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Procedure.Tax
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M19: Further and better particulars
Power to require further and better particulars
“(3)…the Tribunal may by direction --
(d) permit or require a party or another person to provide documents, information or submissions to the Tribunal or a party;” (FTT Rules, r.5(3)(d)).
Opponent's case must be sufficiently clear
“Being just and fair also means letting the applicant know what the case is against him…Is the case the Appellant has to meet in this appeal sufficiently clear in all the circumstances?” (Vale Europe Ltd v. HMRC [2014] UKFTT 1042 (TC), §6…§9, Judge Hellier)
- Appellant entitled to understand HMRC’s legal argument
“Understanding the legal argument for the proposition may help the appellant prepare its case. Nothing is lost and clarity may be gained if the argument is set out sooner rather than later. I shall direct that HMRC serve a short note summarising the basis for its argument within six weeks.” (Vale Europe Ltd v. HMRC [2014] UKFTT 1042 (TC), §22, Judge Hellier in respect of a “novel proposition” (§18))
- HMRC required to explain relevance of factual assertions
“BPP was entitled to know which of the facts led to HMRC’s conclusions, and was correspondingly entitled to have rather more than a general exposition of the facts without discrimination between the relevant and the irrelevant.” (HMRC v. BPP Holdings Ltd [2014] UKUT 496 (TCC), §49).
“It seems to me that HMRC should make clear what aspect of its case they consider is supported by these allegations and the evidence tendered in support of them. I shall make a direction to that effect.” (Vale Europe Ltd v. HMRC [2014] UKFTT 1042 (TC), §37, Judge Hellier);
Confined to matters reasonably necessary and proportionate to enable the party to prepare
"[33] In accordance with rule 25 FTT Rules HMRC's statement of case is required to state the legislative provision under which the decision under appeal was made and set out the respondent's position in relation to the case. These requirements are set in the context of the parties' obligations to assist the Tribunal to deal justly and fairly with the matter under appeal. As recently noted by Judge Aleksander in Alpha Republic Limited v HMRC [2023] UKFTT 750 (TC) endorsing the view taken in Citibank NA v HMRC [2014] UKFTT 1063 (TC) the statement of case, where necessary and appropriate by reference to other material including witness statements, must give the appellant the opportunity to properly prepare for the case. By reference to Tejani v Fitzroy Plance Residential Ltd [2020] EWHC 1855 (TCC) and the cases cited therein Judge Aleksander notes that a statement of case "marks out the parameters of the case being advanced", only pleading the facts necessary for the purpose of formulating a cause of action/defence.
[34] The question to be asked when considering the F&BP applications is: does the statement of case (taken together with the witness statements) enable the Appellant in this case to know the case it has to meet?
[35] The answer is quite plainly yes.
[36] The burden rests with HMRC to establish tax loss attributable to fraudulent evasion of VAT of which the Appellant knew or should have been aware. The basis on which HMRC propose to make good their case is summarised in the statement of case and particularised in the evidence. Whether it is sufficient to meet the burden on them is a matter to be determined by the Tribunal panel hearing the appeal and one on which I make no observation other than that I have concluded that their case is at least reasonably arguable.
[37] In light of the terms on which the statement of case is drafted and the evidence presented it is not clear to me what more HMRC could even say in response to the F&BPs beyond what is there already." (4Site Services London Limited v. HMRC [2024] UKFTT 143 (TC), Judge Brown KC)
“Although not directly applicable, the benefit of the guidance provided by the CPR in Tribunal proceedings has long been recognised (eg by the Senior President of Tribunals in BPP Holdings v HMRC [2016] STC at 841 [36]). In relation to the provision of further information paragraph 1.2 of Part 18 CPR, ‘Preliminary Request for further Information or Clarification’, provides that: “A Request should be concise and strictly confined to matters which are reasonably necessary and proportionate to enable the first party to prepare his own case or to understand the case he has to meet.” (Elbrook (Cash and Carry) Ltd v. HMRC [2017] UKFTT 650 (TC), Judge Brooks).
- Not required to plead negatives
“The appellant is not entitled to ask HMRC to confirm what it is not pleading. Requests for such negative pleadings would unnecessarily prolong proceedings and fail to generate anything useful, particularly as any answer would sensibly have to be caveated by saying that the matter forms no part of HMRC’s case as yet, just in case more evidence comes to light later.” (Citibank NA v. HMRC [2014] UKFTT 1063 (TC), §114, Judge Mosedale. Same approach by Judge Mosedale in Ronald Hull Junior Ltd v. HMRC [2016] UKFTT 525 (TC))
Party who puts the other side to proof can be required to explain areas of challenge
“...in relation to HMRC witnesses dealing only with VAT Loss Issues, where the appellant does not advance a positive case and does not serve evidence challenging the evidence of the relevant witnesses, the form of direction that may be given in appropriate cases is one requiring the appellant to identify the passages in the relevant witness statements which it does not accept.” (Elbrook Cash and Carry Ltd v. HMRC [2019] UKUT 201 (TCC), §60, Zacaroli J and Judge Thomas Scott)
“An appellant who advances a positive case will be required, by virtue of other customary directions, to set it out in witness statements or, if that is not practicable, in a response or a letter, or in some similar way. Accordingly, an appellant putting a positive case must disclose his hand in advance; we see no reason why one merely putting HMRC to proof should be in a better position.” (HMRC v. Fairford Group plc [2014] UKUT 329 (TCC), §48, Simon J and Judge Bishopp).
