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M16: Amending grounds of appeal etc.

Power to permit or require amendment

 

“(3)…the Tribunal may by direction--
(c) permit or require a party to amend a document;” (FTT Rules, r.5(3)(c)).

 

FTT may require HMRC to amend their statement of case

 

“There is nothing to suggest that the power is only exercisable where a party makes an application for a direction. It follows that we reject the submission that Judge Mosedale exceeded her discretion in requiring HMRC to amend their statement of case in the 2010 Appeal.” (First Class Communications Ltd v. HMRC [2014] UKUT 244 (TCC), §29, Judges Sinfield and John Clark).

Power to permit or require amendment

Distinction between new case and more detailed argument


“I agree that the arguments on acknowledgement of title have become more detailed on this appeal than they were below and they are in part based on documents that were not mentioned in the pleadings or even available to the trial judge. I do not, however, think that the acknowledgement argument is a new point taken by Mr Rehman for the first time on this appeal.” (Rehman v. Benfield [2006] EWCA Civ 1392, §23).
 

Distinction between new case and more detailed argument

Requirement for permission to amend

 

Not entitled to rely on grounds not stated in notice of appeal, as of right

 

“The notice of appeal has to state the grounds of the appeal and the taxpayer is not entitled, as of right, to rely on any grounds not so stated.” (Hallamshire Industrial Finance Trust Ltd v. IRC [1979] STC 237 at 242).

 

However

 

“The Tribunal’s overriding objective as set out in Rule 5(2)(b) includes avoiding unnecessary formality.  There is no rule which specifically requires an appellant to formally seek consent of the Tribunal to amend its grounds of appeal; and the Tribunal’s approach to whether consent is required varies from permitting an unheralded amendment during the course of the hearing (eg in a ‘basic’ penalty appeal) to requiring a formal application for permission in more formal standard and complex cases.” (Chung v. HMRC [2016] UKFTT 215 (TC), §10)

Other party must be given opportunity to make representations

“I agree with the appellant that at the very least when the Tribunal asked HMRC to provide a statement of case, it gave the appearance that the Tribunal had accepted the appellants’ amended ground of appeal. This was an error by the Tribunal.  The tribunal ought to have given HMRC to the opportunity to object to the new ground of appeal before requesting the statement of case in response. Nevertheless, I do not accept that the Tribunal’s error means that it is no longer open to HMRC to effectively object to the admission of the new grounds of appeal…As HMRC have objected to the revision of the grounds of appeal, this Tribunal must treat the provision of the revised grounds by the appellant as an application to admit them, and decide whether it is appropriate to do so.” (Chung v. HMRC [2016] UKFTT 215 (TC), §§12…13)
 

Requirement for permission to amend

Query whether a fundamental change is an amendment

 

"[26] [HMRC] did suggest that the footnote to the amended grounds of appeal which suggests that they were made “by way of supplement to the [original grounds of appeal]” misrepresents the position given that ground (1) reflects such a fundamental change of stance. In my view to say that this is an “amendment” is wrong. Ground (1) goes far beyond an amendment. It is effectively tearing up the appellant’s primary submission set out in its original grounds of appeal (namely that the workers were employees) and replacing it with a submission that they were not employees. To my mind that does not fall within the definition of “amendment”." (Mypay Limited v. HMRC [2022] UKFTT 371 (TC), Judge Popplewell)

Query whether a fundamental change is an amendment

Fundamental change requires judicial scrutiny

 

"[28] The appellant is entitled to say, and this is a point with which I would agree, that HMRC are professional litigators and can be expected to understand procedural matters, something with which they deal on a daily basis, and in which they have far greater experience than most appellants and their representatives. They should, therefore, have understood the extent of the draft directions which they were being asked to agree, and indeed should have checked the wording of those directions before agreeing to them. It is, therefore, HMRC’s own fault for having agreed a direction which allows the appellant to amend its grounds of appeal in an ostensibly unfettered manner, and they cannot now cry foul. The time to have ensured that the directions were to their liking was before agreeing them, and the time for challenging them has now passed.

[29] And the appellant might go further. It might say that it has done nothing wrong in simply submitting ground (1) on 24 January 2022 in its amended grounds of appeal pursuant to the draft directions which had been agreed by HMRC on 21 January 2022, such draft directions giving the appellant the right to amend its grounds of appeal in any manner it chose. It was simply complying with the draft direction which it was entitled to take at face value.

[30] However, whilst I am sympathetic to this position, I am also conscious that the overriding objective of the Rules is that I should deal with cases fairly and justly, and to my mind ground (1) represents such a fundamental change of stance by the appellant to its pleaded case that it is only fair and just that it is subject to judicial scrutiny. And that should the appellant wish to introduce ground (1), it should make an application for permission to amend its grounds of appeal. A hearing of that application would then provide that judicial scrutiny.(Mypay Limited v. HMRC [2022] UKFTT 371 (TC), Judge Popplewell)

Fundamental change requires judicial scrutiny

Cannot amend grounds to appeal different decision

 

“I cannot see how the grounds of that appeal can be amended to cover a completely different decision...What I will do is indicate what my decision would have been had there been a valid appeal against the decision brought to the Tribunal.  I would expect HMRC and the appellant to abide by this indication, but I cannot bind them.” (Wetheralds Construction Ltd v. HMRC [2016] UKFTT 827 (TC), §§138…139, Judge Thomas).
 

Cannot amend grounds to appeal different decision

Amendment must clearly set out party's proposed position

 

"[34] And that answer is, whether or not it would be appropriate in principle, taking all relevant factors into consideration, to permit HMRC to amend its statement of case at this point in proceedings, it would only be fair to permit an amendment which fulfils the requirement of Rule 25 by setting out HMRC’s position in relation to the payments services issue. But I find that the amendment sought does no such thing and for that reason it should be refused.

...

[37] In any event, it is clear that HMRC did not attempt to explain any of their legal or factual reasons for believing that the appellant’s services were not payment services. Like the appellants in Fairford, they just sought to put the party with the burden of proof to strict proof.

...

[52] ... [HMRC] chose, impliedly, to concede the issue by exclusively concentrating on the debt collection issue in its statement of case. It now seeks an
amendment that still fails to explain its position on the payments services issue. A party cannot justify bringing in a new, unparticularised ground of dispute at any point in proceedings and rely on being allowed to do so simply because otherwise the Tribunal may not determine the dispute in accordance with the underlying merits of it: so it follows that a person can be refused permission to make an unparticularised amendment and that the effect of such a refusal will be to prevent that issue being considered, however unsatisfactory that might be. In my view in this case that position is preferable to the alternative course of action which is to allow trial by ambush." (Allpay Limited v. HMRC [2018] UKFTT 273 (TC), Judge Mosedale)

Amendment must clearly set out party's proposed position

Amending grounds of appeal/statement of case (hearing not imminent) 

 

General approach: amendments with reasonable prospect of success usually allowed, subject to overriding prejudice 

“The overriding objective is that the court should deal with cases justly, that includes, so far as practicable, ensuring that each case is dealt with not only expeditiously but also fairly. Amendments, in general, ought to be allowed so that the real dispute between the parties can be adjudicated upon, provided that any prejudice to the other party or parties caused by the amendment can be compensated for in costs and the public interest in the efficient administration of justice is not significantly harmed.” (Cobbold v. The London Borough of Greenwich [1999] EWCA Civ 2074, Peter Gibson LJ).

 

“Normally, when a court or tribunal is asked to give permission to amend, the court or tribunal does not determine whether the point to be pleaded will succeed but whether the point has a real prospect of success. If the point does have a real prospect of success then, unless there is some other reason to withhold permission, permission should be given. Where permission is given, then the point can be argued in detail at a later hearing and if a court or tribunal is asked not to follow an earlier decision of a court or tribunal of coordinate jurisdiction, the court or tribunal can ask itself whether the position is sufficiently clear that the earlier decision should not be followed." (HMRC v. AG Villodre SL [2016] UKUT 166 (TCC), §68)

 

“So far as new grounds of appeal or defence are concerned, I consider that the Tribunal would wish to admit them in order that the outcome of the dispute is decided after the fullest possible consideration of the relevant facts and applicable law, and that therefore it would admit new grounds of appeal unless there is a compelling reason not to do so.” (Chung v. HMRC [2016] UKFTT 215 (TC), §14).

 

“It would not be in the interests of justice to permit a ground of appeal to be added which had no merit.” (North Weald Golf Club v. HMRC [2014] UKFTT 130 (TC), §12, Judge Berner)

 

“Our function, in accordance with the Tribunal Procedure (First-tier Tribunal)(Tax Chamber) Rules 2009 (“the Rules”) is to deal with cases fairly and justly (rule 2).  [The taxpayer] submitted (and we accept) that we should follow Peter Gibson LJ’s guidance in Cobbold v London Borough of Greenwich [1999] EWCA Civ 2074 and allow an amendment which will enable the real dispute between the parties to be adjudicated upon, and he further submitted (and we accept) that the amendment would not prejudice HMRC nor would it harm the public interest in the efficient administration of justice.” (Rosen v. HMRC [2013] UKFTT 466 (TC), §8).

