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R4: New evidence on appeals

Upper Tribunal power

(2) The Upper Tribunal may-- 
(a) admit evidence whether or not--

(i) the evidence would be admissible in a civil trial in the United Kingdom; or 
(ii) the evidence was available to a previous decision maker" (UT Rules, r.15(2))

 

Allows new evidence on appeal

“There is no question that this Tribunal has the power to admit evidence that was not available to the FTT: see Rule 15 (2) (a) of the Tribunal Procedure (Upper Tribunal) Rules 2008. We can also do so in the context of agreeing to amend the grounds of appeal.” (Clear plc v. HMRC [2016] UKUT 347 (TCC), §44, Judges Herrington and Aleksander).
 

Upper Tribunal power

Admissibility of FTT’s note of the evidence

“[Counsel for the Revenue], objected to the admissibility of the Special Commissioners' notes of evidence. In the circumstances we allowed [Counsel for the taxpayer] to refer to the notes de bene esse, without prejudice to the question of their admissibility. For my part, I regard it as unnecessary to decide that question since I am content to proceed on the assumption, favourable to the taxpayer, that the Special Commissioners made findings in the terms sought by [Counsel for the taxpayer].” (Schuldenfrei v. Hilton 72 TC 167 at 199).
 

Admissibility of FTT’s note of the evidence

General rule: no new evidence 

“if we were to send this Case back for further inquiry about this, we might be exposed, as far as I see, in almost any case to an exactly similar application – whenever, in short, the Appellant has not presented his case to the Commissioners in a way which brings out the point he ultimately desires to make before the Court of Appeal. That would never do.” (Bird v. IRC 12 TC 785 at 795)

“I think it is important that parties should not be enabled to go back to the Commissioners and call fresh evidence on issues which were raised in the original proceedings, and as to which they had full opportunity of calling such evidence as they might be advised” (Murphy v. Australian Machinery and Investment Co, Ltd 30 TC 244 at 260); Yuill v. Wilson [1980] STC 460 at 470)

“There is nearly always a possibility that not all the evidence which can be produced has been produced, but there is a strong presumption in the administration of the law that the parties must bring forward the whole of their case at the time of trial, and once a case has been decided unless there are compelling reasons to the contrary it should not be reopened” (Kingsley v. Billingham [1992] STC 132 at 138)

“The judge took the view that the evidence would not have materially assisted the Appellant’s case, if it had been admitted. It seems to me that he was entitled to take that view.” (Sub One Ltd v. HMRC [2014] EWCA Civ 733 §99)
 

General rule: no new evidence 

No exception for alternative contentions 

“this difficulty may always arise where a party seeks to rely on alternative contentions, and does not itself afford any ground for allowing new evidence to be led upon the second contention if the first contention fails.” (Bradshaw v. Blunden No.2 39 TC 73 at 80);

 

“…it was in my opinion wrong to remit the case on this point to the commissioners and oppressive of the taxpayer to enable the Crown to reopen an alternative approach on new evidence after deliberately declining to put forward that approach.” (Yuill v. Wilson [1980] STC 460 at 476, Lord Russell).
 

No exception for alternative contentions 

Generally no exception for litigants in person 

“I have considerable sympathy with any taxpayer who acts in person in a case such as this where there were complicated issues to be considered. However, I do not believe that that is enough to excuse the failure to introduce a piece of evidence like this statement. The taxpayer knew that the loans from his father were a central issue in the case…” (Hurley v. Taylor [1999] STC 1 at 8, Aldous LJ)
 

Generally no exception for litigants in person 

Exception 1: reasonable misunderstanding 

 

“No doubt, if there has been a misunderstanding, we would strain a point to put that right” (Bird v. IRC 12 TC 785 at 795); 

“If the taxpayer was truly under that impression [that evidence had been put before the tribunal], then I think it was an unreasonable impression, judged by the standards of any litigant, represented or unrepresented.” (Hurley v. Taylor [1999] STC 1 at 18)

Exception 1: reasonable misunderstanding 

Exception 2: both parties agree 

Correspondence between T and HMRC admitted on appeal to UT in relation to question of whether enquiry had been opened (Portland Gas Storage Ltd v. HMRC [2014] UKUT 0270 (TCC), §39)

Exception 2: both parties agree 

Exception 3: important, credible evidence that could not have been obtained with reasonable diligence (Ladd v. Marshall)

"[68] It is common ground that, whilst the second and third of the Ladd v Marshall criteria are met, the first of those criteria is not met. The Retainer Letter was available to Mr Ketley and his advisers at all material times prior to the FTT hearing. It cannot be said that the Retainer Letter “could not have been obtained with reasonable diligence” prior to the FTT hearing.

