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N5: Tribunal jurisdiction

Meaning of jurisdiction

 

“As Underhill LJ has explained Mr Brennan accepted that the court has jurisdiction to grant the injunction claimed. But "jurisdiction" is a slippery word. As long ago as 1915 Pickford LJ pointed out in Guaranty Trust Co of New York v Hannay & Co [1915] 2 KB 536, 563 (approved by the House of Lords in Fourie v Le Roux [2007] UKHL 1 at [25]): "The first and, in my opinion, the only really correct sense of the expression that the Court has no jurisdiction is that it has no power to deal with and decide the dispute as to the subject matter before it, no matter in what form or by whom it is raised. But there is another sense in which it is often used, i.e., that, although the Court has power to decide the question it will not according to its settled practice do so except in a certain way and under certain circumstances."…Thus while I accept that the court has jurisdiction to grant the injunction in the first sense, the real question is whether the court's settled practice means that on the facts of this case it is inappropriate to exercise the power conferred upon it by section 37 (1) of the Senior Courts Act 1981.” (CC&C Ltd v. HMRC [2014] EWCA Civ 1653, §§49…50)
 

Meaning of jurisdiction

Jurisdiction must be conferred by statute 

 

"[42] Of course, the fact that the parties were agreed that the FTT had jurisdiction was not conclusive in proceedings before the FTT. The FTT’s jurisdiction derives from statute and cannot be conferred by consent. However, our jurisdiction is to hear appeals against decisions of the FTT on a point of law. In circumstances where neither party seeks to appeal against the Decision on the basis that the FTT erred in law by assuming jurisdiction, we should approach this appeal, as both parties request, by considering the correctness or otherwise of the FTT’s conclusions on the s28B(4) Letters and the Disputed Closure Notices." (Reid and Emblin v. HMRC [2020] UKUT 61 (TCC), Nugee J and Judge Richards)

“we…accept that ultimately the FTT only has such jurisdiction that Parliament has through the relevant statutory provisions conferred on it and there can be anomalies where certain decisions can possibly through oversight fall through the net…[N]ot for this Tribunal to fill in the gaps by giving a strained construction to clear language regardless as to whether the failure to give an appeal right appears to be an oversight or not” (Portland Gas Storage Ltd v. HMRC [2014] UKUT 0270 (TCC), §33).

 

“This Tribunal is a creature of statute law and its jurisdiction is circumscribed by that law. This is reflected in Rule 20 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273) (“the Rules”) which provides for how proceedings are started.  It begins: “Where an enactment provides for a person to make or notify an appeal to the Tribunal, the appellant must start proceedings by …”…For an appeal to be entertained then there must be an enactment which provides not just for an appeal but for an appeal of the requisite character.  In other words the appeal must be against an appealable decision, and a decision is only appealable if an enactment provides for it to be appealable to the Tribunal.” (Woodstream Europe Ltd v. HMRC [2017] UKFTT 657 (TC), §§44…45, Judge Richard Thomas).

 

No inherent jurisdiction 

 

“[41]...Such claims are outside the commissioners’ statutory jurisdiction, and the commissioners have no inherent jurisdiction.” (Autologic Holdings plc v. HMRC [2005] UKHL 54, Lord Nicholls (majority speech))

 

“This tribunal is a creature of statute and has only the powers given to it by statute. Unlike the High Court we have no inherent jurisdiction. We can entertain an appeal only if a statutory provision permits that appeal to be made to this tribunal.” (Bartram v. HMRC [2011] UKFTT 471 (TC), §16 – upheld on appeal).

 

Statutory jurisdiction provisions not to be construed narrowly

 

“we accept…that we should not give [SDLT jurisdiction provision] a narrow construction and that it should be construed against the underlying philosophy that the FTT is the body in whom Parliament has vested jurisdiction to deal with disputes between the taxpayer and HMRC as to the correct amount of tax to be paid” (Portland Gas Storage Ltd v. HMRC [2014] UKUT 0270 (TCC), §32).
 