 

“I proceed on the assumption that, in general, apart from these objections,  leave should be given unless the delay and increased costs in the proceedings resulting from a new ground of appeal is outweighed by the potential unfairness if it is excluded; and that Mr Wilden’s new ground of appeal must have at least some prospect of success, for it should not be admitted if it does not.” (Wilden v. HMRC [2012] UKFTT 86 (TC), §13).

 

“This Tribunal would be reluctant in the extreme to prevent a taxpayer from raising a bone fide defence. It is not in the public interest that Customs and Excise should recover more tax than their strict entitlement.” (Marchday Holdings Ltd v. CEC [1992] VATTR 484).

 

“I share the tribunal's view in the Marchday case, supra, at p. 4891, that the tribunal should be reluctant to prevent a taxpayer from raising a bona fide defence, which in the instant case means, as it did in the Marchday case, a bona fide ground for supporting the taxpayer's appeal. In the instant case I see no prejudice to the Commissioners sufficient to justify me in dismissing the application.” (Quicks Plc VATD15836 – alternative argument in support of original claim for repayment of VAT was not a new claim).

 

“it is a well established principle that the object of courts is to decide the rights of the parties, and not to punish them for mistakes they make in the conduct of their cases by deciding otherwise than in accordance with their rights .... 1 know of no kind of error or mistake which, if not fraudulent or intended to overreach, the court ought not to correct, if it can be done without injustice to the other party. Courts do not exist for the sake of discipline, but for the sake of deciding matters in controversy, and I do not regard such amendment as a matter of favour or grace.... It seems to me that as soon as it appears that the way in which a party has framed his case will not lead to a decision of the real matter in controversy, it is as much a matter of right on his part to have it corrected, if it can be done without injustice, as anything else in the case is a matter of right.” (Cropper v. Smith (1884) 26 Ch D 700 at 710 – 711, but see Worldwide Corp Ltd v. GPT Ltd)
 

Recognition that legal arguments frequently change 

 

“It seems to me inherent in the appeal system that the tribunal must form its own view on the law without being restricted to what the Revenue state in their conclusion or the taxpayer states in the notice of appeal. It follows that either party can (and in practice frequently does) change their legal arguments. Clearly any such change of argument must not ambush the taxpayer and it is the job of the Commissioners hearing the appeal to prevent this by case management.” (D’Arcy v. HMRC [2006] STC (SCD) 543, §13, approved in HMRC v. Tower MCashback LLP 1 [2011] UKSC 19, §18).
 

Deciding application to amend at preliminary hearing

 

“As the purpose of an application such as this is to reduce the length of the substantive hearing (and the costs of preparing for it) by eliminating arguments that are perceived to have no reasonable prospect of success (either because of total lack of evidential support or, more commonly, because of inherent fundamental legal flaw), I would generally wish to consider whether the extra time spent in separately considering the application is likely to outweigh the possible saving of time at the eventual hearing. I consider it is also appropriate that, as a general proposition, applications are considered when they are made and only deferred if there is good reason to do so. Also, unreasonable conduct of an appeal carries a risk in costs.” (Pertemps Ltd v. HMRC [2015] UKFTT 512 (TC), §5)
 

Amending grounds of appeal/statement of case (hearing not imminent) 
Deciding application to amend at preliminary hearing

Stage 1: Reasonable prospect of success

 

Amendment must be properly particularised and have some prospect of success 

 

“His proposed amendment is hopelessly lacking in specification, even for the modest standards of flexible, informal tribunal procedure…We do not consider that it would be fair and just to allow a vague amendment to the Grounds of Appeal at this stage. It would immediately be defenceless to an application for further specification or to strike it out. There is no indication that any such specification could be provided. It would cause delay and we would not be able to give proper consideration to the issues because it does not identify them. All this would cause additional administrative time and expense.” (Pattullo v. HMRC [2014] UKFTT 841 (TC) §§109..110 – the taxpayer did not know what the new ground was and did not propose to argue it, but instead wait for others to argue it in other cases).

 

Applications to amend to introduce new factual dispute must be supported by evidence

 

“Well-established authority outside the sphere of the Tribunal, but referring to the same overriding objective, indicates first that any amendment to a party’s case must be supported by evidence (a factor that is not relevant here where the proposed additional grounds are on questions of law alone)…” (North Weald Golf Club v. HMRC [2014] UKFTT 130 (TC), §11, Judge Berner).

No mini-trials of the facts

 

“It may be clear beyond question that the statement of facts is contradicted by all the documents or other material on which it is based. The simpler the case the easier it is likely to be take that view and resort to what is properly called summary judgment. But more complex cases are unlikely to be capable of being resolved in that way without conducting a mini-trial on the documents without discovery and without oral evidence. As Lord Woolf said in Swain v Hillman, at p 95, that is not the object of the rule. It is designed to deal with cases that are not fit for trial at all.” (Pertemps Ltd v. HMRC [2015] UKFTT 512 (TC), §95).

 

Inconsistent position elsewhere not generally significant

 

“The Tribunal has, in reaching its decision, noted but placed little emphasis on the manifest inconsistency between the position taken by Marchday in the civil proceedings (where their case is based on the supply being exempt) and in these proceedings where they seek to argue that it is zero rated. The Tribunal's only jurisdiction is to decide the issue raised by Customs and Excise's decision and their assessment: and the existence of the civil proceedings is not relevant to the strict question of law.” (Marchday Holdings Ltd v. CEC [1992] VATTR 484).
 

Stage 1: Reasonable prospect of success

Stage 2: prejudice

 

Prejudice only relevant if it arises from the delay 

 

“To my mind, however, Mr Sumption is right to say that the point must be taken in this action or not at all. If it is not taken in this action, it will certainly be too late for it to be taken against LDTC…In these circumstances, it appears to me that Lexington should have been, and now should be, permitted to advance it unless, as Peter Gibson LJ put it in the passage from Cobbold quoted above, “any prejudice to the other party or parties caused by the amendment could not be compensated for in costs or the public interest in the administration of justice would be significantly harmed.” In my judgment, that question should have involved some consideration, at least, of the prejudice, if any, suffered by LDTC and JLT as a result of Lexington taking the point on 29 July and not on or before 5 July. I would accept Mr Sumption's submission that none of the problems identified by JLT or LDTC plausibly suggest that they have been, or would be, prejudiced by the delay from 5 July…” (The Law Debenture Trust Corporation (Channel Islands) Ltd v. Lexington Insurance Company [2001] EWCA Civ 1673, §§19 – 20).

 

Less/no prejudice if other party already familiar with basis underlying new ground

 

“Thirdly, the point raised by the application to amend, though no doubt unwelcome to Customs and Excise, relates to a factual background of which they are well aware: much of the work and research will have already been done in the course of preparing Customs and Excise's defence to the civil action.” (Marchday Holdings Ltd v. CEC [1992] VATTR 484).

Strain of litigation 

 

“Furthermore, whatever may have been the rule of conduct a hundred years ago, today it is not the practice invariably to allow a defence which is wholly different from that pleaded to be raised by amendment at the end of the trial even on terms that an adjournment is granted and that the defendant pays all the costs thrown away. There is a clear difference between allowing amendments to clarify the issues in dispute and those that permit a distinct defence to be raised for the first time.

Whether an amendment should be granted is a matter for the discretion of the trial judge and he should be guided in the exercise of the discretion by his assessment of where justice lies. Many and diverse factors will bear upon the exercise of this discretion. I do not think it possible to enumerate them all or wise to attempt to do so. But justice cannot always be measured in terms of money and in my view a judge is entitled to weigh in the balance the strain the litigation imposes on litigants, particularly if they are personal litigants rather than business corporations, the anxieties occasioned by facing new issues, the raising of false hopes, and the legitimate expectation that the trial will determine the issues one way or the other. Furthermore to allow an amendment before a trial begins is quite different from allowing it at the end of the trial to give an apparently unsuccessful defendant an opportunity to renew the fight on an entirely different defence.

Another factor that a judge must weigh in the balance is the pressure on the courts caused by the great increase in litigation and the consequent necessity that, in the interests of the whole community, legal business should be conducted efficiently. We can no longer afford to show the same indulgence towards the negligent conduct of litigation as was perhaps possible in a more leisured age. There will be cases in which justice will be better served by allowing the consequences of the negligence of the lawyers to fall upon their own heads rather than by allowing an amendment at a very late stage of the proceedings.” (Ketteman v. Hansel Properties [1987] AC 189 at 220 considered in Marchday Holdings Ltd v. CEC [1992] VATTR 484)

 

“At the hearing of the appeal, in view of Villodre’s submission as to disappointed expectations, I referred to the decision of the House of Lords in Ketteman v Hansel Properties Ltd [1987] AC 189 as a potentially relevant authority. That case was procedurally complex but I referred to it because of the statement in the speech of Lord Griffiths at 220E-F that when considering a late application for permission to amend the court could take into account the strain of the litigation, the anxieties occasioned by facing new issues, the raising of false hopes and the legitimate expectation that a trial will determine the issues one way or the other. That shows that Villodre’s submission as to its expectations does raise a permissible consideration. On the other hand, the facts of Ketteman were very different from the facts of the present case.” (HMRC v. AG Villodre SL [2016] UKUT 166 (TCC), §74).

 

“Secondly, the Commissioners of Customs and Excise are not, the Tribunal assumes, exposed to the same strains that litigation imposes on individual litigants.” (Marchday Holdings Ltd v. CEC [1992] VATTR 484).