[69] Even accepting, as we do, that the Ladd v Marshall criteria should not be applied as strict rules and that we must exercise our discretion in accordance with the overriding objective to deal with cases “fairly and justly”, in this case we consider that the application of the overriding objective requires us to refuse the application." (Ketley v. HMRC [2021] UKUT 218 (TCC), Judge Cannan and Judge Greenbank)

"[64] Applying the Ladd v Marshall criteria in reverse order, we are quite satisfied that the Google Earth photograph is “apparently credible” and there is indeed a vacant garage at 221 Wakefield Road. We have already explained why we do not consider that the photograph would have had an “important influence” on proceedings. The Company acknowledges that the evidence could, with reasonable diligence, have been obtained prior to the FTT hearing.

...

[66]...In short, it is fair and just, and in accordance with the overriding objective, that the Company 19 should bear the consequences of failing to marshal all the evidence that, with hindsight, it wished it had. We will not exercise our discretion to admit the new evidence and the Company’s appeal on Ground 3 accordingly fails." (Prospect Origin Limited v. HMRC [2021] UKUT 51 (TCC), Judge Richards and Judge Brannan)

“However, whether or not the Ladd v Marshall criteria are binding on us it is an obvious question, when considering an application such as this, why the evidence sought to be introduced was not produced to the F-tT, and despite what he said about Ladd v Marshall Mr Jones offered an explanation, as we have said. We do not find the explanation convincing…Whether or not the judge focused on the wrong question Mrs Jakimaviciene’s evidence was plainly relevant and important.” (Lithuanian Beer Limited v. HMRC [2017] UKUT 245 (TCC), §23, Asplin J and Judge Bishopp).

“We agree with the Tribunal in Reed Employment that the Ladd v. Marshall criteria are of “persuasive authority as to how to give effect to the overriding objective”: see Reed Employment [97]. The Ladd v. Marshall criteria should therefore be borne in mind when exercising our discretion under Rule 15(2)(a): see Reed Employment [100]. So whilst we take into account the fact the stay has been granted and that there is a possibility for HMRC to respond to the introduction of new evidence, we also have regard to the fact that the first of the criteria in Ladd v Marshall is not fulfilled. The Appellant has had an opportunity to put this evidence before the FTT; the evidence of Ms Wallis could have been obtained with reasonable diligence before the hearing.” (Bramley Ferry Supplies Limited v. HMRC [2017] UKUT 214 (TCC), §23, Judge Bishopp and Judge Greenbank).

“In considering whether to exercise the power to admit fresh evidence, in common with other tribunals, this Tribunal applies the principles laid down in the well-known Court of Appeal judgment in Ladd v Marshall [1954] 1 WLR 1489…” (Clear plc v. HMRC [2016] UKUT 347 (TCC), §45, Judges Herrington and Aleksander).

“The approach of having regard to the Ladd v. Marshall criteria when applying the overriding objective should therefore be borne in mind when exercising our discretion under Rule 15 (2) (a)… we accept HMRC’s submission that if the fresh evidence is admitted there will be prejudice to HMRC because it will have to deal with the new evidence several years after the event in circumstances in which all its own witnesses have completed their evidence.” (Reed Employment Plc v. HMRC [2014] UKUT 160 (TCC), §§100…102, Proudman J and Judge Herrington).

“I would for my part have been disposed to think that, if there was fresh evidence which satisfied the conditions in Ladd v. Marshall [1954] 1 WLR 1489, that would amount to ‘special circumstances’ which would warrant the court in allowing that fresh evidence to be used on the rehearing when a tax appeal has been remitted to the commissioners for further hearing.” (Brady v. Group Lotus [1987] STC 635 at 641);

Three conditions

 

“To justify the reception of fresh evidence or a new trial three conditions must be fulfilled: 
[1] first, it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; 
[2] secondly, the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive; 
[3] thirdly, the evidence must be such as is presumably to be believed, or in other words, it must be apparently credible, though it need not be incontrovertible.” (Ladd v Marshall [1954] 1 WLR 1489 at 1491 per Denning LJ).

