M31: Reinstating proceedings/case

Relevant factors

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General approach similar relief from sanction

 

"[44] We will apply the same approach as we applied when considering whether to extend time. We will consider the matter in the light of the overriding objective set out in Rule 2 of the FTT Rules and apply the three-stage approach set out in Martland.

[45] We start with an assessment of the seriousness and significance of the Company’s breach of the FTT’s case management directions..." (HMRC v. BMW Shipping Agents Limited [2021] UKUT 91 (TCC), Judge Richards and Judge Cannan)

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“In North Wiltshire the FTT concluded that it was not obliged consider [the criteria formerly set out in CPR 3.9(1) for relief from sanctions] but it accepted that it might well in practice do so. The same reasoning applies to the present case. These criteria were:
- The reasons for the delay, that is to say, whether there is a good reason for it.
- Whether HMRC would be prejudiced by reinstatement.
- Loss to the appellant if reinstatement were refused.
- The issue of legal certainty and whether extending time would be prejudicial to the interests of good administration.
- Consideration of the merits of the proposed appeal so far as they can conveniently and proportionately be ascertained.” (Pierhead Purchasing Ltd v. HMRC [2014] UKUT 0321 (TCC), §23, Proudman J).

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“I gratefully adopt the approach described by Proudman J in Pierhead Purchasing…I consider that the relevant factors that I should take into account when considering whether to set aside the Strike Out are:
(1) whether the appeal is arguable and has a reasonable prospect of success;
(2) the reasons for the Strike Out;
(3) whether there has been any material change since the Strike Out;
(4) whether HMRC would be prejudiced if the Strike out were set aside;
(5) what prejudice would [the appellant] suffer if the Strike Out were not set aside; and
(6) the conduct of the parties.” (Jumbogate Ltd v. HMRC [2015] UKFTT 0064 (TC), §45 – reinstated as tax at stake substantial (£8m), case reasonably arguable, and prejudice to HMRC minor) 

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The right to be heard before strike out under r.8(1) and r.8(3)(a) was deliberately omitted (and thus does not argue in favour of reinstatement)

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“In so far as the Revenue’s case suggests that the two directions and the order should not have been made without notice to the parties, who could then have sought to make representations to the tribunal, we think that it is an example of adding an impermissible gloss to the plain meaning of the rules themselves, and would risk giving rise to the kind of over-refinement to which we have referred.” (Compass Contract Services UK Ltd v. HMRC [2014] UKFTT 403 (TC), §103)

 

Merits to be considered insofar as they can conveniently be ascertained

 

“We start this point by emphasising the words “so far as [the merits] can conveniently and proportionately be ascertained”.  It is not necessary or appropriate for us to attempt to determine the outcome of the proceedings if they were to be reinstated.  We are, however, obliged to consider the merits of the appeals…[W]e consider the most important guidance on the merits of the appeals can be obtained from the EBT scheme promoter: Montpelier.  As we have already stated, Montpelier decided to withdraw after consultation with counsel on the merits of the appeals and on the basis of a detailed consideration of the prevailing relevant case law.” (Vaultdawn Ltd v. HMRC [2015] UKFTT 383 (TC), §97).

 

Reinstatement where T not aware of strike out

 

“If those were the only factors to take into account, I would reinstate the appeal.  While the default is not trivial and the appellant and/or his advisor cannot give a full explanation for the default, I am satisfied it was not deliberate and the default did not prejudice HMRC.  Taking into account that HMRC do not oppose reinstatement and the importance of the case to the appellant, I would reinstate it.” (Parsanna v. HMRC [2017] UKFTT 699 (TC), §25, Judge Mosedale – the extra issue was whether the appeal had a reasonable prospect of success, which it did).

 

“The reason for the delay was that the appellant was unaware that the appeal had been struck out. No blame is to be attached to the appellant or is representative for the fact that it was not notified of the striking out.” (Hattons (Southport) Ltd v. HMRC [2016] UKFTT 710 (TC), §29, Judge Herrington) 

 

No special treatment for HMRC in pursuing tax 

 

“I found the approach of HMRC to compliance to be disturbing. At times it came close to arguing that HMRC, as a State agency, should be treated like a litigant in person and that the constraints of austerity on an agency like the HMRC should in some way excuse unacceptable behaviour. I remind HMRC that even in the tribunals where the flexibility of process is a hallmark of the delivery of specialist justice, a litigant in person is expected to comply with rules and orders and a State party should neither expect to nor work on the basis that it has some preferred status – it does not.” (BPP Holdings v. HMRC [2016] EWCA Civ 121, §39).

 

“If special account is to be taken of the public interest in the correct payment of tax in a sense which differs from the public interest in the correct determination of civil disputes, then the point must be established elsewhere than at first instance.” (Compass Contract Services UK Ltd v. HMRC [2014] UKFTT 403 (TC), §123) 

 

Degree of latitude for litigants in person 

 

“I accept, as did [HMRC] that [the appellant] was effectively a litigant in person at that point. In the circumstances, and bearing in mind the overriding objective, I consider that [the appellant] should be allowed a degree of latitude when its conduct is considered. It appears to me that [the appellant’s] failure to attend the case management hearing and its declared intention not to take part in the appeal were not due to deliberate disregard of its responsibilities but to the difficult financial situation in which it found itself and [the appellant’s] lack of experience in tax appeals.” (Jumbogate Ltd v. HMRC [2015] UKFTT 0064 (TC), §50).

 

But see general approach to relief from sanctions.

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No leniency for adviser defaults

 

“…our view is that we must examine the history of Mr Green’s appeals on the basis that it fell to him to ensure that the relevant requirements were complied with and that this was done within the appropriate time limits. Any question as to the lack of adequacy of the service provided by a representative is a matter between the appellant and the representative and cannot be the concern of HMCTS, the Tribunal, or the other party to the appeal.” (Green v. HMRC [2016] UKFTT 421 (TC), §63) 

 

Reinstatement only to negotiate settlement counts against reinstatement

 

“If the only objective of the reinstatement applications was to provide an opportunity to participate in the EBT settlement opportunity then we would concur with HMRC that that would count against the Appellants.” (Vaultdawn Ltd v. HMRC [2015] UKFTT 383 (TC), §96)

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