John Dee Limited v Commissioners of Customs and Excise

An appeal to a VAT Tribunal under section 40 of the Value Added Tax Act 1983 is appellate rather than supervisory. Its scope depends on the decision appealed against and any special statutory provisions. On an appeal against a requirement to provide security, the Tribunal reviews whether it appeared requisite to the Commissioners, including whether no reasonable panel could have acted as it did, irrelevant matters were considered, relevant matters were disregarded, or an error of law occurred. The Tribunal cannot exercise a fresh revenue-protection discretion of its own. An appeal may be dismissed where omitted material could not have changed the decision, but a merely likely or probable same result does not establish inevitability.

The Commissioners required John Dee Limited to provide security for VAT under paragraph 5(2) of Schedule 7 to the Value Added Tax Act 1983, citing links between the company and an earlier group of companies. A VAT Tribunal found that the Commissioners should have considered seeking financial information, but dismissed the appeal because the decision would probably have been the same. Turner J allowed the company's further appeal, holding that the Tribunal's jurisdiction was appellate and that it should have left the Commissioners to reconsider the matter. The Commissioners appealed to the Court of Appeal. The central issues were the nature and scope of the Tribunal's jurisdiction and whether it could substitute its own discretion or dismiss the appeal on the basis of a probable, rather than inevitable, identical outcome.

1. Disposition. The Court of Appeal unanimously dismissed the Commissioners' appeal with costs. Lord Justice Neill gave the leading judgment. Lord Justice Roch and Lord Justice Hutchison agreed.
2. The jurisdiction under section 40 of the Value Added Tax Act 1983 is appellate, not supervisory. References to Wednesbury principles may cause confusion because those principles arise primarily in supervisory review. The precise powers of the Tribunal must be determined by the nature of the decision under appeal, the statutory scheme and any special statutory provisions. The Value Added Tax Tribunal Rules 1986 supported the conclusion that the Tribunal was not confined to a purely supervisory role.
3. For an appeal under section 40(1)(n) against a requirement for security under paragraph 5(2) of Schedule 7, the statutory condition is whether it appeared requisite to the Commissioners to require security for the protection of the revenue. The Tribunal may examine whether the Commissioners acted in a way in which no reasonable panel could have acted, considered an irrelevant matter, disregarded a matter to which they should have given weight, or erred on a point of law. The Tribunal does not decide afresh whether security appears requisite to it.
4. The Tribunal has no power to exercise a fresh discretion on the model described in Hadmor Productions Ltd v Hamilton [1983] 1 AC 191. Responsibility for protecting the revenue rests with the Commissioners, not with the Tribunal or the court.
5. Where a decision-maker failed to consider relevant material, the Tribunal may dismiss the appeal if the decision would inevitably have been the same. The Tribunal's finding that the Commissioners would most likely have reached the same decision, and that their concern would probably have been fortified, did not establish inevitability. That was sufficient to dispose of the appeal.

1. Court of Appeal (Civil Division): dismissed the Commissioners' appeal with costs.
2. High Court, Turner J: allowed John Dee Limited's appeal from the VAT Tribunal, holding that the Tribunal's jurisdiction was appellate and that it should have left the Commissioners to make any fresh decision.
3. VAT Tribunal, Newcastle upon Tyne: found that the Commissioners had failed to consider seeking relevant financial information, but dismissed the company's appeal because the outcome would probably have been unchanged.