 

To be applied as guidance not a straitjacket

 

“Mr McLeod drew my attention to the following authorities which indicate that the three criteria in Ladd v Marshall are principles, or guidance, but not rules and not a straitjacket: Singh v Habib [2011] EWCA Civ 599, where fresh evidence was admitted on public interest grounds (see paragraph 14), and Hertfordshire Investments Ltd v Bubb [2000] 1 WLR 2318 at p 2325 where Hale LJ, as she then was, said that the appeal court’s discretion “must be exercised in accordance with the overriding objective of doing justice”. She quoted the unreported case of Banks v Cox (17 July 2000) and the words of Morritt LJ: 

“… the principles reflected in the rules in Ladd v Marshall [1954] 1 WR 1489 remain relevant … not as rules but as matters which must necessarily be considered in an exercise of the discretion whether or not to permit an appellant to rely on evidence not before the court below”
Mr McLeod also cited authorities cited Skrzypkowski v Silvan Investments [1963] 1 WLR 525, and Mulholland v Mitchell [ 1971] AC 666 where Lord Wilberforce said at p. 680: 
“… courts will allow fresh evidence when to refuse it would affront common sense, or a sense of justice.” 
I am convinced that the fresh evidence must be admitted, as a matter of “common sense and justice”.” (Davis v. Wiggett [2016] UKUT 358 (TCC), §§23 – 25, Judge Elizabeth Cooke).

Relevant that other party was already aware of evidence

 

“If the additional documents were of any importance then we would have had to have struck a balance between the availability of the documents to HMRC on the local authority’s website, the fact that they were originally produced by or on behalf of the taxpayer and thus their contents can have been no surprise to him, their relevance, and the nature of the permission to appeal given to HMRC. In this case, however, that is not necessary.” (HMRC v. Barkas [2014] UKUT 558 (TCC), §26, Judges Sinfield and Hellier – re planning application submitted by the taxpayer).

 

Where HMRC failed to provide the evidence to the taxpayer despite requests

 

“HMRC cannot hide behind the absence of any tribunal order for disclosure to argue that the evidence “could have been obtained with reasonable due diligence”. The many repeated requests by Karoulla for HMRC to return the documents are due diligence enough without the needless expense and use of resource generated by requiring an order for disclosure.” (Karoulla v. HMRC [2018] UKUT 255 (TCC), §31, Judges Herrington and Thomas Scott)

 

Late application a factor

 

“We agree with Mr Pritchard too that the fact that the application was made only days before the hearing before us is a material consideration. If it is the case that LBL thought, once his decision was released, that the judge unexpectedly addressed the wrong question and that LBL was disadvantaged by its not having produced evidence to deal with that wrong question it is difficult, if not impossible, to understand why the point was not made in the application for permission to appeal.” (Lithuanian Beer Limited v. HMRC [2017] UKUT 245 (TCC), §24, Asplin J and Judge Bishopp).

 

Possible more relaxed approach for litigants in person

 

“In these circumstances, and particularly where before the FTT the appellants were represented by two silks and experienced junior counsel, it would in our view be unfair to HMRC for the appellants to be able to adduce further evidence for the purposes of an appeal.” (Reed Employment Plc v. HMRC [2014] UKUT 160 (TCC), §103, Proudman J and Judge Herrington).

Exception 3: important, credible evidence that could not have been obtained with reasonable diligence (Ladd v. Marshall)

Exception 4: Party has deliberately misled the court on a material matter

“Where a party deliberately misleads the court in a material matter, and that deception has probably tipped the scale in his favour (or even, as I think, where it may reasonably have done so), it would be wrong to allow him to retain the judgment thus fairly procured” (Meek v. Fleming [1961] 2 QB 366 at 379, Holroyd Pearce LJ). 