 

Earlier amendment would have allowed quicker conclusion

 

“It is a balancing exercise:  should the appellant be prevented from putting a good arguable case to the Tribunal (if I were to find it to be so) on the basis its failure to include it in its grounds of appeal means extending, possibly by several years, the time taken to resolve the Sub One group of appeals?...If there were no other matters in favour of keeping out the new ground of appeal, I am not persuaded that this prejudice to HMRC would be sufficient to justify keeping it out.  However, for the reasons explained below at §§28-29 it is not the only relevant factor.” (Chung v. HMRC [2016] UKFTT 215 (TC), §§23 – 24, grounds sought to be amended after CA rejected main grounds in lead case)
 

Stage 3: balancing all the circumstances

 

Whether trial date set/jeopardised important factor (distinguishing late and very late) 

 

“the judge clearly distinguished between the ‘very late’ amendment cases such as Swain-Mason where the risk to a trial date may mean that the lateness of the application to amend will of itself cause the balance to be heavily loaded against the grant of permission, and ‘late’ amendments in which the consequence of the large scale reformulation of the Particulars of Claim, after the completion of Defences and Part 18 exchanges, will risk undermining work already done in response to the original Particulars of Claim, and causing a duplication of cost and effort.” (Hague Plant Ltd v. Hague [2014] EWCA Civ 1609, §32, Briggs LJ).

 

“In the first place the present appeal is a long way from being heard. It is not at this stage down for hearing. Lord Griffiths envisages that a greater freedom to make amendments was available where the application is made before the trial begins.” (Marchday Holdings Ltd v. CEC [1992] VATTR 484).

 

“While I accept that there has been delay in identifying the new ground of appeal and that that delay may have prejudiced HMRC in that these appeals will take longer to resolve that if the appellants had acted promptly, I do not think that would justify keeping out a good arguable point of law which  had not been considered by the Court of Appeal in Sub One.” (Chung v. HMRC [2016] UKFTT 215 (TC), §28).

 

Lateness is a relative concept (shorter, well-drafted amendments more likely to be accepted) 

 

“a tightly focussed, properly explained and fully particularised short amendment in August may not be too late, whereas a lengthy, ill-defined, unfocussed and unexplained amendment proffered in the previous March may be too late. It all depends upon a careful review of the nature of the proposed amendment, the quality of the explanation for its timing, and a fair appreciation of its consequences in terms of work wasted and consequential work to be done.” (Hague Plant Ltd v. Hague [2014] EWCA Civ 1609, §33, Briggs LJ).

 

Applying for amendment at hearing of preliminary issue

 

“On balance, I consider that HMRC should be given permission to amend their pleading notwithstanding their delay in raising the new point as to Article 221(4). The point which HMRC wishes to rely upon is reasonably arguable on the authority of the decision in FMX. The hearing before the FtT in July 2014 concerned preliminary issues and was not necessarily a stage which would finally decide matters one way or the other. If HMRC had relied on Article 221(4) in their earlier pleading then it would still have been necessary to determine the preliminary issues so I doubt if it can be said that money has been wasted as a result of the trial of those issues. If HMRC are permitted to attempt to rely on Article 221(4) and if they were to succeed on Article 221(4), then the case would be decided on its merits as to the origin of the garlic and as to the relevance of any arguments about the culpability of Villodre. These reasons persuade me that it is in the interests of justice and not procedurally unfair to permit the proposed amendment.” (HMRC v. AG Villodre SL [2016] UKUT 166 (TCC), §75).

 

Collective proportionality not generally relevant

 

“While no reason was given for the failure of the notice of appeal to include this new ground of appeal, there was no suggestion that it was an intentional omission, designed to catch out HMRC. I do not think collective proportionality has any relevance here: refusing to allow parties to introduce new grounds once the pleadings are closed punishes them for not exercising their legal ingenuity earlier but does not really encourage better behaviour.  A litigant can’t include in their notice of appeal a ground of appeal which does not occur to them (or their new representatives) until later in proceedings, and so punishing a litigant for failing to include it at the right time will not mean other litigants are less likely to make this mistake.” (Chung v. HMRC [2016] UKFTT 215 (TC), §26).
 

Stage 2: prejudice
Stage 3: balancing all the circumstances

Previously abandoned grounds can be re-instated 

 

“[15]...I do not consider that, even if the concept, when properly understood, of abandonment of claims which are mentioned in the writ but not mentioned in the points of claim has survived as a concept into the days of the new Civil Procedure Rules, it precludes the judge from exercising his discretion to permit an amendment to put the unmentioned claims back into the proceedings in a proper case. The Court of Appeal certainly thought that such a discretion existed in the case of Worldwide Corporation Limited v. Marconi Communications Limited, decided on 22nd June 1999. That case is authority that even an abandonment in the face of the court at trial is something that may not be finally irrevocable.” (Kuwait Airways Corp v. Iraqi Airways Corp [2002] EWCA Civ 515, Longmore LJ)

 

But

 

“We have noted above (paragraph 32) that HMRC applied to the Tribunal to amend their statement of case to remove the argument that the Invoices were rendered invalid by the deregistration of Sitetech with retrospective effect. Permission was granted and the statement of case was so amended. The argument reappeared, however, in HMRC’s skeleton argument. It would seem to us contrary to the overriding objective of the Tribunal’s rules, to deal with cases fairly and justly, for us now to entertain arguments which HMRC originally advanced and then decided were mistaken.” (Gradon Construction Ltd v. HMRC [2016] UKFTT 149 (TC), §42).
 

Previously abandoned grounds can be re-instated 

EU law: generally to be allowed if consequential on ECJ judgment 

 

“I see nothing contrary to principle, or unjust, in permitting a party to amend its claim so as to take advantage of a judgment of the Court of Justice that has clarified EU law. I do not see how a party could be shut out from bringing a fresh claim to take advantage of such a ruling from Luxembourg, and proceeding by way of amendment to an existing claim is often more convenient and less costly, and causes the defendant no real prejudice.” (R (oao Whistl UK Ltd (formerly TNT Post UK Ltd)) v. HMRC [2014] EWHC 3480 (Admin), §98 – HMRC alleged that the ECJ decision showed TNT lost its original claim and said it should not be allowed to convert defeat into victory by amendment).
 

EU law: generally to be allowed if consequential on ECJ judgment 

Effect of delay in making application  

Delay is relevant 

“HMRC should be on notice that if they intend to apply to amend their SOC they should do so sooner rather than later…”(Citibank NA v. HMRC [2014] UKFTT 1063 (TC), §130, Judge Mosedale).

 

Delay is irrelevant

 

“By itself the lack of a good reason for a delay I do not think would justify keeping out an arguable ground of appeal:  it would need to be coupled with other factors.” (Chung v. HMRC [2016] UKFTT 215 (TC), §20, Judge Mosedale).

 

“Mrs Rosen is under no obligation to show an acceptable reason why she left the application to amend until after Mr Rosen’s death.  The question is simply one of whether the amendment would in reality prejudice HMRC in their conduct of the appeal (i.e. in their defence of the assessments).” (Rosen v. HMRC [2013] UKFTT 466 (TC), §10).

 

"The rule of conduct of the Court in such a case is that, however negligent or careless may have been the first omission, and, however late the proposed amendment, the amendment should be allowed if it can be made without injustice to the other side. There is no injustice if the other side can be compensated by costs . . ." (Clarapede & Co v. The Commercial Union Association (1983) 32 WN 262 at 263)
 

Effect of delay in making application  

Necessity of evidence to justify timing of amendment

 

"[34] As noted at the outset, despite the clear challenge in Mr Byrne's evidence, Voyetra did not produce any evidence to explain the lateness of the amendments. Nor did the judge seem to question this lack of evidence, on the basis I think that the tactic employed by Voyetra was not prohibited by the Trade Marks Act. However in my judgment Voyetra's conduct will not do. I have little doubt that the true reason no evidence was produced to justify the approach was because to have done that honestly, what would have been written down would have looked deeply unattractive. Although counsel for Voyetra took care orally to be relatively frank about his clients' motives, the story has never been explained properly or fully. The fact that Voyetra accept in counsel's submissions that their objective in not telling ABP Tech about the amendment until they did, was to avoid tipping off ABP Tech to bring a revocation action, is no excuse.
[35] As counsel for ABP Tech noted, by not putting in evidence on this issue, the position has been unclear and has developed over time. Voyetra have been able to advance arguments about timing which would have been scotched had they produced proper evidence when they should have. The shift in position in relation to when the s11(1B) defence could have been pleaded is one example of the tactical advantage secured by Voyetra by this approach.
...

[37] In paragraph 108 of the judgment, albeit in a slightly different context concerning the relationship between the s11(1B) amendment and the counterclaim, the judge stated that he was satisfied that the defendants proposed the amendments in good faith. In the circumstances as they were, without evidence in the form of a witness statement, at least from the solicitors, addressing the points I have described, that conclusion was not open.

