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Power to add and join

 

(2) The Tribunal may give a direction adding a person to the proceedings as a respondent.
(3) A person who is not a party to proceedings may make an application to be added as a party under this rule.
(4) If the Tribunal refuses an application under paragraph (3) it must consider whether to permit the person who made the application to provide submissions or evidence to the Tribunal.” (FTT Rules, r.9(2) – (4)).

Power to add and join

Person cannot be added as an appellant

 

“…in Ryan Sampson  [2014] UKFTT 179 Judge McKenna added a party to an appeal as an appellant. However [that] case related to an appeal against a letter of review addressed to two people whose property had been seized. It appeared that the tribunal administration had treated the appeal is being by one of them only. This was a case either of the correction of an administrative mistake under paragraph (1)(a) – the wrong person being named as a party – or where an alternative would have been to consolidate to appeal the appeals of the two persons affected…I have come to the conclusion that rule 9 does not confer on this tribunal a power to add a person as an appellant.” (Space Maker Storage 2 Ltd v. HMRC [2014] UKFTT 296 (TC), §§33…34, Judge Hellier – relied particularly on the definition of appellant in r.1(2) as the person who starts proceedings).

Person cannot be added as an appellant

Tribunal will notify/join persons with a clear interest 

 

“In common with the Tribunal’s usual procedure in such appeals, the second respondent (having a clear interest in the outcome of the appeal, being the person whose entitlement to statutory sick pay was under consideration) was informed of the appeal and that she would be joined as second respondent unless she object.” (Brian Cleaver v. HMRC [2014] UKFTT 1075 (TC), §3).
 

Tribunal will notify/join persons with a clear interest 

Relevant factors and examples

 

Persons directly affected in their legal rights or financial position 

 

“It seems to me that when two parties are in dispute in an action at law, and the determination of that dispute will directly affect a third person in his legal rights or in his pocket, in that he will be found to foot the bill, then the court in its discretion may allow him to be added as a party on such terms as it thinks fit. By so doing, the court achieves the object of the rule” (Gurtner v. Circuit [1968] 2 QB 587); 

 

“We agree with Liquid that, CARS having so consented, it would be in accordance with the overriding objective (Rule 2: to deal with cases fairly and justly) to substitute CARS as the appellant going forward.” (Liquid Investments Ltd v. HMRC [2014] UKFTT 297 (TC), §35, Judge Kempster).

 

“The fact that a third party is directly affected, either legally or financially, by the outcome of legal proceedings is a legitimate consideration to be taken into account” (Barclays Bank plc v. CEC [1992] VATTR 229)

 

Persons joined to ensure that they are bound by findings of fact 

 

“By directions dated 1 November 2013, Judge Barbara Mosedale joined Mr Thomas, Mr Stuart Thomas and SSS…Judge Mosedale made this joinder direction in order that these three additional parties should be bound by findings of fact made by this Tribunal in this appeal insofar as they were relevant to other appeals…” (Spring Capital Ltd v. HMRC [2015] UKFTT 0066 (TC), §6).

 

“My view is that…there is a real risk of inconsistent findings of fact being made in potential proceedings for restitution which Gnutti might decide to take either against HMRC or the appellant and which it is still in time to initiate; and that risk is such as to justify what is likely to be a quite limited increase in cost and expense for the appellant in these proceedings by adding a second respondent.  While I accept that the risk of inconsistent findings can only be nullified if the Court hearing the subsequent proceedings were to find abuse of process, as res judicata will not apply, it seems a real possibility that such a court might find it abusive for Gnutti, if a party to these proceedings, to seek to re-open the question of whether the appellant repaid it the VAT when its associated company made the payment of $2 million.” (Bradonbay Ltd v. HMRC [2015] UKFTT 229 (TC), §65 – the question was whether the vendor/taxpayer had passed on the cost of paying VAT when selling a business, the purchaser).
 

Where subject matter of appeal has been validly assigned

 

“I consider that those words in Rule 9(1) are wide enough to include a change in circumstances consisting of a valid assignment of the subject matter of an appeal, and also that a substitution is necessary because the Appellant has assigned its claim to the Applicant.” (New Miles Limited v. HMRC [2012] UKFTT 33 (TC), §33, Judge Kempster – customs BTI obtained in wrong name; HMRC’s conclusion disputed; person actually affected substituted).

