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N16: Authorities and precedent
General statement
"[4] In a common law system, where the law is in some areas made, and the law is in virtually all areas developed, by judges, the doctrine of precedent, or as it is sometimes known stare decisis, is fundamental. Decisions on points of law by more senior courts have to be accepted by more junior courts. Otherwise, the law becomes anarchic, and it loses coherence clarity and predictability. Cross and Harris in in their instructive Precedent in English Law 4th ed (1991), p 11, rightly refer to the “highly centralised nature of the hierarchy” of the courts of England and Wales, and the doctrine of precedent is a natural and necessary ingredient, or consequence, of that hierarchy.
[5] The doctrine is, of course, seen in its simplest and most familiar form when applied to the hierarchy of courts. On issues of law, (i) Circuit Judges are bound by decisions of High Court Judges, the Court of Appeal and the Supreme Court, (ii) High Court Judges are bound by decisions of the Court of Appeal and the Supreme Court, and (iii) the Court of Appeal is bound by decisions of the Supreme Court. (The rule that a Circuit Judge is bound by a decision of a High Court Judge is most clear from a “Note” included at the end of the judgment in Howard De Walden Estates Ltd v Aggio [2008] Ch 26)." (Willers v. Joyce (Re: Gubay (deceased) No 2) [2016] UKSC 44)
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- Every judgment must be read in context to identify what it was deciding
"[60] It is important not to lose sight of the basic tenets of common law reasoning that every judgment must be read in context, by reference to what was in issue in the case, and that it is only the ratio of the decision which establishes a precedent and not obiter dicta. All too often advocates treat the analysis of cases as if it were simply an exercise in looking at the language used by judges, forgetting that it is not particular verbal formulations that make the common law but the principles on which the actual decisions in cases are based. As Mark Leeming, a judge of the New South Wales Court of Appeal, has observed in a perceptive note on the Takhar case, Lord Kerr's judgment is an excellent example of how cases should be read, in his careful exposition of how the statements in the two Owens Bank cases did not bear on what was actually in issue in those cases: see M Leeming, “Has the golden age of fraud passed?” (2019) 19 Oxford University Commonwealth Law Journal 298, 302.
[61] In Takhar the claimant was seeking to show that the judgment against her was procured by fraud by relying on evidence obtained after the trial. Thus, there was no issue about whether the evidence in question was “new” or about what constitutes “new” or “fresh” evidence for the purpose of a claim to set aside a judgment for fraud: the evidence was “new” on any view of the matter. The only issue in the appeal was whether there was a requirement to show that the new evidence could not have been discovered with reasonable diligence in time to be deployed in the earlier proceedings (see para 37 above). No question arose as to whether it is or may be an abuse of process to attempt to set aside a judgment for fraud relying solely on information which the claimant had when the judgment was given.
[62] Accordingly, the Supreme Court did not receive argument on nor have to apply their minds to that question, let alone decide it. The judgments must be read in this light..." (Finzi v. Jamaican Redevelopment Foundation Inc [2023] UKPC 29)
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Identify the ratio
“The application of this doctrine requires one to identify the ratio decidendi of the earlier decision, and then determine the extent to which it is applicable to the facts of the present case. At that point one might then have to consider other points relied on by the taxpayers, such as whether it was decided per incuriam or whether there are other legally valid reasons why the ratio should not apply.” (Shiner v. HMRC [2015] UKUT 596 (TCC), §41, Mann J).
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The fact that different arguments were not deployed does not affect the ratio
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"[136] First, although the facts of the Fleming case itself may not have been similar to those in the present case, the facts of Condé Nast were materially similar. This is because there were some payments which had been made in a period (the three years before the new limitation period came into effect on 1 May 1997) when there would still have been time on the facts to bring a claim for restitution of wrongly paid tax even under the new limitation period. That did not prevent the House of Lords reaching the decision which it did, of disapplying the new time limit in respect of all of the claims before it. The ratio of a case is the legal principle which is necessary to explain the outcome of that case on its facts. I cannot see how Mr Baldry's argument can account for the actual outcome on the facts of Condé Nast.
[137] Secondly, the fact that different arguments might have been deployed in an earlier case does not prevent the relevant legal principle from forming part of its ratio. In a slightly different context, because it concerned an earlier decision of this Court rather than an earlier decision of the House of Lords or Supreme Court, Sir John Donaldson MR said of the doctrine of per incuriam:
"I do not understand the doctrine to extend to a case where, if different arguments had been placed before it or if different material had been placed before it, it might have reached a different conclusion."
See Duke v Reliance Systems Ltd [1988] QB 108, at 113 (emphasis in original).
[138] The position appears to be different if a point of law was simply assumed to be correct in an earlier decision (even that of a superior court) without any argument on it: see e.g. FSHC Group Holdings Ltd v GLAS Trust Corpn Ltd [2019] EWCA Civ 1361, [2020] Ch 365, at [136] (Leggatt LJ, giving the judgment of the Court). But Fleming was not such a case: there was argument on the material issue of law. What Mr Baldry's submission really amounts to is that there was a better argument available to HMRC, which it did not advance at that time and which it now does.
[139] In my view, there is an important distinction in principle between a case in which an argument was not advanced on the earlier occasion and a case in which the legal issue was entirely different: see, by way of example, R (Elias) v Secretary of State for Defence [2006] EWCA Civ 1293, [2006] 1 WLR 3213. In that case, there had been an earlier decision of the Court of Appeal in which a challenge to the very same scheme now under challenge had been rejected: see R (Association of British Civilian Internees: Far East Region) v Secretary of State for Defence [2003] EWCA Civ 473, [2003] QB 1397. That did not prevent the Court of Appeal from reconsidering the matter (and indeed deciding it in favour of the claimant) because there was an entirely new legal issue and a different ground of challenge advanced in Elias, which had not been raised in the earlier case. In the earlier case, the grounds of challenge were the conventional public law grounds of irrationality and breach of legitimate expectations; whereas, in Elias, the grounds arose under the Race Relations Act 1976. This was not therefore simply a case where different arguments were advanced which had not been made in the earlier case; the legal issues were themselves different.
[140] In the present case, in contrast, the legal issue is on proper analysis the same as that which arose in Fleming (on the facts of Condé Nast) and the decision in that case is binding on this Court." (Jazztel Plc v. HMRC [2022] EWCA Civ 232, per Singh LJ)
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Points not argued are not binding
[73] "The view that these dicta were obiter is supported by the absence of any reported argument on the point: it is unlikely that the House would have decided such an important point, as part of the ratio decidendi, without its having been argued by counsel, or at least raised with them. It is also supported by the absence of any discussion of the point in the dissenting speech of the remaining member of the committee, Lord Walker of Gestingthorpe. It is unlikely that he would have ignored the point if he had understood it to be part of the ratio of the majority decision." (R (oao Elan-Cane) v. Secretary of State for the Home Department [2021] UKSC 56)
"[138] The position appears to be different if a point of law was simply assumed to be correct in an earlier decision (even that of a superior court) without any argument on it: see e.g. FSHC Group Holdings Ltd v GLAS Trust Corpn Ltd [2019] EWCA Civ 1361, [2020] Ch 365, at [136] (Leggatt LJ, giving the judgment of the Court). But Fleming was not such a case: there was argument on the material issue of law. What Mr Baldry's submission really amounts to is that there was a better argument available to HMRC, which it did not advance at that time and which it now does." (Jazztel Plc v. HMRC [2022] EWCA Civ 232, per Singh LJ)
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“…the Special Commissioner observed, at page 273, that the withdrawal by the Revenue of its claim to tax the award in respect of injury to feelings was “rightly made.” As it was not the subject of any argument and the Special Commissioner did not discuss the issue at all in the decision, we do not regard Walker as providing any support for the proposition that any part of a payment that is attributable to injury to feelings is not a payment made in connection with the termination of employment and thus is not subject to income tax.” (Moorthy v. HMRC [2016] UKUT 13 TCC, §28, Rose J and Judge Sinfield).