[38] Even without paragraph 4 of the Defence, the question of what justification if any Voyetra were advancing for the timing of the amendments was a question which required an answer, and none was given. Its absence ought to have been fatal to this application." (ABP Technology Limited v. Voyetra Turtle Beach Incorporated [2022] EWCA Civ 594, Birss LJ)
 

Necessity of evidence to justify timing of amendment

Timing of application deliberately calculated to prejudice other party: not permitted

 

"[33] The real issue in this case is that the lateness of the amendment manifestly deprived the other party of a defence which they would have had if the point had been raised when it could have been. Therefore a justification was called for.

...

[39] Voyetra's approach seems to have been that because the very purpose of the lateness was to cause the prejudice to ABP Tech, no justification was necessary. That is wrong. The right conclusion on the material before the court was that the lateness of the application to amend had been deliberately calculated to cause prejudice to the other party and no good reason had been provided for that lateness."  (ABP Technology Limited v. Voyetra Turtle Beach Incorporated [2022] EWCA Civ 594, Birss LJ)

Timing of application deliberately calculated to prejudice other party: not permitted

Late but hearing date not imperilled 

 

For more on the general approach to lateness see next section.

"[33] Clearly, as no hearing date has been lost, the present case cannot be described as “very late” in the sense described by Carr J. However, in my judgment, the delay cannot be described as anything other than very significant and serious. The application was made on 17 August 2020 over 30 months after the Company filed its Notice of Appeal and more than a year after it had first amended its Grounds of Appeal. As such, I find myself in a similar position to Judge Mosedale in Asiana, who said at [27], albeit that in Asiana there was an even greater delay than in the present case:

“… while raising a new ground of appeal now is not ‘very late’ in the sense of jeopardising a hearing date, it is extremely late in all other senses as the appeal has been running many years …”

[34] Like the appellant in Asiana which, as Judge Mosedale noted at [27] in that case, the Company has had “many opportunities” to raise the issue of best judgment at an earlier stage of the proceedings but, despite the valiant efforts of Mr McNall to persuade me otherwise, did not do so as is clear from the observation of Judge Poole when considering the application by HMRC to strike out the Company’s “Amended and Supplemental Grounds of Appeal” in August 2019 (see paragraph 11, above)." (GB Fleet Hire Limited v. HMRC [2020] UKFTT 365 (TC), Judge Brooks)

Mere lateness not the issue

"[30] When one appreciates that in fact Voyetra could have pleaded this point in January and with no amendment at all, its lateness is even more stark. Nevertheless it is important not to focus too much on labels. Mere lateness is unlikely to matter. The utility in characterising an amendment as late comes from focussing attention on any prejudice caused by the timing, and the need for an explanation. That is what mattered in the present case." (ABP Technology Limited v. Voyetra Turtle Beach Incorporated [2022] EWCA Civ 594, Birss LJ)

The spectrum of lateness

"[32] In that succinct passage the judge clearly distinguished between the "very late" amendment cases such as Swain-Mason where the risk to a trial date may mean that the lateness of the application to amend will of itself cause the balance to be heavily loaded against the grant of permission, and "late" amendments in which the consequence of the large scale reformulation of the Particulars of Claim, after the completion of Defences and Part 18 exchanges, will risk undermining work already done in response to the original Particulars of Claim, and causing a duplication of cost and effort. It is evident, for example from paragraphs 60 and 61, and elsewhere in the judgment, that it was this aspect of lateness, namely the consequence that, if permitted, the amendments would cause existing work to be wasted and substantial further work and expense incurred, that weighed in the judge's mind.
[33] I consider that the judge was entitled to approach the relevance of lateness in this way. Lateness is not an absolute but a relative concept. As Mr. Randall put it, a tightly focussed, properly explained and fully particularised short amendment in August may not be too late, whereas a lengthy, ill-defined, unfocussed and unexplained amendment proffered in the previous March may be too late. It all depends upon a careful review of the nature of the proposed amendment, the quality of the explanation for its timing, and a fair appreciation of its consequences in terms of work wasted and consequential work to be done. A fair reading of the judgment as a whole shows that this is how the judge took lateness into account. When dealing with specific matters sought to be introduced he never said merely that it was "too late" but rather that the manner of pleading it, or the lack of satisfactory explanation for it not having been pleaded earlier meant that it was being introduced at too late a stage: see for example paragraphs 83, 118 and 124 of the judgment." (Hague Plant Ltd v Hague [2014] EWCA Civ 1609, Briggs LJ)

"[19]  In summary, therefore, I consider that the right approach to amendments is as follows:
(a)  The lateness by which an amendment is produced is a relative concept ( Hague Plant ). An amendment is late if it could have been advanced earlier, or involves the duplication of cost and effort, or if it requires the resisting party to revisit any of the significant steps in the litigation (such as disclosure or the provision of witness statements and expert's reports) which have been completed by the time of the amendment.
(b)  An amendment can be regarded as ‘very late’ if permission to amend threatens the trial date ( Swain-Mason ), even if the application is made some months before the trial is due to start. Parties have a legitimate expectation that trial dates will be met and not adjourned without good reason ( Brown ).
(c)  The history of the amendment, together with an explanation for its lateness, is a matter for the amending party and is an important factor in the necessary balancing exercise ( Brown ; Wani ). In essence, there must be a good reason for the delay ( Brown ).
(d)  The particularity and/or clarity of the proposed amendment then has to be considered, because different considerations may well apply to amendments which are not tightly-drawn or focused ( Swain Mason ; Hague Plant ; Wani ).
(e)  The prejudice to the resisting parties if the amendments are allowed will incorporate, at one end of the spectrum, the simple fact of being ‘mucked around’ ( Worldwide ), to the disruption of and additional pressure on their lawyers in the run-up to trial ( Bourke ), and the duplication of cost and effort ( Hague Plant ) at the other. If allowing the amendments would necessitate the adjournment of the trial, that may be an overwhelming reason to refuse the amendments ( Swain Mason ).
(f)  Prejudice to the amending party if the amendments are not allowed will, obviously, include its inability to advance its amended case, but that is just one factor to be considered ( Swain-Mason ). Moreover, if that prejudice has come about by the amending party's own conduct, then it is a much less important element of the balancing exercise ( Archlane )." (CIP Properties (AIPT) Limited v Galliford Try Infrastructure Limited [2015] EWHC 1345 (TCC), Coulson J)

Amendments after disclosure and evidence are late

"[11] Whilst I accept that lateness is a "relative concept" ( CIP Properties v Galliford Try [2015] EWHC 1345 (TCC) at [19]) in my view this is not a case of a late amendment. In this particular case disclosure has not yet taken place and the witness evidence, as far as I am aware, other than in relation to the specific application, has not been prepared. Accordingly this is not a case where the amendments (if permitted) would cause significant steps in the proceedings to have to be revisited." (Re Terre Neuve Sarl [2020] 7 WLUK 73, Moulder J)

"[12] On 9 June 2021, after the parties had filed and served their lists of documents and were waiting for further directions from the Tribunal regarding the exchange of witness evidence, IPS made the Application [to amend]...

...

[23] Clearly, as no hearing date has been lost, it is accepted that the present case cannot be described as “very late” in the sense described by Carr J. However, in my judgment, the delay, for which there is no adequate explanation, cannot be described as anything other than significant and serious.

[24] The Application was made on 9 June 2020, some eight months after IPS had been notified by Accountax that it no longer considered the appeal “to be viable”, ten months after receiving the statement of case and more than a year after IPS had further particularised its grounds of appeal..." (IPS Umbrella Limited v. HMRC [2022] UKFTT 81 (TC), Judge Brooks)

Fundamental changes at late stage generally not just

 

"[37] Additionally, HMRC would clearly be prejudiced if the application to re-amend was allowed as this would effectively lead to the appeal being re-commenced or, as Mr McNall put it, given a “hard reset”. As such HMRC will need to provide a new statement of case and a further witness statement from Mr Mills, who has now retired from HMRC, to answer the new case the Company seeks to advance by re-amending its grounds of appeal." (GB Fleet Hire Limited v. HMRC [2020] UKFTT 365 (TC), Judge Brooks)

"[60] For the above reasons, my view is that if I permit the grounds of appeal to be amended, the litigation will not be conducted proportionately and costs would not be an adequate remedy.  I understand how significant this assessment is to the appellant but it has been professionally represented throughout and has had so many opportunities to raise this issue.  Raising it for the first time in 2018 is, in my mind, too late.  The balance is against the new ground of appeal being raised now and I refuse permission for it to do so." (Asiana Limited v HMRC [2019] UKFTT 267 (TC), Judge Mosedale)

Financial impact not sufficient to override lateness and extensiveness of changes

[38] I accept that, given the sums involved (approximately £1.7m), the Company would suffer hardship if it lost the appeal for procedural reasons. But, as the Upper Tribunal (Mann J and Judge Jonathan Richards) recognised in HMRC v Katib [2019] STC 2106 at [60] in allowing HMRC’s appeal against the conclusion of the First-tier Tribunal (“FTT”) to allow Mr Katib to appeal out of time as the financial consequences of him not being able to appeal were very serious as his means were limited such that he would lose his home, saying, at [60]:

“We have considered this factor anxiously for ourselves. However, again, when properly analysed, we do not think that this factor is as weighty as the FTT said it was.  The core point is that (on the evidence available to the FTT) Mr Katib would suffer hardship if he (in effect) lost the appeal for procedural reasons.  However, that again is a common feature which could be propounded by large numbers of appellants, and in the circumstances we do not give it sufficient weight to overcome the difficulties posed by the fact that the delays were very significant, and there was no good reason for them.”