 

Tax indemnities/warranties 

 

“It would be a bizarre situation, in my judgment, should the appellants have to conduct the appeal on the basis of the material at present before them at the instance of the [indemnifying party], but that the [indemnifying party] could take their part in the appeal before the tribunal putting forward their own wholly different slant and conducting their own case differently from that of [the appellant].” … “Should they become necessarily involved in the appeal as a result of information given [to the Appellant], who have a duty to conduct the appeal in accordance with the undertaking, different considerations may arise” (Schwarz v. Aresta Ltd [1989] STC 230 at 234 - 235); 

 

Third parties supporting HMRC’s position 

 

Permitted in Barclays Bank plc v. CEC [1992] VATTR 229 where the recipient of a supply appealed and the supplier wished to support CEC’s position, but not “run-of-the mill VAT appeal…Joining the user as a party to the supplier’s appeal would seldom be necessary or expedient.”;
 

Relevant factors and examples

Cannot join a party without his/her consent 

 

“I do not consider that the tribunal has power to compel an otherwise unwilling party to join an appeal as a third party…The Tribunal has no power or jurisdiction over that person unless either he has already appealed, in which case his appeal may if appropriate be joined with another party litigating the same matter, or he applied to be joined.” (Canterbury Hockey Club v. CCE VTD19086, §23)

 

“Rule 9(2) of the 2008 Rules gives the First-tier Tribunal a very broad power to add persons or bodies as respondents to proceedings, although a person or body should not, in my judgment, be added as a respondent without their consent unless the law requires it.” (ML v. Tonbridge Grammar School [2012] UKUT 283, §31)

 

Possible distinction between cases where adding a party is required to deal with case fairly and justly and where it is merely helpful: 

 

“In many cases, such as that being deal with [in Tonbridge Grammar School], where it may be helpful to add another respondent, it may still be possible to deal with a case fairly and justly without doing so, and in those cases I would accept that the consent of the respondent should be obtained before being added.” (CM v. HMRC [2014] UKUT 272 (AAC), §11).
 

Cannot join a party without his/her consent 

Joining a third party cannot be made a condition of an appeal 

 

“I do not read rule 19(3) as empowering this or any other tribunal to make it a condition of the party’s right to appeal that a third party is joined” (Canterbury Hockey Club v. CCE VTD19086, §23).
 

Joining a third party cannot be made a condition of an appeal 

Joinder of person affected by CGT valuation/apportionment

 

See Chapter J1: Challenging direct decisions for SI 1967/149

Joinder of person affected by CGT valuation/apportionment

Joinder is possible even after the decision

 

“I consider that the First-tier Tribunal’s power to consider an application for joinder after judgment must be derived from a process of interpretation of rule 9 of the Tribunal Procedure Rules. I am satisfied that it is permissible to interpret rule 9 as permitting joinder following judgment. It seems to me that such an interpretation may be reached either by relying on the Court of Appeal’s decision in Prescott as persuasive authority from a higher court on a matter of procedure, or by praying in aid the overriding objective in order to achieve fairness and justice in the circumstances of the case, as did Judge Warren in Corke.” (Razzaq v. Charity Commission [2016] UKUT 546 (TCC), §12, Judge McKenna).
 

Joinder is possible even after the decision

Costs

 

Costs (existing appellant) 

 

“If the tribunal takes the exceptional course of admitting a third party, the discretion should, so far as practicable, be exercised in a way that causes the least possible disturbance to the Appellant and the way in which he conducts his appeal: on this basis the question of costs should be dealt with at the start…if the third party is normally to be kept harmless from having to pay the appellant’s costs it is only evenhanded that the appellant should be given similar protection.” (Barclays Bank plc v. CEC [1992] VATTR 229).

 

Costs (third party)

 

“…having been joined as a third party on the basis that it was necessary or expedient to ensure the speedy and just determination of the appellant’s appeal, it would be hard to envisage circumstances in the context of a VAT appeal in which that third party should also be put at risk of paying the other parties’ costs. It would be otherwise if the third party offered to be at risk…” (Barclays Bank plc v. CEC [1992] VATTR 229)
 

Costs

UT power to add interested party does not apply to tax appeals

 

"(1) The Upper Tribunal may give a direction adding, substituting or removing a party as an appellant, a respondent or an interested party.

(2) If the Upper Tribunal gives a direction under paragraph (1) it may give such consequential directions as it considers appropriate.

(3) A person who is not a party may apply to the Upper Tribunal to be added or substituted as a party." (UT Rules r.9(1) - (3))

"[10] The Application made clear that the Applicants were not applying to be joined as appellants in the Hearing, and were not applying for the Barclays’ appeals to be transferred to this Tribunal under Rule 28 of the FTT Rules: see 2.3 and 6.7 of the Application.