Direct tax jurisdiction

 

“It is necessary in every case then to examine the appeal to ensure that there is an “enactment” which does provide for an appeal to the Tribunal.  This is not of course usually an issue.  In the major taxes with which this Tribunal deals, provisions such as ss 49D, 49G and 49H Taxes Management Act 1970 (“TMA”) provide for appeals against income tax, corporation tax and capital gains tax assessments and other decisions and s 83G Value Added Tax Act 1994 (“VATA”) provides for appeals against VAT decisions to be notified and made respectively to the Tribunal.  Those provisions of those Acts can only apply if there is a provision in the Acts granting a right of appeal (such as s 31 TMA and s 83 VATA).” (Hill v. HMRC [2017] UKFTT 18 (TC), §47).

 

Issues that may be determined constrained by FTT’s remedies

 

“In the present case, the rights of the taxpayer to appeal to the Tribunal against a closure notice are set out in section 31(1)(b) TMA.  On an appeal, the Tribunal is “to determine the matter in question” (see section 49G(4) or section 49H(4) TMA and similar wording, to which I was not referred, in section 49D(3) TMA).  If we stop at that point, the jurisdiction of the Tribunal would appear to be very broad and would seem to be capable of encompassing both whether the amendments required by the closure notice result in the correct amount of tax being charged and whether those amendments can be made at all.  However, as was discussed in Rotberg, the jurisdiction of the Tribunal is constrained by the remedies which it is able to give and the circumstances in which it is able to give them.  These are set out in section 50(6) and (7).  For present purposes, the important provision is section 50(6), which permits the Tribunal to reduce an assessment if the taxpayer has been “overcharged” by the assessment.” (Scott v. HMRC [2017] UKFTT 385 (TC), §157, Judge Greenbank).

Taxpayer is overcharged by assessment if it is invalid

“In my view, he would be “overcharged” if an assessment was made and one of the conditions specified by the legislation for the making of that assessment was not met.  The process of amending a return through the issue of closure notices is an integral part of the process of assessing and charging tax under the legislation.  In that context, a taxpayer is just as much “overcharged” if an assessment is made on the taxpayer when it should not have been because a condition contained in the legislation for making the assessment has not been met as he or she would be if the tax charge contained in the assessment is not computed in accordance with the tax legislation.” (Scott v. HMRC [2017] UKFTT 385 (TC), §163, Judge Greenbank).

Jurisdiction must be conferred by statute 

Presumption in favour of individuals being able to challenge all aspects of a decision

“[20] ... "The issue of statutory construction is subject to the rule of law that individuals affected by legal measures should have a fair opportunity to challenge these measures and to vindicate their right in court proceedings, and there is a strong presumption that Parliament will not legislate to prevent individuals from doing so.” 

[22]...If in that context fairness requires that the grounds of appeal should extend to “every aspect of the merits” of the enforcement action in planning cases, it is hard to see why it should be any different in the context of a listed building enforcement notice. In particular, as will appear from the cases considered later in this judgment, whether a particular structure constitutes a “building”, and its erection a “building operation”, is an issue which may undoubtedly be raised in the context of a planning enforcement appeal. As those cases show, it may raise difficult issues of factual judgement, which are much more appropriate for a planning inspector than for the High Court in judicial review. No convincing reason was offered as to why the question whether something qualifies as a “building” should be treated in a different way in the listed building context. One advantage of allowing these issues to be dealt with through the planning appeal route is that it enables the inspectorate, with appropriate legal advice, to develop workable criteria on a case-by-case basis." (Dill v. Secretary of State for Housing [2020] UKSC 20)

Presumption in favour of individuals being able to challenge all aspects of a decision

FTT has power to determine whether it has jurisdiction

 