[39] Therefore, having regard to all the circumstances of the case, particularly the inadequate explanation for the delay and the prejudice to HMRC, I have come to the conclusion that the application to re-amend the grounds of appeal should not be allowed." (GB Fleet Hire Limited v. HMRC [2020] UKFTT 365 (TC), Judge Brooks)

Fundamental change at late stage which contradicts contemporaneous documents not permitted

"[25] Not only is the Application late but it is also contrary to the contemporaneous documentation, the Statement of Main Terms and Conditions of Employment (see paragraph 9, above) and a complete volte face from the case that IPS originally sought to advance. Although the interpretation and effect of that document is a matter for the Tribunal, as Carr J observed at [36] in Quah this might be enough in itself for the Application to be rejected.

...

[27]...Adopting Judge Mosedale’s comments [in Asiana] to the present case, it would clearly be unfair if any alleged errors of IPS’s former representative were to be visited on HMRC. HMRC would also be prejudiced if the Application was allowed as this would effectively lead to the re-commencement of the appeal with all that it would entail including the need for the provision of a new statement of case." (IPS Umbrella Limited v. HMRC [2022] UKFTT 81 (TC), Judge Brooks)

Late but hearing date not imperilled 

- Argument based on illegality 3 months after statement of case refused

 

"[28] As such although no hearing date has been lost, so the present case cannot be described as “very late” as described by Carr J in Quah, given that the amendment could have been advanced earlier and lead to the appellant revisiting its evidence and having to provide additional witness statements, it is clearly late, in the sense envisaged by Coulson J in CIP Properties  with the result that the appeal cannot be listed within the hearing window stated in the Case Management Directions.

...

[31] In relation to prejudice, as with the application itself, as Carr J observed in Quah, it is necessary to strike a balance between injustice to the appellant and other litigants if the amendment is allowed and injustice to HMRC if the application is refused. But, as Coulson J observed in CIP Properties prejudice to HMRC is just one factor to be considered and will be a “much less important element of the balancing exercise” where it has come about as a result, as it has in this case, of its failure to obtain advice in relation to the illegality issue sooner.

Conclusion

[32] Having carefully considered the application, I have come to the conclusion that, on balance and for the reasons above, particularly its timing and resulting prejudice to the appellant the application must be dismissed." (The CBD Flower Shop Limited v. HMRC [2023] UKFTT 107 (TC), Judge Brooks)

- Argument based on illegality 3 months after statement of case refused

- Attempt to challenge fraud allegation that had previously appeared to be accepted refused

 

"[28] C4C has never previously suggested to HMRC or to the Tribunal that no fraud was involved and that the input tax should therefore have been allowed.  In particular, this formed no part of the review report prepared by SKS on behalf of C4C.  If C4C or Mr Bassey genuinely believed that the transactions in question were not connected with the fraudulent evasion of VAT, it is inconceivable that this would not have been mentioned as part of the appeal against the penalties and the subsequent review process.

...

[30]  C4C’s original grounds of appeal to the Tribunal in my view also indicate that C4C accepted that the transactions were connected with fraud.  As Mr Millington has pointed out, one of C4C’s arguments as to why it should have been given a bigger reduction in the amount of the penalties is that HMRC had conceded that C4C accepted that there was a deliberate defaulter. 

...

[32] It is also apparent from the report put forward in respect of the review by HMRC and the grounds of appeal put forward to the Tribunal that, at that stage, C4C accepted the categorisation of the inaccuracies as being deliberate. This is clear from the argument that the penalty should be reduced to the minimum 35% applicable to deliberate inaccuracies and not the minimum 15% applicable to careless inaccuracies.

[33] In the light of this evidence, it is in my view fanciful to suggest that any oral evidence which could now be put forward by Mr Bassey could tip the balance in favour of there being some innocent explanation for the transactions which took place and the way in which VAT was accounted for.  The position might be different if there had previously been any hint that C4C did not accept HMRC’s denial of the input tax, but the evidence shows that this is simply not the case.

...

[38] Given that there is no realistic prospect of success, that the application to amend is late and there is no good reason why the new grounds were not raised at an earlier stage, it would not be in accordance with the overriding objective to require both HMRC and the Tribunal to expend resources in dealing with the proposed new grounds of appeal including the additional evidence which would be required and the corresponding increase in the length of the hearing which would result from this." (C4C Investments Limited v. HMRC [2022] UKFTT 367 (TC), Judge Vos)

- Attempt to challenge fraud allegation that had previously appeared to be accepted refused

- Obvious legal point that was likely to arise during the proceedings 

 

"[70]...HMRC’s case, as set out in its amended statement of case, was that ISL supplied intermediary services to the insurers. Approximately one month before the hearing, HMRC applied to re-amend their statement of case to contend in the alternative that ISL supplied intermediary services to the policyholders or to both the insurers and the policyholders. ISL opposed HMRC’s application.

...

[72] In view of the conclusion that I have reached below, it is not necessary for me to decide whether to permit HMRC to amend their Statement of Case. Had it been necessary to do so, I would have allowed HMRC’s application as the new point was an obvious one which was likely to arise in the proceedings. It turned on an analysis of the contracts in the case and, in my opinion, did not require any new evidence. Further, ISL and its representatives had had plenty of time to consider and were well able to respond to the point so, in my view, it would not be unfair to permit the amendment in the circumstances." (WTGIL Limited v. HMRC [2022] UKFTT 131 (TC), Judge Sinfield)

- Obvious legal point that was likely to arise during the proceedings 

Lateness: new grounds raised in skeleton/at hearing generally too late

 

“In this situation of a late amendment the question of fairness has to be considered. As this court said in Swain-Mason, it is necessary to strike a balance between the parties. Any amendment would result in the appellant having to take steps to meet the new case. The case could not be resolved at the trial, which had taken place and which had occupied many days. The judge was satisfied that the litigation brought substantial strain on the parties and that it had been very costly. He took those considerations into account in refusing the opportunity to adduce further evidence or cross-examination or recall witnesses for cross-examination. These considerations were, however, considerations which were equally relevant to the question whether there should be permission to amend at all. In my judgment, accepting as I do the judge's assessment of these matters, the judge should have given them the same weight in relation to the question of permission to amend in the first place. Added to that fact is the fact that the amendment was very late and without satisfactory explanation. In those circumstances, I do not consider that the judge's exercise of his discretion to permit the amendment took into account all the relevant considerations or that it can stand. I would, accordingly, set it aside. I bear in mind that this means that the case of undue influence will not be heard, but the answer it seems to me to that point is that it was not a defence which the respondent intended to run in the first place. It was, as I say, a tactical decision to run it in the light of the judge's indications only.” (Hayer v. Hayer [2012] EWCA Civ 257, §46, Arden LJ)

“On the last day of the five day hearing, the Respondent raised an argument based on estoppel by convention. Ms Sloane strongly objected to this on the basis that it was an unpleaded argument. Ms Mitrophanous admitted that the Respondent’s Statement of Case did not refer to estoppel but said that the Statement of Case referred to the standard agreement being changed by “variation or otherwise”.  In fact, it only referred to “variation or rescission and replacement with a new contract”. I allowed Ms Mitrophanous to make her point but on reflection, I do not consider that it was appropriate for her to do so. The argument had not been pleaded; it would be difficult to say it was included in “variation or otherwise” and it certainly was not included in “variation and rescission or replacement with a new contract”. Ms Sloane very properly objected to the raising of the point and I have decided to exclude consideration of it. I did not, and do not, give leave to amend the Respondent’s Statement of Case. I do not consider the question of estoppel by convention further.” (Hotels4u.com Ltd v. HMRC [2016] UKFTT 718 (TC), §233, Judge McKeever).

 

“Fundamentally, it seems to me, the reason why an amendment to the grounds of appeal (or HMRC’s grounds of defence) may not be permitted after the time pleading has closed is that litigation by ambush is unfair.  So parties ought to set out their case in sufficient time to enable the other side to prepare to meet it:  to this end, the Rules effectively require both parties’ grounds (notice of appeal and statement of case) to be served before the evidence and long before the hearing.  So while there are some cases (such as some ‘basic’ penalty appeals) where the issues are so straightforward that it may in some cases be appropriate to permit the appellant or HMRC to raise a new ground of appeal/defence during the hearing, in cases raising more complex issues, it will rarely be appropriate to do so.  So while the Tribunal should avoid unnecessary formality, in such cases requiring parties to seek the Tribunal’s permission before they introduce a new ground of appeal/defence is a necessary formality.” (Chung v. HMRC [2016] UKFTT 215 (TC), §10).

 

“There is a heavy burden on the Respondents to show why it is fair and just for the application to be granted. The Respondents were seeking to put forward a significant amendment introducing issues in relation to an entirely different product. There was no good reason why the application was made so late. Nor was there any real explanation as to why previous opportunities to amend the Respondents’ case were not taken. It is no answer in such circumstances to say that there would be no prejudice to the Appellant, that the Appellant could be given an opportunity to reply to the new case or that any prejudice could be compensated for in costs.” (Moreton Alarm Services (MAS) Ltd v. HMRC [2016] UKFTT 192 (TC), §56).

