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Procedure.Tax
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M22: Joining and consolidating appeals
Power to consolidate or join
“(3) … the Tribunal may by direction--
[…]
(b) consolidate or hear together two or more sets of proceedings or parts of proceedings raising common issues, or treat a case as a lead case (whether in accordance with rule 18 (lead cases) or otherwise)" (FTT Rules, r.5(3)(b))
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Consolidate appeals by the same appellant, join appeals with different appellants
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“It is important to keep in mind the difference between the “consolidation” of appeals and a direction that appeals be heard together, a distinction that is made in Rule 5(3)(b) of the Tribunal Rules. Under the Tribunal’s procedure, when two appeals are consolidated, they become a single appeal with a single appeal reference and lose their identity as separate appeals. It follows that appeals made by different taxpayers cannot be consolidated since appeals made by different taxpayers could never be regarded as a single appeal. By contrast, under the Tribunal’s procedure, when appeals are directed to be “heard together”, they retain their identity as separate appeals even though for convenience or other reasons they may be case-managed together and heard together at the same time and by the same Tribunal panel.” (The Aquarius Film Company LLP v. HMRC [2016] UKFTT 702 (TC), §26).
FTT directions to be understood in that light
“The Tribunal has, on a number of occasions in its directions referred to appeals being “combined, case managed and heard together by the same Tribunal”. At first sight, the use of the word “combined” might appear to be suggesting that appeals are to be consolidated. However, once the directions are considered in context, I consider that it is clear that the Tribunal has at no point consolidated any of the relevant appeals.” (The Aquarius Film Company LLP v. HMRC [2016] UKFTT 702 (TC), §27).
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Different categorisation of appeals no bar to consolidation
"[50] The appellant pointed out that the Kittel appeals were categorised as complex while the de-registration appeal was categorised as standard: it considered this a bar to consolidation. I do not agree: categorisation is a decision made by the Registrar at the outset of the appeal and can be re-considered at any time, whether or not a party applies for re-categorisation. It seems clear to me that the de-registration appeal must be (as it depends on the same allegations) at least as complex as the Kittel appeals; in any event, the effect of consolidation into appeal Ref TC/16/2753 will be that all appeals take on the complex categorisation of that case. To the extent I am wrong on that, I re-categorise the de-registration appeal as complex because its nature is complex.
[51] In any event, it is not impossible to consolidate appeals with different costs regimes. It just makes the decision on costs at the end of the appeal more complicated." (Manhattan Systems Limited v. HMRC [2017] UKFTT 862 (TC), Judge Mosedale)
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Relevant factors
"[20] In Maharani Restaurant, Turner J referred to a number of factors that should properly be considered in deciding whether to exercise the power to consolidate separate proceedings. These include
(1) commonality of appellants;
(2) commonality of witnesses;
(3) degree of overlap of evidence;
(4) risk of prejudice to the appellants in relation to the presentation of similar fact evidence;
(5) avoiding the need for witnesses to give evidence more than once (and the risk that their evidence on the same point might be accepted in one appeal but not in another);
(6) cost of holding more than one appeal or single consolidated appeal;
(7) length of hearing required for separate appeals and for single consolidated appeal; and
(8) listing and delay." (First Class Communications v. HMRC [2014] UKUT 244 (TCC), Judge Sinfield and Judge John Clark)
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"[26] HMRC relied on Maharani Restaurant (1999) STC 295 for the principles on when appeals should be consolidated. These principles were not really in dispute: the dispute was whether consolidation was justified on the facts of this case. In Maharani the High Court ruled that the Tribunal should consider:
(a) The risk of two tribunals reaching inconsistent findings of fact ('[22]…. It would indeed have been a mischievous result if there had been two separate hearings and witnesses whose evidence was believed in one case in relation to the same evidential matters were not believed in the other, or the rother way about.')
(b) Convenience of the witnesses ('[23]…added enormously to their inconvenience if they had been required to give evidence on two separate occasions in relation to a matter that was covering essentially the same matter.'
(c) Length of the hearing and whether consolidation will reduce the overall sitting days: [24];
(d) Potential effect of similar fact evidence [25];
[27] By ruling that the Tribunal had not taken into account any irrelevant matter, he High Court also impliedly approved the fact that the Tribunal had considered:
(e) Whether overall costs will be saved by consolidation;
(f) Whether consolidation will increase complexity
(g) Risk of prejudice to parties to only some but not all of the consolidated appeals.