- Or at least to identify the respects in which a statement is disputed at a high level
“According to [49] of the judgment in Fairford the circumstances in which the FTT might refuse to permit an appellant to cross-examine HMRC’s witnesses in respect of the VAT Loss Issues are where the appellant (1) raises no positive case, (2) serves no evidence challenging the relevant statements and (3) does not identify “the respects in which” the relevant statements are disputed. In this case, the Appellant had identified the respects in which the relevant statements were disputed, namely (in effect) in all respects…The appellant must in responding to this part of a Fairford direction say what he objects to; he need not say why.” (Elbrook Cash and Carry Ltd v. HMRC [2019] UKUT 201 (TCC), §§47…55)
- Possible costs sanction for not undertaking exercise properly
“If an appellant complies with the direction by identifying every passage in a statement, or even every passage in every statement, then that does not provide a reason to preclude the appellant from cross-examining the witness. If, in such a case, it turns out at the full hearing that either no (or no proper) cross-examination is undertaken in respect of the witnesses, then it may well be that the costs sanctions referred to by Judge Berner in [17] of Booth would be appropriate.” (Elbrook Cash and Carry Ltd v. HMRC [2019] UKUT 201 (TCC), §63)
Not generally entitled to “full” or “exhaustive” particulars
“Although I accept the submission of Mr Jones that no one would request partial or limited particulars, to my mind the requests of Elbrook in its application are for exhaustive or full particulars of the facts of the type rejected by Judge Mosedale in Ronald Hull Junior Limited (at [56]) as “tantamount to requiring a Statement of Case to contain the text of witness statements” and Briggs J in Lexi Holdings (at [10]) “as having to achieve a preconceived level of detail regardless of its practical effect in terms of providing enlightenment as to the claimant’s case.”” (Elbrook (Cash and Carry) Ltd v. HMRC [2017] UKFTT 650 (TC), §33, Judge Brooks).
“If I were to grant an application for ‘full’ or ‘exhaustive’ particulars I could create a hostage to fortune; it could lead to an application by the appellant at the hearing that anything put to the appellant’s witness that strays beyond the ‘exhaustive’ particulars is beyond what the respondent is entitled to put to that witness…I would create an unfortunate expectation that appellants are entitled to that level of detail in every statement of case.” (Citibank NA v. HMRC [2014] UKFTT 1063 (TC), §94…§95, Judge Mosedale).
But:
“The matter cannot be left in the present unsatisfactory state. In my view because of the reasons I have given in this ruling HMRC are required to set out the basis of its case against Infinity. Thus they should provide full particulars of every fact or matter relied upon for the allegation that Infinity did not act in good faith. If they are going to allege fraud they must give full particulars of fraud to the like extent. I have already observed that in my view an allegation of bad faith is tantamount to an allegation of fraud on established authority. Further they must give full particulars of every fact or matter relied upon for the allegation that they did not take every reasonable measure to ensure that their supply did not lead to their participation in tax evasion…It is only when those particulars are provided that Infinity can know the case against it.” (HMRC v. Infinity Distribution Ltd [2015] UKUT 219 (TCC), §37…38, Peter Smith J).
Information to be provided in the future no answer to application for FBP
“there is a difference between considering the position as at the date of the hearing and asking the question whether the appellant knew the case against it in time to prepare for the hearing, and considering an application for further and better particulars before the service of the evidence. The appellant is entitled to have the respondent’s case set out in its statement of case and it is no answer for the respondents to say (at this point in time) that they will rely on their (yet to be served) witness statements to remedy any defects in the Statement of Case.” (Citibank NA v. HMRC [2014] UKFTT 1063 (TC), §12, Judge Mosedale)
- But may be an answer if already provided in witness statements
"[30] Even if all the foregoing were entirely wrong, and neither the Decision Letter nor HMRC's Statement of Case did set out, in an intelligible form, the case which Mr Qureshi has to meet, that case has now been set out, intelligibly and fully, in HMRC's witness statements. Mr Qureshi and his representatives have now had those for 13 months." (Igen Distribution Ltd v. HMRC [2020] UKFTT 328 (TC), Judge McNall)