 

“I strongly suspect that Mr Bushell deceived the Court when he gave evidence to the commissioners. If he did it would be wrong that the decision he obtained from the commissioners should stand. Compared with that, the factor that in the absence of error of law on the part of the commissioners there would be no means of getting in the new evidence short of a separate action alleging fraud is of relatively minor significance. I see no good reason why the Special Commissioners should be required to approach their task in blinkers, denied the benefit of the new evidence which is known to be available.” (Brady v. Group Lotus [1987] STC 635 at 641);
 

Exception 4: Party has deliberately misled the court on a material matter

Exception 5: Material that one party ought to have disclosed 

“We can envisage circumstances in which either the right to set aside an FTT decision where the unavailability of relevant evidence has made the hearing unfair or a right of appeal on the grounds of an error of law, the error being in the manner in which the hearing was conducted, can arise in circumstances where evidence that should have been made available was not.” (Clear plc v. HMRC [2016] UKUT 347 (TCC), §57, Judges Herrington and Aleksander).

“All that would be needed to remedy any prejudice to the Company caused by Mrs Morris' failure to disclose the relevant extract from the manual would be for it to be looked at and taken into account; but as I have already said there would be no point in doing this, because it could not make any difference to the result.” (HMRC v. Household Estate Agents Ltd [2007] EWHC 1684 (Ch), §60).

Exception 5: Material that one party ought to have disclosed 

Exception 6: New evidence that renders the original decision unfair

“We therefore reject [the appellant’s] submission that there was new evidence in the form of the witness statements filed in the DDQ Proceedings and that that new evidence could materially have influenced the Decision, in particular on the question of prejudice to HMRC. In any event, in our view to bring the jurisdiction of this Tribunal into play, new evidence would have had to have been produced which leads to the conclusion that the Decision involved the making of an error on a point of law. It is only in those circumstances that the powers of the Upper Tribunal to set aside a decision of the FTT, as set out in section 12 (2) of the Act arise. It follows from our analysis as set out above that the circumstances on which [the appellant] relies come nowhere close to satisfying us that an error of law such as that identified in Aslam, namely that the appellant had not had a fair hearing, is present in this case.” (Clear plc v. HMRC [2016] UKUT 347 (TCC), §68, Judges Herrington and Aleksander).
 

Exception 6: New evidence that renders the original decision unfair

UT refusing to admit new evidence despite HMRC not objecting

 

"[58] [Counsel for HMRC] did not object to the document being admitted before us on appeal pursuant to the test in Ladd v Marshall [1954] 1 WLR 1489...

[59] Nonetheless we are satisfied that we should not admit HMRC’s Guidance in this appeal as it would not be just and fair to do so when applying Tribunal Procedure (Upper Tribunal) Rules 2008, Rule 15(2)(a)(ii) and Rule 2(1) – the overriding objective.

[60] First, we repeat that the document was not put to HMRC’s witnesses in evidence for them to comment upon or explain their understanding of its contents or its relevance (if any) to their assessment of the application of the law to the facts of the case. We are satisfied that this would have had an important effect on the fairness of proceedings and might have necessitated different evidence being called or the appeal being run differently before the FTT. The potential unfairness explained at [73]-[74] of Ketley applies to this appeal for similar reasons.

...

[62] The Appellants’ suggestion that HMRC “were, much earlier than 2010, in no doubt that these arrangements did not work” is a collateral attack on the FTT’s findings of fact in respect of HMRC’s knowledge, contained in the evidence given by Mr Kane and accepted by the FTT...

[63] Second, HMRC’s Guidance was a publicly available document which could have been obtained by the Appellants, who were legally represented, at the time of the hearing before the FTT. HMRC had no obligation to disclose this guidance upon which they did not rely and HMRC had disclosed an earlier version of the document (albeit with different content) as an exhibit to one of its witnesses’ statements. There was no convincing or good reason explaining why the Appellants did not identify and rely on this document before the FTT.