“However, because there was no argument on that point, the decisions do not constitute an authority on that point.” (R (oao Derry) v. HMRC [2015] UKUT 416 (TCC), §43, Morgan J).
Observations of judges must be read in relation to the issues before them/should not be automatically applied to issues they cannot have had in mind
“It is a cardinal rule that the observations of judges and the law as stated by them must be read in relation to the issues which they had to try, and their remarks cannot safely be applied to questions which could not have been in the judges’ minds at the time.” (re Pilkington’s Will Trust [1961] Ch 466 at 489, Upjohn LJ).
“In my judgment, the references to entitlement in equity and beneficial entitlement [in a previous case] must be read in the context of the particular case in which those words were used. No one had in mind the problem with which I am concerned.” (Hoare Trustees v. Gardner (Inspector of Taxes) [1978] 2 WLR 839 at 844).
“I think the better view is that the Upper Tribunal either intended no comment on burden of proof at all in [137] or, if they did, they were talking merely of a shift in the evidential burden, in the sense that, as the appellant had shown that there was a comparator which gave equivalent tax liability to the arrangements actually adopted, the evidential burden had shifted to HMRC to establish that it was not a valid comparator.” (Hilden Park LLP v. HMRC [2017] UKFTT 217 (TC), §37, Judge Mosedale).
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Building blocks for binding conclusion are also binding
“We conclude that the Court of Appeal’s decision on the meaning of ‘prescribed accounting period’ in s 73(2) was seen by the Court as a necessary part of the judgment they delivered and not simply a comment made in passing. We say this because the Court of Appeal’s decision was on the meaning of ‘evidence of facts’ in s 78A(2). It reached its decision on this based on four reasons. The third reason given is at [52-55]. That reason was that ‘prescribed accounting period’ in s 73 refers to the period in which the repayment in issue was made. In other words, the meaning of that phrase in s 73(2) was a building block on which the Court relied in making their judgment on s 78A(2).” (London School of Economics and Political Science v. HMRC [2015] UKFTT 291 (TC), §44, Judge Mosedale).
Binding interpretation of another authority
“I am clearly bound by that explanation of City & Property even though there might be perceived a tension between the reasoning of May LJ (adopted by Wilson LJ) in that case and the reinstatement, if I can put it that way, of the fundamental principle stated in Chelleram.” (Clavis Liberty Fund LP1 v. HMRC [2015] UKUT 72 (TCC) §31, Warren J, CA interpreting CA)
Binding decision on whether a conclusion was obiter
“Richards J’s decision in Laura Ashley that the Court of Appeal’s ruling on the meaning of ‘prescribed accounting period’ in (what is now) s 73(2) was obiter, and his decision on the meaning of that phrase, is binding on the Tribunal in absence of later superior or equivalent conflicting authority, or a change to the statute.” (London School of Economics and Political Science v. HMRC [2015] UKFTT 291 (TC), §38, Judge Mosedale).
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Considered judgment on a point fully argued that could have determined the case not obiter
"[51] We consider that Ms Brown’s approach fails to take into account that such clear and comprehensive general guidance given by the Supreme Court cannot be discounted or ignored altogether simply because it did not, strictly speaking, form part of the ratio of the decision. As Megarry J said in Brunner v Greenslade [1971] Ch 993 at pages 1002-1003 (emphasis added to original):
In the Lawrence case [1939] Ch. 656, Simonds J. held, in a reserved judgment, that on the facts before him no general scheme of development existed. It was accordingly not necessary to determine what rights as between the subpurchasers there might have been if the main scheme had been held to exist. However, as the point had been fully argued, he expressed his views on it. I do not think that such views can simply be stigmatised as being obiter and so of little weight. A mere passing remark, or a statement or assumption on some matter that has not been argued, is one thing; a considered judgment on a point fully argued is another, especially where, had the facts been otherwise, it would have formed part of the ratio. Such judicial dicta, standing in authority somewhere between a ratio decidendi and an obiter dictum, seem to me to have a weight nearer to the former 8 Tooth SC at [86]. 13 than the latter; and, perhaps I may add, anything uttered by Simonds J. carries its own intrinsic authority.
[52] In Tooth SC, it was made clear, at [86], that, absent its conclusion on deliberate inaccuracy, the Supreme Court would have found against Mr Tooth on the staleness issue.
[53] Megarry J’s observations were recently endorsed by Sir James Munby in An NHS Trust v X [2021] EWHC 65 at [59], where he said “as a great judge once said, there are obiter dicta and obiter dicta”. In responding to Counsel’s argument that a particular decision of the Court of Appeal should be followed notwithstanding a subsequent decision of the Court of Appeal to the contrary, on the basis that the statements in the subsequent decision were obiter dicta, he observed, at [60]:
Here, we have two authorities in each of which the Court of Appeal, having had the benefit of vigorous adversarial arguments by Leading Counsel, delivered three lengthy judgments dealing with the points at issue in carefully considered and commanding detail. Indeed, as we have seen, in In re W (A Minor) (Medical Treatment: Courts Jurisdiction) [1993] Fam 64, where the hearing spread over three days, the court deliberately reconsidered what it had previously said in In re R (A Minor) (Wardship: Consent to Treatment) [1992] Fam 11 because of the criticism to which it had been subjected. How sensibly can this be treated as mere obiter? I do not criticise counsel for taking the point, but I have to say that it is the kind of point which probably has more traction amongst the dreaming spires of the Academy than in the robust and ultimately pragmatic world of the court room.