[28] However, it seems to me that the above list is not necessarily an exhaustive list of what would be relevant and in this case, it was also relevant to consider:
(h) Whether consolidation would make it difficult to expedite the de-registration appeal in the limited fashion which I have found justified in this case." (Manhattan Systems Limited v. HMRC [2017] UKFTT 862 (TC), Judge Mosedale)
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“…it is clear that on an application of this nature, the most relevant factors are those relating to the congruity of relevant evidence, and the prejudice to a party…In the absence of any identifiable prejudice in these respects to CFBL, the question resolves itself into whether there is a congruity of relevant evidence in each of the appeals.” (CF Booth Ltd v. HMRC [2015] UKFTT 407 (TC), §22).
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- Commonality of appellants
"[38] The appellant in the two appeals is the same. This favours consolidation or joinder of the appeals but is far from decisive." (Arunvill Global Equity Trading Limited v. HMRC [2018] UKFTT 378 (TC), Judge Mosedale)
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- Risk of inconsistent findings of fact/overlap of evidence
“All the relevant witnesses in the one case were witnesses in the other. It would indeed have been a mischievous result if there had been two separate hearings and witnesses whose evidence was believed in one case in relation to the same evidential matters were not believed in the other, or the other way about.” (Maharani v. CEC [1999] STC 295 at 300).
"[13] During the course of the hearing, and at my suggestion, HMRC withdrew the application to join the Section 73 Appeals to the Kittel Appeals both parties agreeing that the Section 73 Assessment and Penalty appeals could simply be stayed pending the outcome of the Kittel Assessment and Penalty appeals. The parties agreed that a stay was effective to protect the Appellants and meet HMRC's concern that were the Section 73 Appeals to run in parallel to the Kittel Appeals there was a risk of different decisions on conduct arising from the same factual backdrop." (4Site Services London Limited v. HMRC [2024] UKFTT 143 (TC), Judge Brown KC)
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"[46] Therefore, I find that the two notional tribunals (one hearing the de-registration appeal and the other hearing the Kittel appeals) will principally be deciding exactly the same question of fact, and that is whether the appellant entered into transactions which were, and it knew were, connected to fraud. That question cannot be asked and answered in separate hearings, without risking inconsistent findings of fact; inconsistent findings of fact would bring the administration of justice into disrepute.
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[49] So factor (a) [risk of inconsistent findings of fact] is a factor which is very strongly in favour of consolidation; all the other factors bar (h) are also in favour of consolidation, and, as I have said, even factor (h) does not really indicate that it would be prejudicial to the appellant to consolidate." (Manhattan Systems Limited v. HMRC [2017] UKFTT 862 (TC), Judge Mosedale)
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“In these appeals, I have concluded that the evidence of the activities and processes of CFBL over the whole period covered by the two appeals, and in respect of periods outside those in issue in the appeals, is relevant to the case put in each of them as regards the knowledge, actual or constructive (“knew or should have known”) of CFBL. There can be no doubt as to the potentially probative value of the evidence taken as a whole.” (CF Booth Ltd v. HMRC [2015] UKFTT 407 (TC), §32).
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Factor is weaker if one appeal is supervisory and the other is appellate
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"[34] It seemed to me that proceeding on the assumption (for the sake of argument) that Ms Tanchel was right and the jurisdiction in the deregistration appeal would be merely supervisory, it would be significant because the two notional tribunals, the one hearing the deregistration appeal and the other the Kittel appeals, would not be deciding identical questions. The first would consider on the basis of the evidence known to HMRC at the time of the decision whether HMRC reasonably concluded that the appellant entered into the transactions knowing they were connected to fraud; the other tribunal would consider all the evidence available at the time of the hearing in order to decide whether the appellant actually did enter into the transactions knowing they were connected with fraud.
[35] It would be possible for the two notional tribunals to decide these questions differently without bringing the administration of justice into disrepute. The case for consolidation would be much weaker than otherwise: while there would be some overlap of documentary and witness evidence, the inconvenience to the HMRC officer in giving evidence twice might not be sufficiently significant to delay the preparation of the de-registration appeal for hearing." (Manhattan Systems Limited v. HMRC [2017] UKFTT 862 (TC), Judge Mosedale)
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Overlap of background not necessarily significant
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"[41] There would be some overlap of evidence because at root of both appeals was the same transaction. The appellant’s position was that the overlap would be more in the background to the appeals and the ‘reading in’ of that by the judicial panel, than in contested evidence at the hearing. Again, I did not understand HMRC to suggest that this view was wrong.
[42] It was unlikely that the two appeals involved overlapping disputed evidence." (Arunvill Global Equity Trading Limited v. HMRC [2018] UKFTT 378 (TC), Judge Mosedale)
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- Inconvenience to witnesses
“Witnesses are entitled to consideration, and it would have added enormously to their inconvenience if they had been required to give evidence on two separate occasions in relation to a matter that was covering essentially the same matter.” (Maharani v. CEC [1999] STC 295 at 300).