“The FTT is empowered to determine questions of jurisdiction in any case coming before it. That much is clear from the power given to the FTT by its Procedure Rules to strike out an appeal for want of jurisdiction. That jurisdiction to determine such questions is not excluded because, for example, it may be argued that the appeal is not validly made at all because there has been no appealable decision. That is the very question that the FTT will be required to determine.” (Raftopolou v HMRC [2015] UKUT 579 (TCC), §71, Judges Berner and Raghavan)

 

Tribunal required to form own view of jurisdiction 

 

“In the current proceedings, the Tribunal raised of its own motion two questions on jurisdiction only one of which is relevant to the appeal before me.” (Spring Salmon & Seafood Ltd v. HMRC [2014] UKUT 488 (TCC), §19).

 

“…both parties appear to proceed on the basis that the Tribunal’s jurisdiction in relation to the Prior Recovery Issue was a full appellate jurisdiction rather than merely a supervisory jurisdiction. It is, however, necessary for the Tribunal to satisfy itself as to the limits of its jurisdiction regardless of any agreement between the parties (actual or implied).” (Perenco Holdings v. HMRC [2015] UKFTT 0065 (TC), §54).

 

“Both parties agreed that we did have jurisdiction but such consent cannot give us jurisdiction if we do not have it.” (Rafferty v. HMRC [2005] STC (SCD) 484, §103).

 

Parties agreeing to extend the jurisdiction of the Tribunal 

 

“A Court or Tribunal has the jurisdiction which is granted to it by statute or is part and parcel of its inherent jurisdiction. However, additionally, the parties to litigation can agree to extend the jurisdiction of a Court or to confer jurisdiction where none might otherwise exist. For example, it was commonplace in the days when the County Court had a financial limit upon its jurisdiction for parties to agree to extend that financial limit so as to keep a case within the County Court. The rationale is that the parties are free to contract to extend or confer jurisdiction just as they would be free to contract to refer a particular dispute to arbitration.” (The Reform Club v. HMRC [2015] UKFTT 241 (TC), §8 – HMRC agreed that the FTT should have jurisdiction to consider an ESC, without prejudice to any other case).
 

FTT has power to determine whether it has jurisdiction

Tribunal refusing jurisdiction in favour of more appropriate forum (abuse of process)

 

Where a party seeks to raise an issue before the Tribunal in one appeal when that issue will be determined, in due course, in another forum (including a different appeal to be heard by the FTT), then if that other forum is the more appropriate forum and if its decision will fully resolve the issue as raised in the immediate appeal, the Tribunal will decline to exercise jurisdiction over that matter in the immediate appeal on the grounds of abuse of process.

 

“And if, contrary to his submissions, the Claim was made in either of those returns, the 2004 and 2005 closure notices are effective to reject the Claim. In those circumstances, the appropriate forum for determining the validity of the 2004 and 2005 closure notices is the tribunal or court which is properly to be seized of the matter in accordance with the statutory procedure: that is to say the Tribunal in the context of an appeal against those closure notices. The correct forum is not the court nor is it the Tribunal in the context of other proceedings (namely the appeals in respect of the 2002 and 2003 closure notices). Whether this is a matter of jurisdiction in its strict sense or whether it is the slightly different question whether a jurisdiction which exists should ever be exercised, does not much matter. In relation to that, the passage from the opinion of Lord Nicholls in Autologic plc v Inland Revenue Commissioners [2006] 1 AC 118, cited by the Judge at [79] of the Decision is instructive. Just as there was really no real discretion in that case to allow the case to proceed in the “wrong” forum (because, although there was technically jurisdiction, it would be an abuse of process for the case to proceed), so too in the present case, even if strictly the Tribunal has jurisdiction to decide the issue in the appeals in relation to the 2002 and 2003 closure notices, it should not accept that jurisdiction.” (Spring Salmon & Seafood Ltd v. HMRC [2014] UKUT 488 (TCC), §45 – taxpayer was arguing that HMRC’s rejection of a loss carry-back claim that was (arguably) included in later returns, the appeals in respect of which were not before this Tribunal, was wrong and that that conclusion should be applied to allow the appeal in respect of the earlier return).
 