[54] Ms Brown submitted that these pronouncements were not applicable in the present appeal, because they were made in the context of conflicting decisions at the same judicial level, whereas we were concerned with conflicting obiter dicta of a superior court. We do not agree. While that was the factual context in each case, the remarks made were of general application, to the effect that certain obiter dicta may, as Megarry J put it, have a weight which is closer to a ratio. It is difficult to conceive of a clearer such example than the dicta concerning staleness in Tooth SC. In any event, it seems to us that the comments of Megarry J and Sir James Munby carry even greater force where the statements which are strictly obiter dicta were made by the Supreme Court and the ratio was in a decision of an inferior court." (Harrison v. HMRC [2023] UKUT 38 (TCC), Judge Thomas Scott and Judge Greenbank)
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Purposive approach to interpretation of ratio
"[59]...Mr Warburton's argument is an attempt to escape the wide scope of a well-understood principle by latching on to certain words in the leading judgments and ascribing to them a meaning they will not bear textually and an effect which would run counter to the very principles and policies explained in those judgments. It is an approach to legal analysis which, in my judgment, should be seriously discouraged." (Warburton v. Chief Constable of Avon and Somerset Constabulary [2023] EWCA Civ 209, Phillips, Moylan and Males LJJJ)
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Binding obiter: Supreme court unanimously directs that an otherwise binding decision of the Court of Appeal should no longer be followed
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"[104] We conclude that where the Supreme Court itself directs that an otherwise binding decision of the Court of Appeal should no longer be followed and proposes an alternative test that it says must be adopted, the Court of Appeal is bound to follow what amounts to a direction from the Supreme Court even though it is strictly obiter. To that limited extent the ordinary rules of precedent (or stare decisis) have been modified. We emphasise that this limited modification is confined to cases in which all the judges in the appeal in question in the Supreme Court agree that to be the effect of the decision. Such was a necessary condition before adjusting the rules of precedent accepted by this court in James in relation to the Privy Council. Had the minority of the Privy Council in Holley not agreed that the effect of the judgment was to state definitively the law in England, it would not have been accepted as such by this court. The same approach is necessary here because it forms the foundation for the conclusion that the result is considered by the Supreme Court to be definitive, with the consequence that a further appeal would be a foregone conclusion, and binding on lower courts." (R v. Barton [2020] EWCA Crim 575)
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Applies in civil proceedings
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"[63] While it is the case that the criminal courts have been more ready to modify the strict application of stare decisis, as discussed at [96] of Barton, and while Barton concerned the test applicable in criminal cases, the Court of Appeal in Barton did not indicate that the limited modification could apply only in criminal cases9. In the recent case of Ideal Shopping Direct Ltd v Mastercard Inc and others [2022] EWCA Civ 14, one issue considered by the Court of Appeal (at [112]-[113] of the decision) was whether the Barton modification applied in relation to the law on service of claims, and there was no indication in that discussion that it did not apply in a civil context. Indeed, at [112] it was stated: R v Barton makes clear that, if the House of Lords or Supreme Court has directed that an otherwise binding decision of the Court of Appeal should no longer be followed, then this court must follow the direction even if it is strictly obiter, but only if all the judges in the Supreme Court agree that to be the effect of the decision. To that extent only, the doctrine of precedent is modified.
[64] We consider that applying the modification is appropriate and justified in this case.
[65] In relation to whether the terms of the modification are satisfied in respect of Tooth SC, we consider that they are." (Harrison v. HMRC [2023] UKUT 38 (TCC), Judge Thomas Scott and Judge Greenbank)
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A limited exception
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"[64] It is clear to us that if the dicta of Lady Hale in Clyde & Co as to the meaning and effect of s 4(4) LLPA 2000 were not part of the reasoning of the Supreme Court then those dicta would not fall within the limited exception to the rule of precedent described by Burnett CJ. The FTT was therefore wrong to treat the dicta as overruling Tiffin in the way it did." (Wilson v. HMRC [2021] UKUT 239 (TCC), Adam Johnson J and Judge Cannan)
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Obiter dicta of higher court should normally be followed
“As what the Upper Tribunal said in Hilden Park 1 on burden of proof was only obiter, I must decide whether or not I should follow it. I consider that dicta from a superior court that was given after full argument should be followed unless it is obviously wrong.” (Hilden Park LLP v. HMRC [2017] UKFTT 217 (TC), §20, Judge Mosedale).
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Lower court decision not binding if decided on a different basis by higher court
"[107] Although we are not bound by the decision of this court on the invoice issue in Zipvit (because the Supreme Court decided the case on a different point), I do not consider that there is anything in that judgment that is out of step with EU case-law as it stood at the time of Zipvit..." (Tower Bridge GP Limited v. HMRC [2022] EWCA Civ 998, Lewison, Snowden, Henderson LJJJ)
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Higher appeal withdrawn by HMRC
Indication that the lower decision is correct
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"[54] Silver was an FTT judgment and, as such, it is not binding on this Tribunal. Consideration was given as to whether the fact that HMRC appealed Silver and subsequently withdrew from the appeal meant that the judgment itself could be given the status of that of having been given by the Upper Tribunal, but it was concluded that was not the case.
[55] There is, however, significance in HMRC’s appeal and withdrawal in the context of the principle of judicial comity. Judicial comity forms part of the principle of precedent. Both comity and precedent are rooted in the principle of stare decisis which requires courts to honour the findings of law made in earlier cases, in the case of precedent by a higher court and in the case of comity by co-ordinate courts. As set out in the case of HMRC v Abdul Noor [2013] UKUT 71 [82] it is the reasoning by reference to which a decision or judgment is reached that should be followed unless considered to be wrong.
[56] HMRC litigated Silver on the basis that the hypothetical recalculation did not permit account to be taken of a personal allowance which had been reduced as a consequence of the chargeable event gain and they lost. An appeal must have been lodged on the basis that Judge Mosedale had made an error of law. But it was subsequently withdrawn in close proximity to the making of a legislative amendment. Therefore there must be a strong indication that the judgment was not wrong but that ministers were concerned that the interpretation adopted would carry consequences which had not been addressed in Silver. Legislation was therefore introduced and ultimately enacted to address those consequences of which the facts of this case are an illustration. It is somewhat difficult to conclude that applying the legal principles determined by Judge Mosedale to the facts of this case the factual differences would impact her decision a full section 23 ITA calculation is required. A full calculation s23 ITA calculation is a full section 23 ITA calculation whether HMRC like the outcome or not." (Sally Judges v. HMRC [2022] UKFTT 77 (TC), Judge Amanda Brown QC)
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First-tier Tax Tribunal
Other FTT decisions (persuasive but not binding)
“I can only say for myself that I think the modern practice, and the modern view of the subject, is that a judge of first instance, though he would always follow the decision of another judge of first instance, unless he is convinced the judgment is wrong, would follow it as a matter of judicial comity.” (Huddersfield Police Authority v. Watson [1947] KB 842 at 848 per Lord Goddard CJ).
“Although a first instance decision of the First-tier Tribunal is not binding in the way that a decision of the Upper Tribunal or Court of Appeal would be it would, nevertheless, be expected to be followed by the First-tier Tribunal in another similar case unless considered clearly wrong.” (King v. HMRC [2016] UKFTT 409 (TC), §82).
Multiple FTT decisions on the same point settling it at first instance
“In the circumstances, the time of which Nourse J. spoke in Colchester Estates (Cardiff) v. Carlton Industries Plc. [1986] Ch. 80, 85 - "a time when a point is normally to be treated as having been settled at first instance" - has in my judgment not yet arrived.” (Re Saunders (a bankrupt) [1997] 3 All ER 992)
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"[69] I am of the view that the law is as expressed by Nourse J in Colchester Estates." (Daewoo Shipbuilding & Marine Engineering Company Ltd v Songa Offshore Equinox Ltd, [2018] EWHC 538 (Comm), Bryan J)
FTT decision reviewing inconsistent decisions and reaching clear conclusion
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"There were a number of inconsistent first instance decisions on the point, which Rimer J considered, and came to a clear conclusion as to which line of authority he agreed with. In those circumstances, very convincing reasons indeed would have had to have been put before Judge Hodge QC before he could sensibly have departed from the reasoning and conclusions of Rimer J." (Re Lune Metal Products ltd (in administration [2006] EWCA Civ 1720, §9, Neuberger LJ)
Upper Tribunal, High Court, Court of Appeal and Supreme Court (all binding)
Privy Council decisions:
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"[12]...First, given that the JCPC is not a UK court at all, decisions of the JCPC cannot be binding on any judge of England and Wales, and, in particular, cannot override any decision of a court of England and Wales (let alone a decision of the Supreme Court or the Law Lords) which would otherwise represent a precedent which was binding on that judge. Secondly, given the identity of the Privy Counsellors who sit on the JCPC and the fact that they apply the common law, any decision of the JCPC, at least on a common law issue, should, subject always to the first point, normally be regarded by any Judge of England and Wales, and indeed any Justice of the Supreme Court, as being of great weight and persuasive value. Thirdly, the JCPC should regard itself as bound by any decision of the House of Lords or the Supreme Court - at least when applying the law of England and Wales." (Willers v. Joyce (Re: Gubay (deceased) No 2) [2016] UKSC 44)
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Do not follow if inconsistent with binding decision
“[16] There is no doubt that, unless there is a decision of a superior court to the contrary effect, a court in England and Wales can normally be expected to follow a decision of the JCPC, but there is no question of it being bound to do so as a matter of precedent. There is also no doubt that a court should not, at least normally, follow a decision of the JCPC, if it is inconsistent with the decision of a court which is binding in accordance with the principles set out in paras 5, 8 and 9 above.” (Willers v. Joyce (Re: Gubay (deceased) No 2) [2016] UKSC 44)
Unless Privy Council expressly directs courts not to follow earlier decision:
“[21] In any case where the Practice Direction applies, I would hold that the following procedure should apply from now on. The registrar of the JCPC will draw the attention of the President of the JCPC to the fact there may be such an invitation. The President can then take that fact into account when deciding on the constitution and size of the panel which is to hear the appeal, and, provided that the point at issue is one of English law, the members of that panel can, if they think it appropriate, not only decide that the earlier decision of the House of Lords or Supreme Court, or of the Court of Appeal, was wrong, but also can expressly direct that domestic courts should treat the decision of the JCPC as representing the law of England and Wales.” (Willers v. Joyce (Re: Gubay (deceased) No 2) [2016] UKSC 44)
Upper Tribunal and High Court (same level)
“It is clear therefore that the Upper Tribunal is not bound by a previous High Court decision. We cannot see any argument therefore that the F-tT should be bound by the High Court in preference to a conflicting Upper Tribunal decision.” (Meena Seddon Settlement v. HMRC [2015] UKFTT 140 (TC), §35).
