriate for the decision-maker to take and remit the matter to the decision-make with appropriate directions. Unilateral service of a notice of discontinuance would usurp the role of the Tribunal.

I do not accept that submission. In circumstances where a decision notice has been referred to the Tribunal, Rule 17 of the Tribunal Procedure (Upper Tribunal) Rules 2008 makes separate provision for any party, including the Authority, to withdraw its case before the Tribunal or any part of its case:

It seems to me that in withdrawing the penalty, the Authority is seeking to withdraw part of its case on this reference. The Authority did not reference Rule 17 in its application, and I agree with the Applicant that the Authority should have given a notice of withdrawal at the same time as applying to amend its statement of case. It would then be a matter for the Tribunal whether it should consent to the withdrawal. In practical terms, however, no prejudice flows from the Authority’s failure to give notice of withdrawal of its case on the penalty. The Authority requires permission from the Tribunal to amend its statement of case. It also requires consent from the Tribunal to withdraw its case on the penalty. On the facts of this case, there is no reason to think that different factors would be relevant to the Tribunal’s discretion on each procedure. They would stand or fall together.

In summary, where the Authority decides not to take any action in relation to a decision notice, it must serve a notice of discontinuance under section 389. It should at the same time serve a notice of withdrawal under Rule 17. The Tribunal will then consider whether to consent to the withdrawal.

The Authority in the present proceedings should therefore serve a notice of withdrawal of its case on the penalty pursuant to Rule 17. I hereby direct that should be done within 7 days of the date on which this decision is released.

Turning to the Applicant’s second objection, he contends that the Authority has not followed its own policy in relation to the publication of notices of discontinuance. At the time of the application, the Authority’s Handbook stated as follows at EG 6.2.16 and 6.2.19:

The Applicant says that the Authority has not made clear on its website that it is discontinuing the penalty proceedings, nor has it sought the Applicant’s prior consent to publish a notice of discontinuance. In applying for permission to amend its statement of case, the Authority is seeking to circumvent its own policy. The Applicant also says that the Authority has not complied with its obligations in relation to publication and consents in section 391(2).

The Authority says that the policy described in its Handbook is not engaged because the decision notice has not been successfully referred to the Tribunal. However, it acknowledges in the application that if it is permitted to amend its statement of case and if directed it will issue a further decision notice seeking only to impose a prohibition and will publish an update reflecting the change.

For the reasons given above, there is no obligation on the Authority to issue a notice of discontinuance and therefore section 391(2) is not engaged. Nor does the Tribunal have a supervisory jurisdiction in relation to the Authority’s application of its policy on publication of notices and whether previously published details should be amended.

Whilst the Tribunal does not have any general supervisory power over the Authority’s enforcement actions, there is no reason why the Tribunal should not, in appropriate circumstances, require the Authority to publish details of a withdrawal under Rule 17. Effectively, that would be a condition of granting consent pursuant to Rule 17(2). It seems to me that in exercising power to consent under Rule 17(2) it would be in accordance with the overriding objective of dealing with cases fairly and justly to require the Authority in this case to undertake to publish its decision not to pursue the penalty as a condition for granting consent to the withdrawal of that aspect of its case.

The Applicant’s third objection is that the proposed amendments are inconsistent because allegations of a failure to act with integrity and honesty have been removed in some parts of the statement of case but not all. I do not consider that objection is well-founded. The Authority clearly relies on allegations of failure to act with integrity and honesty in relation to the prohibition. Those allegations remain in the amended statement of case.

Overall, I am satisfied that it would be consistent with the overriding objective to grant permission to the Authority to amend its statement of case in accordance with the draft annexed to the application. The Authority should lodge its notice of withdrawal pursuant to Rule 17(2) together with the undertaking referred to above within 7 days. The permission to amend shall take effect when consent is expressly granted by the Tribunal pursuant to Rule 17(2).