Tribunal refusing jurisdiction in favour of more appropriate forum (abuse of process)

Jurisdiction to decide issues the resolution of which is necessary to a decision on the matter in hand

 

“The Tribunal's functions are prescribed by the legislation which provides for appeals to be made to it from decisions of HMRC. The Tribunal has jurisdiction to decide many sorts of issue (although not all issues since it does not have a general judicial review jurisdiction) the resolution of which are necessary to a decision on the matter in hand.” (Spring Salmon & Seafood Ltd v. HMRC [2014] UKUT 488 (TCC), §28).
 

Jurisdiction limited to issues properly before the Tribunal

“And if, contrary to his submissions, the Claim was made in either of those returns, the 2004 and 2005 closure notices are effective to reject the Claim. In those circumstances, the appropriate forum for determining the validity of the 2004 and 2005 closure notices is the tribunal or court which is properly to be seized of the matter in accordance with the statutory procedure: that is to say the Tribunal in the context of an appeal against those closure notices. The correct forum is not the court nor is it the Tribunal in the context of other proceedings (namely the appeals in respect of the 2002 and 2003 closure notices). Whether this is a matter of jurisdiction in its strict sense or whether it is the slightly different question whether a jurisdiction which exists should ever be exercised, does not much matter.” (Spring Salmon & Seafood Ltd v. HMRC [2014] UKUT 488 (TCC), §45).

Jurisdiction to decide issues the resolution of which is necessary to a decision on the matter in hand
Jurisdiction limited to issues properly before the Tribunal

Exclusivity of jurisdiction in relation to tax matters

 

“[12] ... High Court proceedings [for a declaration of how much tax is owed] will be struck out as an abuse of the court’s process. The proceedings would be an abuse because the dispute presented to the court for decision would be a dispute Parliament has assigned for resolution exclusively to a specialist tribunal.” (Autologic Holdings plc v. HMRC [2005] UKHL 54, Lord Nicholls (for the majority); see also §84 – claims for group relief in the High Court relying on EU law were misconceived); 

 

“Possibly the correct view is that there is an absolute exclusion of the High Court’s jurisdiction only when the proceedings seek relief which is more or less co-extensive with adjudicating on an existing open assessment: but that the more closely the High Court proceedings approximate to that in their substantial effect, the more ready the High Court will be, as a matter of discretion, to decline jurisdiction.” (Glaxo Group Ltd v. IRC [1995] STC 1075, 1083, Robert Walker J).

 

But: 

 

“[15]...at least as a general principle, the taxpayer and the revenue are each entitled to insist that the statutory procedure for dealing with disputed assessment should be followed” (Autologic Holdings plc v. HMRC [2005] UKHL 54, Lord Nicholls (for the majority));

 

Tribunal route time barred 

 

“[39] Thus far I have been considering cases where the subject matter of the category (1) claims in the High Court is group relief claims which can still be allowed by the appeal commissioners if the claimants' Community law contention is correct. I now turn to the other class of cases, where this is not so. The most obvious example is where it is now too late, in respect of the relevant accounting periods, for a claimant to make a group relief claim to the revenue or to appeal to the appeal commissioners. The claimant is outside the prescribed time limits.

...

[41] In such cases the taxpayer’s remedy necessarily lies elsewhere. In such cases the taxpayer’s remedy is of a different character. The taxpayer’s remedy lies in pursuing proceedings claiming restitutionary and other relief in respect of the United Kingdom’s failure to give proper effect to Community law.” (Autologic Holdings plc v. HMRC [2005] UKHL 54, Lord Nicholls (for the majority) – in respect of claims for restitution of tax levied in breach of EU law. Contrast with Lord Walker at §126).