Advocate General opinions (not binding)
“However, this statement formed no part of his proposed answer to the question to the court which was to the extent an airline operating a domestic route could rely on the exemption within Article 148(g). His view was not repeated or considered by the CJEU, nor is it clear whether the parties had made submissions on this point. His views are not binding on this Tribunal.” (Norwich Airport Ltd v. HMRC [2012] UKFTT 277 (TC), §133).
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Upper Tribunal
FTT decisions (not binding)
Other UT decisions (not binding but to be followed unless convinced/satisfied wrong)
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"[9] So far as the High Court is concerned, puisne judges are not technically bound by decisions of their peers, but they should generally follow a decision of a court of co-ordinate jurisdiction unless there is a powerful reason for not doing so. And, where a first instance judge is faced with a point on which there are two previous inconsistent decisions from judges of co-ordinate jurisdiction, then the second of those decisions should be followed in the absence of cogent reasons to the contrary: see Patel v Secretary of State for the Home Department [2013] 1 WLR 63, para 59. I would have thought that Circuit Judges should adopt much the same approach to decisions of other Circuit Judges." (Willers v. Joyce (Re: Gubay (deceased) No 2) [2016] UKSC 44)
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“there is no rule of stare decisis between tribunals of co-ordinate jurisdiction. Rightly it [departed from an earlier Tribunal] only when convinced the earlier decision was wrong – for broadly tribunals should strive to achieve consistency amongst themselves. But once so convinced it was its duty to apply the law as it considered it to be.” (Procter & Gamble UK v. HMRC [2009] STC 1990, §43).
“It is common ground that the approach to be adopted in these circumstances, as a matter of judicial comity, is that I should follow the judgment of another judge of coordinate jurisdiction, which extends in this case to Sales J sitting in the UT exercising a judicial review jurisdiction, and that I should only depart from his judgment if I am convinced that it is wrong.” (R (oao Rowe) v. HMRC [2015] EWHC 2293 (Admin), §83).
“The Upper Tribunal is not bound by decisions of the High Court, as:
(a) the intention of Parliament, in enacting the Tribunals Courts and Enforcement Act 2007…and constituting the Upper Tribunal as a court of superior record makes it clear that Parliament did not intend the Upper Tribunal to be bound by the High Court as a matter of stare decisis;
(b) as a matter of principle, the need for predictability and consistency of outcome are not offended;
(c) there is a substantial line of authority that Tribunals which are constituted as superior courts of record are free to depart from High Court decisions, which line of authority has not been disturbed…
…the Upper Tribunal may depart from a decision of the High Court, if the Upper Tribunal is “convinced” (using the language at paragraph 40 of RB) or “satisfied” (using the language at paragraph 47 of RB) “…that [the High Court decision] is wrong”. We do not consider that there is any difference between “convinced” and “satisfied” in this context.” (Gilchrist v. HMRC [2014] UKUT 169 (TCC), §§85(ii)…94, David Richards J and Judge Ghosh).
“As to the latter, we are not so bound, although we should depart from a decision of the High Court only in circumstances where another High Court judge would properly be able to do so. Thus, we would be able to depart from Mann J’s conclusion only if we thought it was plainly wrong or if we considered ourselves bound by authority that would have bound Mann J. This is not an issue where the fact that this tribunal is a specialised tribunal would affect the propriety of our departing from Mann J’s judgment.” (Khawaja v. HMRC [2013] UKUT 353 (TCC), §27, Judges Berner and Herrington).
“…it seems to us equally clear that where the Tribunal is exercising a jurisdiction formerly exercised by the High Court, it need not regard itself as formally bound by the decisions of the High Court. Subject to one qualification [see below], we think the position should be the same as with the High Court as dealing with decisions of co-ordinate jurisdiction: ‘That you will follow the decision of another judge of first instance, unless he is convinced that that judgment is wrong, as a matter of judicial comity…’ ” (Secretary of State for Justice v. RB [2010] UKUT 454, §40).
High Court decisions (same as UT decisions, but possibly less inhibition in revisiting issues)
“It is common ground that the decision in Morris is not binding on the Upper Tribunal. Nevertheless, the decision is clearly persuasive and I should follow it unless I conclude that it was wrong. See in that regard the judgment of the Upper Tribunal (David Richards J and Julian Ghosh QC) in Gilchrist v HMRC [2015] 2 WLR 1, at paragraphs 85-101.” (R (oao Higgs) v. HMRC [2015] UKUT 92 (TCC), §24, Barling J).
“It is clear therefore that the Upper Tribunal is not bound by a previous High Court decision. We cannot see any argument therefore that the F-tT should be bound by the High Court in preference to a conflicting Upper Tribunal decision.” (Meena Seddon Settlement v. HMRC [2015] UKFTT 140 (TC), §35).
“[Lady Hale in AH (Sudan) v. Secretary of State [2007] UKHL 49] emphasised the highly specialised character of some legislation before the tribunals, and the need for the higher courts to respect their expertise. Consistently with that approach, where such specialised issues arise before the Upper Tribunal, it may in a proper case feel less inhibited in revisiting issues decided even at High Court level, if there is good reason to do so.” (Secretary of State for Justice v. RB [2010] UKUT 454, §41).
Court of Appeal and Supreme Court (binding)
“There is no doubt that, when applying the law of England and Wales, the Upper Tribunal is bound by decisions of the Court of Appeal on issues of law in accordance with the ordinary rules of precedent. This follows from its status as a higher court, to which the State provides a direct right of appeal.” (Secretary of State for Justice v. RB [2010] UKUT 454, §39).