[11] The Application is for the Applicants to be joined as “interested parties” to the Hearing..." (HSBC Electronic Data Processing (Guangdong) Limited v. HMRC [2021] UKUT 58 (TCC), Judge Thomas Scott)

Meaning of interested party

“interested party” means—

(a) a person who is directly affected by the outcome sought in judicial review proceedings, and has been named as an interested party under rule 28 or 29 (judicial review), or has been substituted or added as an interested party under rule 9 (addition, substitution and removal of parties); 

(b) in judicial review proceedings transferred to the Upper Tribunal under section 25A(2) or (3) of the Judicature (Northern Ireland) Act 1978 or section 31A(2) or (3) of the Supreme Court Act 1981 F27, a person who was an interested party in the proceedings immediately before they were transferred to the Upper Tribunal;

(c) in a financial services case or a wholesale energy case, any person other than the applicant who could have referred the case to the Upper Tribunal and who has been added or substituted as an interested party under rule 9 (addition, substitution and removal of parties);

(d) in a financial sanctions case, any person other than the appellant upon whom the Treasury has imposed a monetary penalty under Part 8 of the Policing and Crime Act 2017 in connection with the same matters as led to the decision that is the subject of the appeal and who has been added or substituted as an interested party under rule 9 (addition, substitution and removal of parties); and

(e) in a trade remedies case, any person other than the appellant who could have appealed to the Upper Tribunal and who has been added or substituted as an interested party under rule 9 (addition, substitution and removal of parties)" (UT Rules r.1(3))

Limb (a) only applies to judicial review cases

"[21] As to that construction, Rule 1(3) is clearly, and conventionally, structured so as to define in relation to a number of distinct types of proceedings in which the Tribunal has jurisdiction (at (a) to (e)) who can and cannot be an interested party. It would be extremely surprising if a freestanding category had been bolted by the draftsman onto the definition applying in non-transferred judicial review proceedings. The standard drafting approach would have been to create a separate category, either by way of an additional sub-paragraph in Rule 1(3), or by way of introductory wording, if the Applicants’ construction were correct. There would seem to be no good reason why a freestanding definition should be included in (1)(a) and not in another sub-paragraph. Secondly, the comma after “proceedings” is a clear indication that both Rule 28/29 and Rule 9 situations are those arising “in judicial review proceedings”. Thirdly, if the construction proposed by the Applicants and HSBC were correct, then either the references to Rule 9 in sub-paragraphs (c), (d) and (e) would be otiose or those subparagraphs would naturally have been expressed as limitations to a “freestanding” Rule 9 power. Finally, although I afford this less weight in reaching my conclusion, the construction proposed by the Applicants would mean that in all situations other than those referred to in (a) to (e) where the Upper Tribunal has jurisdiction the Tribunal has an unfettered discretion to add anyone at all as an interested party. I think it unlikely that that can have been the intention of the draftsman.

[22] I therefore conclude that this Tribunal does not have jurisdiction in this case to add the Applicants as interested parties." (HSBC Electronic Data Processing (Guangdong) Limited v. HMRC [2021] UKUT 58 (TCC), Judge Thomas Scott)

UT power to add interested party does not apply to tax appeals

But does have power to permit submissions from non-party

 

"[39] In Lobler v HMRC [2015] UKUT 0152 (TCC) the Chartered Institute of Taxation had made submissions in relation to the legislation relevant in that appeal. The CIOT was gathering information in relation to that legislation from interested parties and professional bodies with a view to making representations to the Treasury as to a possible change in law. The Tribunal directed under Rule 5(3)(d) that it should hear written and oral submissions from counsel for the CIOT.

[40] While the power in Rule 5(3)(d) may be relevant in circumstances similar to those in which a party applies to a court to be an intervener, I am not persuaded that it 10 should necessarily be construed by reference to the same restrictions. Barclays is not applying to be an intervener, the position of an intervener in the courts is well established, and tribunal rules are designed to be more flexible in their operation. Having said that, Lobler was an example of a situation of the sort described by Lord Hoffman." (HSBC Electronic Data Processing (Guangdong) Limited v. HMRC [2021] UKUT 58 (TCC), Judge Thomas Scott)

 

Not permitted to allow party to another appeal to seek to influence outcome

"[41] In this case, I do not consider that the Tribunal should of its own initiative make a direction under Rule 5(3)(d) of the Rules permitting written or oral submissions from the Applicants. The reasons I have given above for refusing the Application militate against a decision to exercise discretion so as to make such a direction. It is apparent from the documents filed by the Applicants what submissions they would wish to make. Such submissions would not assist the Tribunal to understand the issues raised by the preliminary issues to be determined at the hearing. The position of the Applicants in making any submissions is far removed, for example, from the position of the CIOT in Lobler. The Applicants’ motivation is to have a say in the conduct and ambit of the Hearing and the terms of the Tribunal’s decision, for the reasons they give, and their status is that they are parties to another appeal before the FTT. I would decline to issue a direction permitting them to make submissions." (HSBC Electronic Data Processing (Guangdong) Limited v. HMRC [2021] UKUT 58 (TCC), Judge Thomas Scott)

But does have power to permit submissions from non-party
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