 

Only time barred if discretion to extend time limits exercised against claimant 

 

“[42] I add one caveat. The revenue and the appeal commissioners have power to extend time limits for late amendments and late appeals. Before proceeding with their High Court claims claimant companies in this class of cases should therefore take the simple step of inviting the revenue or the appeal commissioners to extent the time limits appropriately. If this invitation is accepted, the claimants should proceed along the statutory route. If the invitation is declined, or if the revenue and the appeal commissioners have no power to grant the necessary extensions, the way will be clear for the High Court proceedings to continue.” (Autologic Holdings plc v. HMRC [2005] UKHL 54, Lord Nicholls (for the majority))
 

Exclusivity of jurisdiction in relation to tax matters

Judicial review jurisdiction

 

See N5a. Judicial review jurisdiction

Judicial review jurisdiction

Human Rights Jurisdiction

 

Power to reduce income tax assessments

 

“It seems to us that a similar interpretive approach would be appropriate in the context of section 29 TMA.  In other words, the power of the relevant representative of HMRC to issue an assessment pursuant to that section should be read as being to make an assessment of the amount of tax which is the amount required, in his or her opinion, to make good the loss of tax but only where assessing that amount does not breach the taxpayer’s rights under the A1P1 to the extent that giving effect to those rights does not go against the “grain of the legislation”.” (Fessal v. HMRC [2016] UKFTT 285 (TC), §29 – Bosher distinguished on the basis that s.29 does not contain any second-stage mitigation power).

 

Or:

 

“It seems to me that… the word ‘overcharged’ in s 50(6)(a) of the TMA 1970 primarily refers to being overcharged by reference to the tax legislation. Mr Lobler has incurred the tax charge that was envisaged under the legislation and there is no element of ‘overcharge’, as that term is usually understood.” (Lobler v. HMRC [2015] UKUT 152 (TCC), §107, Proudman J).

 

We consider ourselves bound to accept, by reason of the above comments, that the approach in Willey was wrong. Even if we were not so bound, we would still reach the same view and for the same reasons.” (Morgan Lloyd Trustees Ltd v. HMRC [2017] UKFTT 131 (TC), §132, Judge Poole).

“Accordingly, I find that in respect of s 50(6) this tribunal’s jurisdiction is limited to determining whether, under the provisions of the legislation, there has been an overcharge (or, as the case may be, undercharge) to tax. That involves consideration of the statutory requirements for a valid assessment or determination, as well as the question of the proper liability to tax, but it does not enable the tribunal to consider public law questions.” (Barrett v. HMRC [2015] UKFTT 329 (TC), §93).

 

FTT cannot make declaration of incompatibility 

 

“The position, which before us was common ground, is that to the extent that Article 6 applies in the circumstances of Euro Wines’ case, the FTT had been correct 30 to conclude that it was not a “court” for the purpose of s 4(5) of the Human Rights Act 1998 (“HRA”), and accordingly that it had no jurisdiction to make a declaration of incompatibility.” (Euro Wines (C&C) Limited v. HMRC [2016] UKUT 359 (TCC), §4, Birss J and Judge Berner).

 

“the First-tier Tribunal is not a ‘court’ as defined by s4(5) HRA 1998, and therefore has no power to issue such a declaration.” (Bosher v. HMRC [2012] UKFTT 631 (TC), §141).

 

UT cannot make declaration of incompatibility 

 

“We have considered whether the Upper Tribunal might be able to issue such a declaration given that it is a superior court of record…and has many of the powers, privileges and authority of the High Court…This point was considered by the Employment Appeals Tribunal (which has corresponding standing to the Upper Tribunal in relation to employment appeals) in Whittaker v. Watson…[2002] ICR 1244. In its decision, Lindsay J determined that the EAT was not a ‘court’ for the purposes of s4 HRA 1998, and had no power to make a declaration. The legislation governing the powers of the EAT in s29 Employment Tribunals Act 1996 is expressed in very similar terms to the provisions governing the Upper Tribunal. We therefore have concluded that even if a declaration were to be an appropriate remedy, there would be no point transferring this appeal to the Upper Tribunal, as the Upper Tribunal could not make one.” (Bosher v. HMRC [2012] UKFTT 631 (TC), §141).
 