- UT declining to make any observations on correctness of binding CoA decision
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"[22] We indicated to the parties our provisional view that the Court of Appeal in Hoey has, as Mr Gordon quite properly accepts, determined the very issues which are the subject of this appeal against the Appellants. Where, as here, the Appellants do not seek to distinguish the decision of the Court of Appeal, by the doctrine of precedent we are bound by the decision of the Court of Appeal and it is not open to this Tribunal to rehear the arguments de novo and determine whether, with respect, we consider the Court of Appeal was wrong. We indicated our provisional view that we are unlikely to engage at any length with the criticisms made by the Appellants of the decision of the Court of Appeal in Hoey and will instead focus upon the issues that arise in the statutory appeal before us, which in our provisional view, have been answered by the Court of Appeal in Hoey." (Higgs v. HMRC [2023] UKUT 296 (TCC), Judges Mandalia and Poole)
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Court of Appeal
"[8] The Court of Appeal is bound by its own previous decisions, subject to limited exceptions. The principles were set out by the Court of Appeal in a well-known passage (which was approved by the House of Lords in Davis v Johnson [1979] AC 264) in Young v Bristol Aeroplane Co Ltd [1944] KB 718, 729-730:
“[The Court of Appeal] is bound to follow previous decisions of its own as well as those of courts of co-ordinate jurisdiction. The only exceptions to this rule … are … (1) The court is entitled and bound to decide which of two conflicting decisions of its own it will follow. (2) The court is bound to refuse to follow a decision of its own which, though not expressly overruled, cannot, in its opinion, stand with a decision of the House of Lords. (3) The court is not bound to follow a decision of its own if it is satisfied that the decision was given per incuriam.” (Willers v. Joyce (Re: Gubay (deceased) No 2) [2016] UKSC 44)
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See also IGE USA Investments Limited v. HMRC [2021] EWCA Civ 534, §§85 - 98
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Court of Appeal authority wrongly distinguished earlier House of Lords authority: follow House of Lords
“I can understand the difficulty in which both the county court judge and the Court of Appeal were placed in the present case. What a court should do, when faced with a decision of the Court of Appeal manifestly inconsistent with the decisions of this House, is a problem of some difficulty in the doctrine of precedent. I incline to think it should apply the law laid down by the House, and refuse to follow the erroneous decision.” (Noble v. Southern Rly Co [1940] 2 All ER 383 at 392 per Lord Wright).
“What is the position when the court is of the opinion that a decision of the Court of Appeal is inconsistent with the previous decision of the House of Lords, which had been cited to that court and wrongly distinguished? This is described by Lord Wright in Noble v Southern Rly Co [1940] 2 All ER 383 at 391, [1940] AC 583 at 598 as a problem of some difficulty. He inclined to the view that our duty is to follow the law as we believe it to have been laid down in the previous decision of the House of Lords.” (Holden & Co v. CPS [1990] 1 All ER 368 at 374 per Lord Lane CJ).
“In this case we have heard full argument, which has provided what we believe has been the first opportunity in this court for a full and mature consideration of the relation between Bell v Lever Bros Ltd and Solle v Butcher. In the light of that consideration we can see no way that Solle v Butcher can stand with Bell v Lever Bros Ltd. In these circumstances we can see no option but so to hold.” (Great Peace Shipping Ltd v. Tsavliris Salvage (International) Ltd [2002] EWCA Civ 1407, §160 per Lord Phillips MR).
Court of appeal considering departing from earlier court of appeal interpretation of ECJ judgment should refer
“But, as it seems to me, one constitution in this court should not substitute its own view as to the effect of a judgment of the Court of Justice for the view which has been reached by another constitution in this court in an earlier case on consideration of the same judgment in circumstances in which there has been no opportunity for the Court of Justice to review that judgment. In those circumstances, if persuaded that there are strong grounds for thinking that the earlier decision is wrong (as a matter of Community law) this court may think it right to refer the point to the Court of Justice for a preliminary ruling. Or it may follow the earlier decision and give permission to appeal. But it should not refuse to follow the earlier decision merely because, on the same material and the same arguments, it is satisfied that a different conclusion should have been reached.” (Conde Nast v. HMRC [2006] EWCA Civ 976, §44).
Court of appeal bound by its own decisions on ECHR matters
“That degree of certainty is best achieved by adhering, even in the Convention context, to our rules of precedent. It will of course be the duty of judges to review Convention arguments addressed to them, and if they consider a binding precedent to be, or possibly to be, inconsistent with Strasbourg authority, they may express their views and give leave to appeal, as the Court of Appeal did here. Leap-frog appeals may be appropriate. In this way, in my opinion, they discharge their duty under the 1998 Act. But they should follow the binding precedent, as again the Court of Appeal did here.’” (Lambeth London BC v. Kay [2006] UKHL 10 at §43, per Lord Bingham).
Supreme Court/House of Lords
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Prior decisions normally binding, but will depart if it appears right to do so
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"[22] In our view, therefore, the issue is whether this is a case where this Court should apply the 1966 Practice Statement. In that connection, it is well established that this Court should not refuse to follow an earlier decision of this Court or the House of Lords merely because we would have decided it differently - see per Lord Bingham of Cornhill in Horton v Sadler [2007] 1 AC 307, para 29. More than that is required, not least because of the desirability of certainty in the law, as just discussed. However, as Lord Bingham said in the same passage, while “former decisions of the House are normally binding … too rigid adherence to precedent may lead to injustice in a particular case and unduly restrict the development of the law”.
...
[26] Of course, there may be cases where any proposed change in the law is so complex, or carries with it potential injustices or wider implications that the matter is better left to the legislature, but this is not such a case." (Knauer v. Ministry of Justice [2016] UKSC 9)
​
"[24] The question then is whether this Court should now hold that the interpretation of section 82(2) that Lord Neuberger has suggested is indeed what this subsection means and that Thompson [1987] 1 WLR 1425 should be overruled. As is of course very well known, the House of Lords issued a Practice Statement on 26 July 1966 which stated that it would still treat former decisions of the House as normally binding, but that it would depart from a previous decision when it appeared right to do so: Practice Statement (Judicial Precedent) [1966] 1 WLR 1234. Its application was considered and applied from time to time by the Appellate Committee during the 40 years or so that were to elapse until 1 October 2009 when the appellate jurisdiction was transferred from the House of Lords to this Court: see, for example, R v National Insurance Commissioner, Ex p Hudson [1972] AC 944, 966 per Lord Reid; R v Knuller (Publishing, Printing and Promotions) Ltd [1973] AC 435, 455 per Lord Reid; Miliangos v George Frank (Textiles) Ltd [1976] AC 443; Fitzleet Estates Ltd v Cherry [1977] 1 WLR 1345, 1349 per Lord Wilberforce ; Hesperides Hotels Ltd v Aegean Turkish Holidays Ltd [1979] AC 508; Vestey v Inland Revenue Commissioners (Nos 1 and 2) [1980] AC 1148; R v Secretary of State for the Home Department, Ex p Khawaja [1984] AC 74; R v Howe [1987] AC 417; R v Kansal (No 2) [2002] 2 AC 69; Rees v Darlington Memorial Hospital NHS Trust [2004] 1 AC 309; and Horton v Sadler [2007] 1 AC 307, para 29 per Lord Bingham of Cornhill.