 

“I am clear that, as a matter of judicial discretion, it should not be admitted. It is too late, and there has been clear prejudice to HMRC in being unable to marshall the necessary evidence in relation to this ground. That evidence would require to be given by individuals who made the relevant decision, and there would need to be evidence of all the available information with a view to determining what was relevant and what was irrelevant in the context of a Wednesbury-type challenge.” (Barrett v. HMRC [2015] UKFTT 329 (TC), Annex 1, §11)

 

“While we accept that HMRC are right to object to new grounds of appeal being sprung on them at the last moment, this was a case where there was a gap between the close of evidence, putting in closing submissions and the final hearing. HMRC did have time to address the new ground, although we accept that the new ground of appeal was not very clearly put by [the taxpayer]. On balance, we decided to allow the amendment.” (Hutchings v. HMRC [2015] UKFTT 9 (TC), §162).

 

Requirement for fair notice

"[10] Although there was perhaps a slight difference in emphasis, there was no real difference between the parties as to the principles which should be applied by the Tribunal in determining whether to give permission for an amendment to the grounds of appeal.  This includes the need for each party to be given fair warning of the case it will be required to meet (see Worldpay (UK) Limited v HMRC [2019] UKFTT 235 (TC) at [8-11]) and the need for the Tribunal to exercise its discretion in accordance with the overriding objective in Rule 2 of the Tribunal Rules in the light of all the relevant circumstances." (Alab Environmental Services Limited v. HMRC [2022] UKFTT 109 (TC), Judge Robin Vos)

Application necessary even for points not admitted

“[15] Moreover, it is implicit in these principles that a party must state its grounds of appeal (or defence).  I think Mr White did accept that, although he reverted on occasions to stating that the appellant had never admitted that it was correctly charged to made-wine duty.  But the law on pleadings is clear: the appellant must state what are its grounds of appeal. If it does not, it cannot rely on those grounds. And if it wants to rely on a new grounds of appeal, as it does here, it must apply for permission to amend. And Quah and Denley set out the principles the Tribunal will consider in determining such an application.” (Asiana Limited v HMRC [2019] UKFTT 267 (TC), Judge Mosedale)

Approach

 

“a) whether to allow an amendment is a matter for the discretion of the court. In exercising that discretion, the overriding objective is of the greatest importance. Applications always involve the court striking a balance between injustice to the applicant if the amendment is refused, and injustice to the opposing party and other litigants in general, if the amendment is permitted;
b) where a very late application to amend is made the correct approach is not that the amendments ought, in general, to be allowed so that the real dispute between the parties can be adjudicated upon. Rather, a heavy burden lies on a party seeking a very late amendment to show the strength of the new case and why justice to him, his opponent and other court users requires him to be able to pursue it. The risk to a trial date may mean that the lateness of the application to amend will of itself cause the balance to be loaded heavily against the grant of permission;
c) a very late amendment is one made when the trial date has been fixed and where permitting the amendments would cause the trial date to be lost. Parties and the court have a legitimate expectation that trial fixtures will be kept;
d) lateness is not an absolute, but a relative concept. It depends on a review of the nature of the proposed amendment, the quality of the explanation for its timing, and a fair appreciation of the consequences in terms of work wasted and consequential work to be done;
e) gone are the days when it was sufficient for the amending party to argue that no prejudice had been suffered, save as to costs. In the modern era it is more readily recognised that the payment of costs may not be adequate compensation;
f) it is incumbent on a party seeking the indulgence of the court to be allowed to raise a late claim to provide a good explanation for the delay;
g) a much stricter view is taken nowadays of non-compliance with the Civil Procedure Rules and directions of the Court. The achievement of justice means something different now. Parties can no longer expect indulgence if they fail to comply with their procedural obligations because those obligations not only serve the purpose of ensuring that they conduct the litigation proportionately in order to ensure their own costs are kept within proportionate bounds but also the wider public interest of ensuring that other litigants can obtain justice efficiently and proportionately, and that the courts enable them to do so.” (Quah v. Goldman Sachs International [2015] EWHC 759 (Comm), §38, Carr J, quoted and applied in Goldenstate Ltd v. HMRC [2017] UKFTT 568 (TC), §20, Judge Cannan).

"[13] We do therefore consider that the principles set out by Carr J in Quah Su-Ling are a useful guide to the approach which should be taken.  In particular, we accept, as submitted by Mr Puzey, that it is clear from cases such as BPP Holdings Limited v HMRC [2017] UKSC 55 at [26] that, even in the tribunals, there is a greater focus on litigation being conducted efficiently and at proportionate cost and enforcing compliance with rules, practice directions and orders." (Alab Environmental Services Limited v. HMRC [2022] UKFTT 109 (TC), Judge Robin Vos)

"[13] I was referred by both parties to the Upper Tribunal’s decision in Denley [2017] UKUT 340 (TCC) for the test on when the FTT should admit further grounds of appeal.   In that case, the Upper Tribunal basically applied the same principles as considered under the CPR in Quah v  Goldman Sachs International [2015] EWHC 759 (Comm) at [38] which were (in summary):

(a) The Tribunal should consider the overriding objective and strike a balance of fairness between both parties;

(b) and (c) A ‘very late’ application is one which would cause the trial date to be lost and carries a heavy burden of justification;

(d) Lateness is not a measure of time so much as a measure  of (i) the reason for the lateness (ii) the waste of work to date and (iii) the consequences of allowing the amendment;

(e) the Tribunal must recognise that costs may not be an adequate compensation for a late amendment;

(f) the applicant must provide a good explanation for the delay;

(g) the Tribunal must respect the need for litigation to be conducted proportionately." (Asiana Limited v HMRC [2019] UKFTT 267 (TC), Judge Mosedale)

Consider merits if very weak or very strong

"These principles do not expressly require the Tribunal to consider the merits of the new grounds of appeal but it is implicit:  while the Tribunal must not conduct a mini-trial in an interim hearing, nevertheless, if, without doing so, it is apparent that the proposed new grounds are very weak, the balance of fairness between the parties is unlikely to favour them being admitted; if it is apparent that the grounds are very strong, however, they may tilt the balance in favour of the appellant.  If the strength of the grounds cannot be ascertained without a mini-trial or it is apparent that it is somewhere in between these two positions, the strength of the grounds is unlikely to affect the outcome of the application either way." (Asiana Limited v HMRC [2019] UKFTT 267 (TC), Judge Mosedale)

Fact that lateness is due to representative of limited relevance

[30] The appellant’s case that it was not to be blamed for its representative’s errors rested on the CPR and the Upper Tribunal decision in O’Flaherty [2013] UKUT 161 (TC) where the Upper Tribunal cited Sayers v Clarke Walker [2002] I WLR 3095 which pointed out that the CPR required the court to consider whether the failure to comply was caused by the party or its legal representative and that therefore it was a

‘relevant factor that the failure to comply was caused by the party’s legal representative and not by the party himself.

[31] I am of course bound by what the Upper Tribunal said.  Nevertheless, I would point out that where the fault lay with the representative it was only said to be a ‘relevant’ factor and not that it was necessarily an exonerating factor.  It is difficult to see how it could be an exonerating factor save in exceptional circumstances:  a party is responsible for how it conducts litigation; that includes responsibility for the actions of its representative whom it has chosen to appoint.  Moreover, while the non-compliant party may well feel aggrieved if it is let down by its representative, it by no means follows that the errors of one party’s representative should be visited upon the other party who had no choice over who its opponent appointed as representative and certainly has no rights to sue his opponent’s representative in contract or negligence.  The Tribunal is called upon to do justice between the parties and I struggle to see how it can be just to visit the errors of one party’s representative on the other party, which is in practice may be the result if a party is forgiven its non-compliance arising from its own representative’s failures." (Asiana Limited v HMRC [2019] UKFTT 267 (TC), Judge Mosedale)

FTT should generally dismiss application summarily and proceed with appeal

 

“What happened was that the Respondents made a very late application to amend their case and adduce the Supplementary Report. If we had granted the application then the hearing date would inevitably have been lost. Indeed the process of hearing the application left insufficient time for the hearing to proceed. With the benefit of hindsight we probably ought to have refused the application summarily at the hearing and proceeded with the appeal.” (Moreton Alarm Services (MAS) Ltd v. HMRC [2016] UKFTT 192 (TC), §55).
 

Lateness: new grounds raised in skeleton/at hearing generally too late

- New point requiring factual investigation not permitted, even though raised following other side's new point

 

"[52] Secondly, looking at the nature of the new ground that HMRC wish to rely on, it is much more significant in terms of the consequences than the new ground of appeal put forward by ESL. It would result in a new factual inquiry as to the basis of the agreement or the bargain between ESL and its employees which would, in my view, require a consideration of what evidence would be needed in order to reach a fair and just determination in relation to that particular issue.