Human Rights Jurisdiction

Requirement for review of criminal penalties by a court with full jurisdiction

“In my view the ECtHR has evolved a clear principle relating to the meaning of a court of “full jurisdiction” in relation to a “criminal charge” for the purposes of Article 6. On factual and legal matters, a decision of an administrative body such as HMRC, which does not fulfil the requirements of Article 6, must be subject to review by a court or tribunal which is able to determine all factual and legal matters and is not merely confined to a Wednesbury judicial review jurisdiction.” (British-American Tobacco v. HMRC [2017] UKFTT 190 (TC), §516, Judge Brannan).

Requirement for review of criminal penalties by a court with full jurisdiction

No jurisdiction in respect of inter-governmental agreements (e.g. Liechtenstein Disclosure Facility)

 

“I believe that there is a fundamental flaw with this argument. Mr Knight was approaching the LDF as if it were a statutory provision. However, the LDF does not form part of the primary or secondary legislation of the United Kingdom. On the contrary, it is set out partly in agreements between HMRC and the Government of Liechtenstein (to which the appellants are not party) and partly in public (non-statutory) statements that HMRC have made to taxpayers. I do not consider that the Tribunal has any jurisdiction to consider complaints that HMRC have not honoured their agreement with the Government of Liechtenstein. Nor do I consider that the Tribunal has jurisdiction to consider arguments to the effect that, whatever the position set out in Schedule 24, HMRC should still have applied a lower level of penalty given the public statements they made on the LDF. It seems to me that such arguments are based on public law and, since the Tribunal has no judicial review function, would have to be pursued in the courts.” (Knight v. HMRC [2016] UKFTT 819 (TC), §45, Judge Jonathan Richards).
 

No jurisdiction in respect of inter-governmental agreements (e.g. Liechtenstein Disclosure Facility)

No unjust enrichment jurisdiction

 

“The Tribunal is not satisfied it has jurisdiction to consider what is effectively a claim in restitution. Its jurisdiction is limited to that provided by statute.  Such a claim, if to be made, would likely have to be made in a claim seeking restitution pursued in court, for instance in the Chancery Division. The Tribunal is of the preliminary view that it does not have jurisdiction to consider such a claim and was directed to any authority or statutory provision that confers such a jurisdiction.” (Grange Shipping Ltd v. HMRC [2017] UKFTT 142 (TC), §97, Judge Rupert Jones).
 

No unjust enrichment jurisdiction

Undertaking restricting the scope of HMRC’s enquiries/assessments 

 

Undertaking given to the Court binding and given effect by tax tribunal

"[37] The undertaking was an undertaking given to the Court. It should be construed in the same way as any legal document, adhering as far as possible to the plain meaning of the words used in the way in which they would have been understood by the interested parties...

[38] On that basis HMRC are precluded by their undertaking from seeking to claim the sums which are the subject of this appeal." (Sping Salmon Ltd v. HMRC [2016] UKUT 313 (TCC), Lord Glennie)

Undertaking restricting the scope of HMRC’s enquiries/assessments 

Jurisdiction to consider contract with HMRC

 

“I accept, following Noor, that if the appellants were arguing that HMRC had entered into an intra vires contract not to assess the appellants (or to assess them only for a particular sum), the Tribunal mayhave jurisdiction to consider whether HMRC’s assessments complied with the terms of that contract. However, that does not mean that every argument that can be labelled a “private law” argument is within the scope of the Tribunal’s jurisdiction.” (Always Sheet Metal Ltd v. HMRC [2017] UKFTT 198 (TC), §100, Judge Jonathan Richards).
 

Jurisdiction to consider contract with HMRC
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