[64] Third, we are not satisfied that the document would probably have had an important influence on the outcome of the case before the FTT. We are satisfied that the document does not contradict the findings of the FTT. As explained above, Mr Kane’s evidence was accepted by the FTT at [66]-[69]. It is not open to the Appellants to seek to challenge the findings made by the FTT, on the basis of generic statements made in a document that was not put to HMRC’s witnesses. In any event, it was put to Mr Kane in cross-examination that HMRC knew prior to 1 April 2010 that the schemes were challengeable. Mr Kane denied that and the FTT accepted his evidence. There was sufficient evidence available to support the FTT’s conclusion on this issue." (Kennedy v. HMRC [2021] UKUT 300 (TCC), Judge Rupert Jones and Judge Andrew Scott)

UT refusing to admit new evidence despite HMRC not objecting​

Error of law arising from new evidence

"[58] In Bramley Ferry, on an application to admit new evidence and an application to rely on a new ground of appeal based on that evidence, the Upper Tribunal took the view that it could not give permission for a new ground of appeal based on Edwards v Bairstow principles by reference to fresh evidence that was not before the trial judge...

...

[60] The contrary view is arguably expressed by the decision of the Upper Tribunal in Karoulla. In that case, HMRC had repeatedly refused requests by the taxpayer prior to the FTT hearing for the return of certain documents, which were required in order to answer HMRC’s case that under-declarations of VAT had been made. Following the FTT hearing, the documents were made available and the Upper Tribunal allowed an application by the taxpayer to admit the new evidence in support of its appeal that the FTT made an error of law in finding as a fact that there had been an under-declaration of VAT. That ground of appeal was said to be critically dependent on the new evidence.

...

[65] It seems to us that tax law, as with asylum law is a statutory context “where the parties share an interest in co-operating to achieve the correct result”. Indeed, in the context of tax law there is a “venerable principle” which recognises that there is a public interest in taxpayers paying the correct amount of tax. In our view, accepting an appeal on a point of law arising from a mistake of fact giving rise to unfairness would provide a basis for addressing the issue that arose in Karoulla, whilst otherwise respecting the classic formulation of the Edwards v Bairstow principle and the limitation of appeals to errors of law. Having said that, we should only express a concluded view if it is necessary for our decision. In the event it is not necessary because the Application can properly be decided on the basis of established principles." (Ketley v. HMRC [2021] UKUT 218 (TCC), Judge Cannan and Judge Greenbank)
 

Error of law arising from new evidence​

New evidence generally not heard by the appeal court 

“Since the only appeal…against a decision of the commissioners, Special or General, in a tax case is an appeal by case stated on a question of law, it is accepted by the Crown that new evidence cannot in general be received in the High Court or in this court on a tax appeal, even if the three well-known conditions laid down in Ladd v. Marshall [1954] 1 WLR 1489 are satisfied.” (Brady v. Group Lotus Car Companies plc [1987] STC 635 at 637).

Upper Tribunal different to High Court/Court of Appeal

 

UT has express power to admit evidence and remake the decision.
 

New evidence generally not heard by the appeal court 

Reopening final decision due to new evidence​

 

[7] Fresh evidence: That the jurisdiction to set aside also extends to situations where fresh evidence is discovered after a judgment has been rendered which is not susceptible of appeal is also recognised in Court of Appeal authority: In re U [2005] EWCA Civ 52[2005] 1 WLR 2398 Feakins v Department of Environment, Food and Rural Affairs [2006] EWCA Civ 699. The latter was a case where it was discovered that a DEFRA official had provided materially incorrect information to the court in a witness statement. In each case, however, it was emphasised that it was not sufficient simply to rely on the principles in Ladd v Marshall [1954] 1 WLR 1489, which apply when fresh evidence is sought to be adduced for or on an appeal. Rather, as it was put in In re U, para 22,

“… it must at least be shown, not merely that the fresh evidence demonstrates a real possibility that an erroneous result was arrived at in the earlier proceedings …, but that there exists a powerful probability that such a result has in fact been perpetrated.”

This statement was quoted from and accepted in the application to set aside, para 121. Further, as to the discretionary aspect, the court noted in Feakins:

“The court [in In re U] held that, although that was a necessary condition, it was not sufficient; the court would have also to consider the extent to which the complaining party was author of his own misfortune and that there was no alternative remedy.” (R (oao Bancoult no.2) v. Secretary of State for Foreign and Commonwealth Affairs [2016] UKSC 35)

Reopening final decision due to new evidence​
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