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- Shorter hearing length
“Estimates were made of the length of the separate appeals, each heard separately was estimated to last about seven days, making fourteen in all. If there was one appeal proceeding or one set of appeal proceedings, it is estimated they would last about ten days. The impact of this simple arithmetic is clear.” (Maharani v. CEC [1999] STC 295 at 300).
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- Efficient use of Tribunal resources
"[55] HMRC wanted the appeals to be joined for the sake of convenience and I accept it would be more convenient to the Tribunal if only one judicial panel had to read into the factual background rather than two, and that, if they were not joined, reserving the second appeal to the same judicial panel would be unwise. It would also be convenient if the same hearing determined the s 923 point as the CT issues, in order to avoid the risk of a stay of the CT appeal while the s 923 point went on appeal.
[56] Aside from these issues, there seemed to be no factors which pointed towards the appeals being joined, despite the fact that the appellant and transaction in issue was the same. Nevertheless, while taking into account the appellant’s concerns with the financial impact of delay on its business, I considered the overall benefit of consolidation/joinder did outweigh the disadvantages." (Manhattan Systems Limited v. HMRC [2017] UKFTT 862 (TC), Judge Mosedale)
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- Delay
"[47] (h) Whether consolidation would slow down preparation of the de-registration appeal: this is the only factor which might be against consolidation but I do not think that properly analysed it is, as the same evidence must be served in both appeals.
[48] In conclusion, because the same evidence is relevant to both appeals, I don’t accept that consolidation will significantly delay the de-registration appeal. HMRC must be given a fair opportunity to serve the evidence of connection to fraud and knowledge/means of knowledge of it in both appeals." (Manhattan Systems Limited v. HMRC [2017] UKFTT 862 (TC), Judge Mosedale)
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- Risk of inappropriate use of evidence
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“The concern, and understandable concern, of the appellants is the risk that the evidence in the one appeal might be used in the other appeal by way of similar fact. It is clear that the tribunal had well in mind the restricted nature of the ability of a court in a case such as this to treat evidence as amounting to similar fact, and it will be for the chairman of the tribunal who will hear these joined appeals to make careful findings in relation to that matter, or he may—I do not say will—find that his decision will be impugned by the unsuccessful party.” (Maharani v. CEC [1999] STC 295 at 300).
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- Caution about overloading judge with too many variations
“There were five separate appeals, with slightly different facts; although many of the differences were of no significance it has been necessary to consider in each case whether or not that is so. The references, too, raised questions to which the answers might differ depending on the facts applicable to each of the individual referrers, or the tax year to which the question related…Against that background the task of producing a decision of manageable length but which (one hopes) deals adequately with all of the relevant issues in a manner which is understandable both to the parties and to others coming to it without any prior knowledge of the case presents obvious difficulties. We say that not by way of an excuse, but as a warning for the future: although, at first sight, the gathering together of several similar cases so that they can be heard together seems to be an economical course, in practice it creates real difficulties and leads to delay. It would, we think, have been better not to link the appeals with the references, to identify fewer lead cases or to focus, in the references, on one tax year.” (Hawksbridge LLP v. HMRC [2014] UKFTT 416 (TC), §§21…22, Judge Bishopp).
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Premature applications
“[The taxpayer] submitted that it was in any event premature for the question of consolidation of these appeals to be considered. It was not possible for the question of congruity of evidence to be determined until that evidence had been served…I do not agree. Although such an argument might have force in some circumstances, where it might not be possible to ascertain the nature or relevance of evidence before it is available for detailed scrutiny, that is not so in this case. The nature of the evidence likely to be relied upon, as a general matter, by HMRC in cases where it is alleged that an appellant knew or should have known of the connection of its transactions with fraudulent evasion of VAT can be discerned by reference to the many similar cases that have been brought before the tribunal. The nature of such evidence, if not its detail, can be readily appreciated by CFBL. I do not therefore accept that there is any prejudice in this respect to CFBL in the timing of this application.” (CF Booth Ltd v. HMRC [2015] UKFTT 407 (TC), §18).
Contemporaneous hearing of appeals without joining
“There would be obvious duplication if this issue were to be litigated twice or three times with the potential for inconsistent decisions by differently constituted Tribunals and subsequent further appeals. Having regard, as I must, to the overriding objective, especially in dealing with cases in ways which are proportionate to the complexity of issues, anticipated costs and resources of the parties (see rule 2(2)(a) Tribunal Procedure (First-tier Tribunal)(Tax Chamber) Rules 2009) I consider that it would be possible to eliminate or at least reduce the likelihood of such problems arising if the WOWGR, First and Second VAT appeals are heard contemporaneously by the same Tribunal….I have therefore directed accordingly.” (Elbrook (Cash and Carry) Ltd v. HMRC [2017] UKFTT 143 (TC), §§18…19).