[25] The Supreme Court has not thought it necessary to re-issue the Practice Statement as a fresh statement of practice in the Court's own name. This is because it has as much effect in this Court as it did before the Appellate Committee in the House of Lords. It was part of the established jurisprudence relating to the conduct of appeals in the House of Lords which was transferred to this Court by section 40 of the Constitutional Reform Act 2005. So the question which we must consider is not whether the Court has power to depart from the previous decisions of the House of Lords which have been referred to, but whether in the circumstances of this case it would be right for it to do so." (Austin (FC) v. Southwark [2010] UKSC 28)
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Scottish decisions
Generally follow in revenue matters
​
"[45] There is a well-established practice that the courts in this jurisdiction will follow the decisions of courts in Scotland on the same point of interpretation in revenue matters, since the legislation is of application in both jurisdictions and it would be highly undesirable if there were inconsistent decisions. This is particularly so at the appellate level, since any decision of ours will be binding on this Court and lower courts and tribunals in England and Wales, while the decision of the Inner House will be binding on all courts and tribunals in Scotland. This is subject to there being a "compelling reason" not to follow a Scottish decision on the same point: see e.g. Secretary of State for Employment and Productivity v Clarke Chapman & Co Ltd [1971] 1 WLR 1094, at 1102 (Widgery LJ); and Deane v Secretary of State for Work and Pensions [2010] EWCA Civ 699; [2011] 1 WLR 743, at para. 26 (Ward LJ), citing Abbott v Philbin (Inspector of Taxes) [1960] Ch 27, at 49 (Lord Evershed MR); and [1961] AC 352, at 373 (Lord Reid).
In my view, this Court should accord the greatest respect to the decision of the Inner House in Adnan. I can see no compelling reason to depart from the decision of the Inner House. Although I see some force in the submissions advanced on behalf of the Appellants, I also see force in the contrary submissions made on behalf of the Respondent, which in substance found favour in the Inner House." (R (oao DK) v. HMRC [2022] EWCA Civ 120, Singh LJ)
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“whilst it is the case that the English and Scottish courts (including tribunals forming part of their respective judicial systems) are not bound to follow the judicial decisions of the other, regardless of the hierarchy level of the prior decision, it has long been the position that the interpretation of tax legislation ought, so far as possible, to follow the decisions of the cross-border court. Tax law generally applies to England and Wales and Scotland alike and should therefore be applied in the same way in both jurisdictions.” (National Exhibition Centre Ltd v. HMRC [2015] UKUT 23 (TCC), §30, Roth J and Judge Berner).
“In a case of a revenue statute of this kind it is the duty of this court, unless there are compelling reasons to the contrary, to say, expressing such doubts as we feel we ought to do, that we should follow the Scottish decision.” (Abbott v. Philbin [1960] Ch 27, 49, Lord Evershed MR – approach approved in House of Lords [1961] AC 352 at 367 and 373).
Not binding (applies to Tribunal decisions)
“The decision is not binding (Under s41(2) of the Constitutional Reform Act 2005 such a decision of the Supreme Court is to be regarded as the decision of a court of the relevant part of the United Kingdom and, as pointed out by the Upper Tribunal in Commrs for HMRC v National Exhibition Centre Limited [2015] UKUT 23 (TCC) at [30], tribunals from the respective judicial systems of the relevant parts of the UK are not bound to follow the judicial decisions of the other).” (Deloitte LLP v. HMRC [2016] UKFTT 479 (TC), §14).
ECHR decisions
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- Not bound
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"[31] It is, of course, open to a domestic court to refuse to follow the Strasbourg court’s analysis and conclusion in MGN v UK, especially as it is a single decision of one section of the Strasbourg court. It is not as if there is a number of section decisions to the same effect or a decision of the Grand Chamber; it is also of some possible relevance that there was no oral argument in MGN v UK.
[32] However, there is undoubtedly a very powerful argument for concluding that we should effectively follow the Strasbourg court’s approach in that case. The judgment was full and careful, and the ultimate decision was based on a report which was prepared by a senior United Kingdom judge and was largely acted on by the UK government..." (Times Newspaper Limited v. Flood [2017] UKSC 33)
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- Normally follow a clear and consistent line of decisions
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[36] Our duty under the Human Rights Act 1998 section 2 is “take account of” the decision of the court. There appears to be no relevant Grand Chamber decision on the issue, but we would normally follow a “clear and constant line” of chamber decisions (see Manchester City Council v Pinnock [2011] 2 AC 104, para 48). This might perhaps be said of some of the previous decisions referred to in the judgment, including most recently Tsfayo v United Kingdom (2006) in which the application of article 6 was conceded by the government. However, it is apparent from the Chamber’s reasoning (see para 58 cited above) that it was consciously going beyond the scope of previous cases. In answer to Lord Hope’s concern that there was “no clearly defined stopping point” to the process of expansion, its answer seems to have been that none was needed. That is a possible view, but one which should not readily be adopted without full consideration of its practical implications for the working of the domestic regime." (Poshteh v Royal Borough of Kensington and Chelsea [2017] UKSC 36)
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- Supreme Court refusing to follow decision of the Chamber inconsistent with previous Supreme Court decision
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"[37] The scope and limits of the concept of a “civil right”, as applied to entitlements in the field of public welfare, raise important issues as to the interpretation of article 6, on which the views of the Chamber are unlikely to be the last word. In my view, this is a case in which, without disrespect to the Chamber, we should not regard its decision as a sufficient reason to depart from the fully considered and unanimous conclusion of the court in Ali. It is appropriate that we should await a full consideration by a Grand Chamber before considering whether (and if so how) to modify our own position." (Poshteh v Royal Borough of Kensington and Chelsea [2017] UKSC 36)​
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CJEU decisions
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- Decisions in references from the UK before end of 2020 have binding force
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[16] It follows that, under the terms of the Withdrawal Agreement, judgments of the CJEU on references from United Kingdom Courts and Tribunals made before the end of 2020 are to have "binding force in their entirety on and in the United Kingdom" even if handed down in 2021 or later. Further, the United Kingdom is required by article 4(2) to ensure compliance with article 4(1) "through domestic primary legislation". (HMRC v. Perfect [2022] EWCA Civ 330)
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- CA not following post-brexit CJEU decision
[118] It is also noticeable that in Kemwater the court did not refer to Geissel and on one view directly contradicts it. The only case that it cited was Ferimet. But Ferimet did not refer to Geissel either. Moreover, as I have said, Ferimet was a reverse charge procedure case for which the PVD itself laid down no formal requirements. The court in Kemwater did not explain why it was transposing a case dealing with the reverse charge procedure to the wholly different situation which it was considering.
[119] Because judgment in Kemwater was given after 31 December 2020 we are not bound by it, although we may have regard to it. In my judgment it is at odds with the previous jurisprudence of the court; proceeded to a decision without the benefit of an Advocate General’s opinion; does not explain why it applied a case in which no EU formalities were prescribed to one in which they were; and does not deal with the cases which only gave effect to corrected invoices, or where the taxable person ultimately supplied the information that the PVD required the invoice to contain. Although I have had regard to it, I do not consider that we should follow it." (Tower Bridge GP Limited v. HMRC [2022] EWCA Civ 998, Lewison LJ)
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- Unreasoned order not treated as determinative
"[79] It seems to us that it is impossible for us to conclude that Megasol should determine the outcome of these appeals. There is no detailed reasoning in the CJEU's Order, the point was not substantively addressed and the facts were not fully laid out (e.g. whether Megasol had complied or had failed to comply with necessary exemption formalities required by the 2016 Implementing Regulations). Moreover, the Court dismissed the application on the basis that Megasol had not shown that the regulations were, as Ms Vicary put it, causing it a problem. On that basis, the Court considered that the point being raised a hypothetical situation in respect of which Megasol was seeking a declaratory decision and therefore had not established that it had a sufficient interest in bringing the proceedings. We consider that it is unsafe to treat Megasol as authority for any proposition other than that Megasol had simply failed to demonstrate how the 2016 Implementing Regulations were or might be applicable to it and, therefore, the application was inadmissible.