[53] The result is that I agree with Mr Goodfellow that if permission were granted it would be likely to require a postponement of this hearing. It would be necessary for HMRC to set out in a reasonable level of detail, in the same way as it would in its statement of case, what it is relying on in support of this argument. ESL would need to consider that and would need to decide what, if any, additional evidence should be produced in order to deal with the argument which was being put forward. If the application were granted but there were no postponement, that would, in my view, lead to procedural unfairness as far as the ESL is concerned." (Exchequer Solutions Ltd v. HMRC [2022] UKFTT 181 (TC), Judge Vos)

- New point requiring factual investigation not permitted, even though raised following other side's new point

- Pure point of law raised late without good reason permitted

 

"[48] In summary, although I have found that there are no good reasons for the lateness of the application, and even bearing in mind that there is these days a stricter approach to compliance with rules and directions and time limits, given that I consider this to be a pure point of law which is arguable, that it has no effect on the evidence that will be required, that as a result of that there will be no disruption to the hearing timetable, that there is no significant prejudice to HMRC or other court users and also bearing in mind the Tribunal’s role in determining the correct amount of tax, it would, in my view, be in line with the overriding objective of dealing with cases fairly and justly to allow the application." (Exchequer Solutions Ltd v. HMRC [2022] UKFTT 181 (TC), Judge Vos)

- Pure point of law raised late without good reason permitted

- Late allegations of fraud covered by existing evidence permitted

 

"[121] ...

(5)          we were, however, sympathetic to [HMRC's] application to amend the SOC despite the late stage at which the application had been made.  We considered this to be a finely-balanced point in relation to which neither side emerged with much credit;

(6)          we agreed with [the taxpayer] that, at the point when the relevant witness statement was filed in July 2019, or very soon after that date, the Respondents ought to have known that the SOC was defective.  Accordingly, the Respondents ought to have applied to amend the SOC well before the hearing.  They were fully aware of the litigation rules and had in fact applied the rules pertaining to pleadings of fraud in dealing with the allegations of fraud to the goods which were the subject of the proceedings;

(7)          on the other hand, we agreed with [HMRC] that the Appellant had been on notice of the defects in the SOC from the same date and had deliberately waited until the hearing before raising its objections to the evidence in question.  Moreover, this was not a case where the material to which the Appellant had objected was a small or relatively insignificant part of the evidence upon which the Respondents were seeking to rely.  For instance, if the evidence had been set out in a limited number of paragraphs in the witness statement of one of the Respondents’ less important witnesses, then it might very easily have been overlooked by the Appellant.  In that instance, prior to seeing the Respondents’ skeleton argument, the Appellant might reasonably have reached the view that the relevant paragraphs were merely surplus and did not form part of the Respondents’ case.  However, in this case, the evidence in question was set out at considerable length in a witness statement for the Respondents’ chief witness and comprised a significant part of that witness statement.  Following its receipt of the witness statement, the Appellant could hardly have reached the view that the evidence in question was merely surplus and was not intended to be a significant part of the Respondents’ overall case. And, even if the Appellant had been in any doubt on that score, it could have sought clarification on the point at any point in the intervening 3 years.  Instead, it had deliberately chosen to wait until the day before the hearing to make its application to exclude the evidence;

(8)          we recognised that allowing the Respondents to amend the SOC at this late stage might give rise to the need to adjourn the hearing of the substantive appeal.  [The taxpayer] had said to us that the Appellant might well require additional time to deal with the implications of the additional evidence and [HMRC] had indicated to us that the Respondents would not oppose any application by the Appellant to adjourn the hearing on that basis. We therefore concluded that, in the event that we were to allow the SOC to be amended, it would be in accordance with the overriding objective to uphold any application for adjournment which might be sought by the Appellant for that reason;

(9)           although we recognised that any such adjournment would have costs implications for the parties, we considered that allowing the application to amend the SOC would not mean that any costs which had previously been incurred by either party would be wasted.  It would simply be the case that the additional evidence would need to be addressed by the Appellant in making its submissions;

(10)      taking all of the above into account, we concluded that, on balance, it would be fair and just to permit the Respondents to amend the SOC at this late stage;" (Vortex Enterprises Limited v. HMRC [2023] UKFTT 211 (TC), Judge Beare)
 

- Late allegations of fraud covered by existing evidence permitted

- Late reliance on a "realistic view of the facts" not permitted

"[129] We should note that Ms Choudhury suggested that we should look at the reality of the situation (referring to the principle that legislation should be construed purposively based on a realistic view of the facts as explained by the Court of Final Appeal of Hong Kong in Collector of Stamp Revenue v Arrowtown Assets Limited 6 ITLR 454 at [35].  However, this sort of argument was never part of HMRC's case prior to Ms Choudhury's oral submissions and we accept Mr Firth's submission that HMRC should not be allowed to introduce such an argument at such a late stage as it would require a rather different focus on the facts which Mainpay has had no opportunity to consider." (Mainpay Limited v. HMRC [2023] UKFTT 16 (TC), Judge Vos)

- Late reliance on a "realistic view of the facts" not permitted

Relevant factors

Relevant factors

- Is the complaint substantive or advocacy? 

 

“In any event, we did not understand that these arguments were put to us in such a way as to seek to persuade us to pay no heed to the other party's argument at which this line of attack was directed, as opposed to a (wholly proper) form of advocacy designed to weaken those arguments.” (Health & Safety Executive v. Cadman [2004] IRLR 29, §121).

- Is the complaint substantive or advocacy? 

To avoid a party gaining an unjustified windfall 

 

“One thing, however, is missing from the judge's exercise of discretion. It is what the overall effect of refusing the amendments might well be. Servier in Canada will doubtless be able to seek financial compensation for all the manufacture that did happen in Canada, including exports, but it is by no means clear that the Canadian proceedings would result in any return of money handed over to Apotex as a result of the order in this country, because that money is in respect of manufacture which did not happen because of this interlocutory injunction. Mr Watson fairly accepted that there was a very real prospect that if this amendment is not allowed, his clients will get the benefit of the sums awarded by Norris J as a total windfall. That to my mind is a very serious factor in the exercise of discretion and, although the judge mentions the argument, he does not appear to take it into account at all when exercising his discretion as to whether or not to allow the amendment. For English proceedings to give a party £17.5 million which might well be wholly unjustified is a very serious matter.” (Les Laboratoires Servier v. Apotex Inc [2010] EWCA Civ 279, §7).

- To avoid a party gaining an unjustified windfall 

Where the point is important and can be dealt with justly

 

“It is unfortunate that the issue surrounding the legality of the conditions, which was so fundamental to the case, was not really recognised until the hearing was about to commence and unfortunate that it was not then clearly enunciated.  But this is a tribunal: even though a relevant point is not put in a timely or clearly articulated manner, we need in so far as possible consistent with justice to consider it.  While the Tribunal had sympathy with HMRC’s predicament, and while it seemed that the only reason the point of law had not been raised in good time in the Notice of Appeal was that the appellants had only just thought of it, nevertheless the point of law appeared arguable and in view of the importance of the case to the appellants and the need for the Tribunal to administer justice, we ruled that we would consider it subject to (1) the appellant clearly stating its position on the point and (2) HMRC being given the opportunity in post-hearing submissions to respond to it.” (Pierhead Drinks Ltd v. HMRC [2016] UKFTT 286 (TC), §133).

“Once proceedings are afoot, I consider there is strong public interest in the court reaching a correct decision on the applicable law and that weighed in favour of allowing the amendment.  On balance, I permitted the statement of case to be amended to include HMRC’s case on unjust enrichment, but directed that this hearing would be a preliminary hearing to consider in full the appeal on exemption and, as the appellant wanted the issue resolved earlier rather than later, the purely legal point on whether unjust enrichment was relevant when HMRC assessed for repayment of repaid tax.  The hearing then proceeded on the exemption issue and that one legal point on unjust enrichment.” (Ukinbound Ltd v. HMRC [2016] UKFTT 414 (TC), §22).

- Where the point is important and can be dealt with justly

- Party already aware of the point from witness statement served

 

"[121(7)] (7)          on the other hand, we agreed with Mr Hayhurst that the Appellant had been on notice of the defects in the SOC from the same date and had deliberately waited until the hearing before raising its objections to the evidence in question.  Moreover, this was not a case where the material to which the Appellant had objected was a small or relatively insignificant part of the evidence upon which the Respondents were seeking to rely.  For instance, if the evidence had been set out in a limited number of paragraphs in the witness statement of one of the Respondents’ less important witnesses, then it might very easily have been overlooked by the Appellant.  In that instance, prior to seeing the Respondents’ skeleton argument, the Appellant might reasonably have reached the view that the relevant paragraphs were merely surplus and did not form part of the Respondents’ case.  However, in this case, the evidence in question was set out at considerable length in a witness statement for the Respondents’ chief witness and comprised a significant part of that witness statement.  Following its receipt of the witness statement, the Appellant could hardly have reached the view that the evidence in question was merely surplus and was not intended to be a significant part of the Respondents’ overall case. And, even if the Appellant had been in any doubt on that score, it could have sought clarification on the point at any point in the intervening 3 years.  Instead, it had deliberately chosen to wait until the day before the hearing to make its application to exclude the evidence;" (Vortex Enterprises Limited v. HMRC [2023] UKFTT 211 (TC), Judge Beare)

- Party already aware of the point from witness statement served

New ground not covered by existing evidence 

 

“[The new ground of review] was first raised in recognisable terms in the week prior to the hearing in the Claimant's skeleton argument. All of the evidence in the case related to events up to and including the meeting of the Licensing Committee. Those events were the entire thrust of the case put by the Claimant until very late in the day. The new argument (as such it was) was set out in the skeleton argument lodged for the purposes of the final hearing. The issue was raised too late to allow the Defendant properly to meet it.” (007 Taxis Stratford Ltd v. Stratford-on-Avon District Council [2010] EWHC 1344 (Admin), §3).