[80] Accordingly, we do not consider that that Megasol determines the position in these appeals." (Canadian Solar EMEA GmbH v. HMRC [2024] UKFTT 85 (TC), Judge Brannan)
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Inconsistent decisions of courts of co-ordinate jurisdiction: usually follow the later decision
“And, where a first instance judge is faced with a point on which there are two previous inconsistent decisions from judges of co-ordinate jurisdiction, then the second of those decisions should be followed in the absence of cogent reasons to the contrary: see Patel v Secretary of State for the Home Department [2013] 1 WLR 63, para 59. I would have thought that Circuit Judges should adopt much the same approach to decisions of other Circuit Judges.” (Willers v. Joyce (Re: Gubay (deceased) No 2) [2016] UKSC 44, §9).
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“Even if Sales J’s conclusion on the Tribunal’s jurisdiction was to be regarded as part of the decision and there were then two authorities of equivalent jurisdiction on the point then there is authority to suggest that barring the exception where e.g. some binding authority has not been cited in either of the two cases, a second decision (i.e. Noor) which has considered the first decision is to be preferred (Colchester Estates (Cardiff) v Carlton Industries Plc [1986] Ch 80 which refers to Lord Denning’s judgment in Minister of Pensions v Higham [1948] 1 All ER 863).” (Newell v. HMRC [2015] UKFTT 535 (TC) §106).
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“We should not embark on a detailed scrutiny of both decisions to see whether we prefer the reasoning in one over that in the other. In a case of conflict the F-tT is bound to follow the later of two first instance authorities where the later authority has fully considered earlier authorities (see Colchester Estates (Cardiff) v Carlton Industries Plc [1986] Ch 80).” (Meena Seddon Settlement v. HMRC [2015] UKFTT 140 (TC), §32).
Per incuriam (made without consideration of a binding higher authority)
“In general this Tribunal is bound by all decisions of higher courts, and would carefully consider the decisions of equivalent jurisdiction. Nevertheless, I am not so bound where any such decision was:
- Made without consideration of a binding higher authority (‘per incuriam’);
- Inconsistent with a decision of equivalent authority which I prefer;
- If the views expressed did not form part of the actual judgment of the court. Such non-binding views are referred to as ‘obiter’. Nevertheless, I am bound to give such obiter views expressed by a higher authority considerable respect and would be likely to follow them unless I considered they did not properly reflect a decision of even higher authority or were inconsistent with one of equivalent authority which I preferred.” (L H Bishop Electric Company Ltd v. HMRC, §58, Judge Mosedale)
Rule does not apply where a lower authority is overlooked:
“It seems to us that the fact the Court of Appeal was not referred to Laura Ashley does not deprive the DFS decision of authority (it was not ‘per incuriam’): the Court of Appeal is not bound to consider decisions of lower courts.” (London School of Economics and Political Science v. HMRC [2015] UKFTT 291 (TC), §43, Judge Mosedale).
Binding precedent that might be wrong
In such circumstances there is the possibility of an automatic dismissal of the appeal in order to expedite the parties’ journey to a higher court with jurisdiction to depart from the binding precedent - see Allan v. HMRC [2015] UKUT 16 (TCC), §§18 – 22.
Foreign authorities
On international tax matters
Considered in, for example, Irish Bank Resolution Corporation Ltd v. HMRC [2017] UKFTT 702 (TC).
- Informal translation of foreign authorities
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"[384] [Counsel for the taxpayer] argued that no weight whatsoever should be attached to the informal translation. She argued that:
(1) HMRC had been aware of the appellant’s case on PFC (ie that “purely cosmetic applied only to surgery) since the Skeleton Argument had been filed three weeks previously and had also been aware that the Authorities Bundle included only the official English translation.
(2) The appellant had had no opportunity to test the accuracy of the informal translation or to decide whether it should seek an alternative translation.
(3) No one present spoke Swedish.
(4) There were only translations of three paragraphs and any paragraph in any judgment should be read in context.
[385] I have had regard to the Overriding Objective and I agree with her on all counts. Accordingly I have disregarded both the translation and the arguments for HMRC predicated thereon." (Aesthetic-Doctor.Com Ltd v. HMRC [2024] UKFTT 48 (TC), Judge Anne Scott)
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Academic and Counsel opinions
Eminent counsel opinion has persuasive authority
“The seminal opinion, as the appellants describe it, is that of Mr Michael Nolan QC (later Lord Nolan) and Mr Robin Mathew (now QC) of 7 December 1978…At first sight that conclusion seems contrary to the view expressed in the Nolan opinion, quoted at para 13 above. Although the opinion is not binding on me, a statement of such eminent authorship is obviously of great persuasive value.” (Irish Bank Resolution Corporation Ltd v. HMRC [2017] UKFTT 702 (TC), §§13…65, Judge Bishopp).
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Unpublished decisions not admissible for HMRC
"[10] For present purposes, in refusing permission for HMRC to rely on Wesley we had regard to the overriding objective of dealing with cases fairly and justly. There is no rule of law which prohibits a party from relying on an unpublished decision in another tribunal. Each case must be considered on its own merits and it is a matter for the discretion and judgment of the particular tribunal. We took into account the following factors:
(1) As we understand it, most written decisions of the FTT on substantive appeals are published on the FTT’s website, on the National Archive and on BAILII. Some basic cases are not published and there may be certain circumstances, including oversight, where a decision is not published. HMRC will be aware of all unpublished decisions of the FTT whereas most taxpayers and their representatives will have no knowledge of unpublished decisions. HMRC might therefore be perceived as having an unfair advantage over the general body of taxpayers. There is potential for HMRC, even if only by inadvertence, to refer to favourable unpublished decisions but not to refer to unfavourable decisions. Indeed, we note that in Ardmore, counsel for HMRC gave an assurance that no-one connected with the appeal including HMRC’s policy leads, were aware of any other relevant, unpublished FTT decision.
(2) We agree with the FTT in Ardmore that elementary justice demands that rules which bind a citizen should be ascertainable by the citizen by reference to identifiable sources which are publicly accessible (see Fothergill v Monarch Airlines Limited [1981] AC 251 at 279, per Lord Diplock, albeit in a different context). (3) We accept that in this case there was no specific prejudice to the appellants. The appellants are well represented and were given notice prior to the hearing that HMRC intended to rely on Wesley and were provided with a copy of the decision. We should add that, in his submissions on the issue of whether we should have looked at Wesley (in its unpublished state), Mr Rivett made it quite clear that he was not claiming any specific prejudice to the appellants. His position, quite properly, was that he was making his submissions in the interests of all those taxpayers, and in particular those without representation, who might be prejudiced if HMRC was permitted to make references to unpublished authorities of which HMRC alone were likely to be aware.
(4) There was ample authority before us from the higher courts as to the correct test for the POEM of the trusts and we had the benefit of full submissions from experienced counsel. We considered that we were unlikely to gain any further assistance from Wesley.
[11] Weighing all these factors, we considered that fairness and justice required us to refuse permission for HMRC to rely on Wesley in its unpublished state."
(Haworth v. HMRC [2024] UKUT 58 (TCC), Edwin Johnson J and Judge Cannan)
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"[25] HMRC referred the Tribunal to an unpublished 2019 First-tier Tribunal decision. In Ardmore Construction Ltd v HMRC [2014] UKFTT453 the First-tier Tribunal did not consider it proper for HMRC to cite an unpublished decision. Judge Brooks stated, at [20]:
“This clearly raises the question of fairness and whether HMRC should be permitted to rely on an unpublished (as opposed to an unreported) decision not freely available to the general taxpayer, especially as we are obliged to give effect to the overriding objective, contained in Rule 2 of the Tribunal Procedure (First-tier Tribunal)(Tax Chamber) Rules 2009 (the “Tribunal Rules”), to “deal with cases fairly and justly” which includes dealing with a case in ways which “are proportionate” to the “resources of the parties”.
[26] I do not consider it proper for HMRC to have cited an unpublished decision in this case and I have not relied upon it." (Fastklean Ltd v. HMRC [2020] UKFTT 289 (TC), Judge Sukul)
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On the approach to publication see P1: Nature of Tribunal's decision
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Unpublished decisions may be admissible for taxpayer
"[12] In the FTT there may be additional relevant factors. For example, the FTT in Ardmore noted that as a matter of judicial comity, the FTT will generally follow other FTT decisions unless satisfied that they are wrong. The perception of unfairness may be stronger in those circumstances. However, we do not rule out that there may be cases where it may be appropriate for the FTT to be referred to and to take into account an unpublished FTT decision. Indeed, HMRC may well consider it appropriate to refer the FTT to an unpublished decision which is unfavourable to their case." (Haworth v. HMRC [2024] UKUT 58 (TCC), Edwin Johnson J and Judge Cannan)
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"[22] One of the reasons given by Mr Messore for his application was that a Tribunal may not allow a party to refer to or rely on an unpublished Tribunal judgment. In Ardmore Construction Limited v HMRC [2014] UKFTT 453 (TC) at [22], Judge Brooks refused to allow HMRC to rely on an unpublished judgment of the Special Commissioners because HMRC had copies of all Special Commissioners and Tribunal judgments, and it was not fair for them to rely on a case which the taxpayer could not access.
[23] More recently, in Greencyc v HMRC [2021] UKFTT 480 (TC), Judge Alexander first cited the relevant passages from Ardmore and then refused permission for the taxpayer to rely on an unpublished interlocutory decision. He said:
“what is sauce for the goose must also be sauce for the gander - if it is not proper for HMRC to cite an unpublished decision, fairness dictates that it is also improper for the appellant to cite an unpublished decision.”
[24] Ms Mallik submitted that this was the correct approach, and that the Tribunal should neither publish the Decision, nor should any person (other than the parties) be able to refer to or rely on it.
[25] However, my own view is that there is a difference between HMRC citing and relying on unpublished judgments, and the taxpayer doing so. Taxpayers rarely have copies of unpublished judgments; this usually only happens if they or their advisers know an appellant in a previous case, or if the adviser maintains a library of judgments in earlier cases in which they represented an appellant.
[26] In contrast, HMRC is the respondent in all tax appeals. They have an entire and complete library of unpublished judgments. If HMRC were permitted to rely on these judgments at the Tribunal, they could select one from that library, and the taxpayer (and the Tribunal panel) would not know whether other contradictory or conflicting unpublished judgments also existed.
[27] But the position is not the same where the taxpayer seeks to rely on an unpublished judgment. HMRC know whether or not that judgment is atypical, an outlier, or reflects the consensus view of previous Tribunals who have considered similar issues. They are thus in a position to challenge reliance on an unpublished judgment, whereas the taxpayer is not.
[28] This reflects the position in Ardmore, where Judge Brooks first noted at [20] that:
“HMRC has copies of all decisions made in the various tax courts, because, of course, it is always a party to such proceedings.…This means that HMRC has the ability to draw upon some decisions of the tax courts that are not freely available to the general taxpayer,”
[29] He then said:
“This clearly raises the question of fairness and whether HMRC should be permitted to rely on an unpublished (as opposed to an unreported) decision not freely available to the general taxpayer, especially as we are obliged to give effect to the overriding objective, contained in Rule 2 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (the ‘Tribunal Rules’), to ‘deal with cases fairly and justly’ which includes dealing with a case in ways which ‘are proportionate’ to the ‘resources of the parties’.”
[30] Thus, I would allow a taxpayer to rely on an unpublished judgment as long as HMRC had had due notice, but I would not allow HMRC to do the same. In other words, the HMRC goose and the taxpayer gander are not in the same position. I accept, however, that other judges may take a different view." (Lillicrap v. HMRC [2023] UKFTT 72 (TC), Judge Redston)
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- HMRC not seeking publication of unfavourable decision until much later
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"[14] We would add that the present circumstances vividly illustrate the potential unfairness to taxpayers. Wesley concerned the question of POEM. It also concerned what was described as the “different persons argument”. The FTT determined that argument in favour of the taxpayer. The same argument was raised by HMRC in this appeal before the FTT. The decision in Wesley was released to the parties in February 2021, which was after the FTT hearing in the present appeal but a year before the FTT released its decision. We understand that the present appellants and their legal advisers were unaware that there was an FTT decision which dealt with POEM and the different persons argument. It might well have assisted the taxpayer and indeed the FTT in this appeal to see how the FTT in Wesley had dealt not only with POEM but also with the different persons argument. In the event, the FTTs came to the same conclusion on the different persons argument. Of course, this might all have been avoided if HMRC had invited the FTT to publish the decision in Wesley soon after it was released. It seems unlikely that it went unnoticed by HMRC that the decision had not been published." (Haworth v. HMRC [2024] UKUT 58 (TCC), Edwin Johnson J and Judge Cannan)
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Artificial Intelligence generated authorities
"[23] Although we have accepted that Mrs Harber did not know the AI cases were not genuine, we reject her submission that this did not matter because the Tribunal had decided other reasonable excuse cases on the basis of ignorance of the law and/or mental health issues. We instead agree with Judge Kastel, who said on the first page of his judgment (where the term "opinion" is synonymous with "judgment") that:
"Many harms flow from the submission of fake opinions. The opposing party wastes time and money in exposing the deception. The Court's time is taken from other important endeavors. The client may be deprived of arguments based on authentic judicial precedents. There is potential harm to the reputation of judges and courts whose names are falsely invoked as authors of the bogus opinions and to the reputation of a party attributed with fictional conduct. It promotes cynicism about the legal profession and the…judicial system. And a future litigant may be tempted to defy a judicial ruling by disingenuously claiming doubt about its authenticity."
[24] We acknowledge that providing fictitious cases in reasonable excuse tax appeals is likely to have less impact on the outcome than in many other types of litigation, both because the law on reasonable excuse is well-settled, and because the task of a Tribunal is to consider how that law applies to the particular facts of each appellant's case. But that does not mean that citing invented judgments is harmless. It causes the Tribunal and HMRC to waste time and public money, and this reduces the resources available to progress the cases of other court users who are waiting for their appeals to be determined. As Judge Kastel said, the practice also "promotes cynicism" about judicial precedents, and this is important, because the use of precedent is "a cornerstone of our legal system" and "an indispensable foundation upon which to decide what is the law and its application to individual cases", as Lord Bingham's said in Kay v LB of Lambeth [2006] UKHL 10 at [42]. Although FTT judgments are not binding on other Tribunals, they nevertheless "constitute persuasive authorities which would be expected to be followed" by later Tribunals considering similar fact patterns, see Ardmore Construction Limited v HMRC [2014] UKFTT 453 at [19]." (Harber v. HMRC [2023] UKFTT 1007 (TC), Judge Redston)
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