 

​"[284] I have considered the submissions carefully in the light of Quah and I have also considered the importance of the overriding objective. In view of the extreme lateness of the application-two thirds of the way through the hearing, the lack of a good reason for the lateness, the uncertainty about the actual value of the aircraft which would require a further hearing or submissions and further evidence to resolve, I have decided not to allow the Appellant to argue this new ground of appeal, challenging the amount of the assessment on the basis of the value of the aircraft." (Caerdav Limited v. HMRC [2022] UKFTT 105 (TC), Judge McKeever)

"[17] In these circumstances, there would in our view be significant prejudice to HMRC if permission were granted and the hearing were to proceed as they have had no opportunity to obtain any evidence in relation to the proposed new ground of appeal. 

...

[20] Our conclusion therefore was that if we were to give permission for Alab to rely on the new ground of appeal, the hearing would have to be postponed.  We therefore refused permission to rely on the new ground of appeal given Alab’s wish to proceed with the hearing in any event."(Alab Environmental Services Limited v. HMRC [2022] UKFTT 109 (TC), Judge Robin Vos)

“The Appellant’s submission questioning whether the categorisation letter had been sent was raised in Mr Southern’s skeleton argument only a few days before the hearing. It was raised in circumstances where the Appellant had previously accepted that the letter had been sent by the Tribunal to ABG. Applying the overriding objective, I do not consider that it would be fair and just on the Respondents to expect them to adduce detailed evidence as to the addressing, pre-payment and posting by the Tribunal of the categorisation letter to ABG. If the Appellant was seriously questioning those matters then the Respondent would no doubt have sought more detailed evidence to address them.” (Albion Engineering v. HMRC [2017] UKFTT 560 (TC), §15, Judge Cannan).

 

“The position was that the respondents would be in a position where they would have little if any warning as to the evidence to be led in support of the amended grounds of appeal. Mr Beal fairly said that he was prepared to deal with the legal arguments that arise in connection with the amended grounds of appeal, but the respondents would be prejudiced if he was forced to effectively cross examine “blind”.” (Huitson v. HMRC [2015] UKFTT 448 (TC), §69).

- New ground not covered by existing evidence 

- Inexplicable delay

 

“In any event, and taking into account the background to Mr Huitson’s judicial review claim, we considered that the application to amend was made far too late in the day…In summary, Mr Huitson has been aware of the Article 56 argument since at least November 2010. His then counsel was present at the hearing before the Court of Appeal. Detailed directions were given in this Tribunal following a case management hearing in July 2014. There was no suggestion of any amendment to the grounds of appeal. The parties were notified of the final hearing date on 2 September 2014 after counsel for both parties had given their time estimates for the final hearing.” (Huitson v. HMRC [2015] UKFTT 448 (TC), §§66 - 67).

- Inexplicable delay

- Pedantic and formalistic procedural points not to stand in the way of substantive justice 

 

“I would add that even if the pleading point had been good I think this would be a clear case for allowing the acknowledgement point to be taken on appeal. No procedural injustice which could not be rectified in costs would be caused. To hold that it could not be taken would be to put a pedantic and formalistic procedural point in the way of substantive justice.” (Rehman v. Benfield [2006] EWCA Civ 1392, §44).

- Pedantic and formalistic procedural points not to stand in the way of substantive justice 

New arguments requiring full examination of factual basis 

 

“There was a late attempt by Mr Turner to deploy an argument based on art 3 ECHR. This new argument raised in the skeleton argument served on 11 November 2013 for the first time, has not been properly particularised or supported by evidence, and is objected to by the Defendant. I decline to permit the Claimants at this very late stage to run it absent full examination of the factual basis that underpins it. In any event, given the high threshold for an art 3 claim, and the absence of any supporting evidence, it is not arguable that a failure to grant leave to remain places these Claimants at real risk of destitution, contrary to art 3.” (Hamzeh v. Secretary of State for the Home Department [2013] EWHC 4113 (Admin), §78).

- New arguments requiring full examination of factual basis 

- FTT would have to consider the full factual matrix in any event

 

“We agree that the arguments about whether PGMOL was the contracting party, and whether it was not liable because it did not make the relevant payments, were raised for the first time in Mr Maugham’s skeleton argument. However, they had now been raised and, given the factual matrix that the Tribunal would in any event have to consider, they were not in reality points that could simply be ignored by the Tribunal in determining whether the determinations and decisions were correctly made. In the circumstances the best course available was to ensure that the Tribunal had the appropriate evidence before it.” (Professional Game Match Officials Ltd v. HMRC [2018] UKFTT 528 (TC), §7, Judge Falk).

“[58] HMRC’s Statement of Case indicated that it agreed that there was a direct and immediate link between the advertising and the sofas. In other words it did not espouse the overheads analysis of Mr Thomas’ first alternative. However the overheads argument was raised by his skeleton argument which was served several days before the start of the hearing. We were not minded to refuse to consider the argument in those circumstances. (DFS Furniture Company Ltd v. HMRC [2009] UKFTT 204 (TC), Judge Hellier).

- FTT would have to consider the full factual matrix in any event

- No prejudice

 

“I allowed the Appellant to raise the new arguments on the basis of the Respondent suffering no prejudice and on the Appellant's undertaking that if the case proceeded further beyond my decision on this ground the Appellant would not seek any costs from the Respondent. The reasoning behind that was that the point raised was a test point of some importance to the Appellant, but had marginal significance to the Respondent.” (Blackburn (Inspector of Taxes) v. Keeling [2003] EWHC 754 (Ch), §2).

- No prejudice

Points of jurisdiction must always be considered

 

"[2] However, it has now become clear that under BIIR this court has no jurisdiction to entertain such an appeal. This point was not raised by the respondent mother in her notice of objection to the application for permission to appeal. No doubt, had she done so, the court would have listed it for oral argument before deciding whether or not to give permission. In the event, once it was raised, we were able to arrange a hearing at short notice, in advance of the date set for the substantive appeal. As a point of jurisdiction, it could not be ignored, however inconveniently late in the day it was raised." (re D [2016] UKSC 34)

Points of jurisdiction must always be considered

Adjournment may be granted

“It was inevitable that if we gave permission to amend the grounds of appeal then the hearing would have to be postponed, or at least go part heard. In the light of all the circumstances we did not consider that was consistent with the overriding objective of dealing with cases justly and fairly, even if it could be compensated for in costs. As a matter of discretion therefore we would also have refused the application to amend…[HMRC] suggested that the application to amend was part of a cynical attempt to delay the hearing of the appeal. We are satisfied that was the case.” (Huitson v. HMRC [2015] UKFTT 448 (TC), §§70 - 71).

​​

“HMRC did not respond to the Appellant’s Human Rights Act arguments on the basis that they had not been aware that this would be raised…Having heard both parties the Tribunal concluded that any issues concerning the Human Rights Act were of sufficient significance that both parties should be given the opportunity to consider and present arguments on the application of that legislation to [the taxpayer’s] case and the hearing was adjourned to allow the parties to consider whether they wished to take this opportunity.” (Fessal v. HMRC [2015] UKFTT 80 (TC), §§17…18).

But not if there is no substance in the new points


“On the morning of the hearing, in oral argument, no written skeleton having been provided, Ms Akther shifted her argument fairly substantially. I allowed her to develop it in a little detail and considered whether or not I ought to put the matter back to another date so that the grounds could be amended and a further skeleton arguments exchanged. However, having considered the reply to the new arguments developed by Mr Keller on behalf of the defendant, I am satisfied, as I made clear in the course of argument, that there is no substance in those new points and I shall deal with them now and I have decided that there was no need for an adjournment.” (R (oao Wahidi) v. Secretary of State for the Home Department [2011] EWHC 2897 (Admin), §18).
 

Adjournment may be granted

Raising new points after the hearing

 

Generally not permitted

 

“…HMRC had separately voluntarily provided the Company with some or all of the information requested [and which the FTT had refused to order disclosure of after the hearing]. The Company therefore submitted further written closing submissions (which the Tribunal had not requested) stating that these were relevant in the light of the information it had obtained from HMRC. Those additional closing submissions were not by way of reply to any points that Mr Haley made in his written closing arguments: they sought to expand on allegations of racism that Mr McNicholas had raised both at the hearing and in his own written closing arguments. In the circumstances, we have not considered Mr McNicholas’s additional closing submissions. We refused the Company’s application for disclosure precisely because we did not consider it right that the Company should seek new evidence when the Tribunal had already heard witness evidence from both sides. (Indeed, in the course of discussions as to whether to end the hearing on its third day, Mr McNicholas had specifically stated the request was not motivated by any desire of the Company to seek new evidence). Even though the Company has obtained some new material from HMRC, that material was not in evidence before the Tribunal. We therefore saw no reason to consider additional submissions on it.” (Morrella Ltd v. HMRC [2017] UKFTT 13 (TC), §13).
 

See also: R2: Expanding and restricting arguments on appeal

Raising new points after the hearing
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