Totel Ltd, R (on the application of) v The First-Tier Tribunal (Tax Chamber) & Ors

A statutory power to amend primary legislation by delegated legislation receives a narrow and strict construction. Clear words are required to authorise the executive to abolish a statutory right of appeal.

A power to make provision “in connection with” appeals against administrative decisions, including provision about the circumstances in which an appeal may be made or concluded, presupposes an existing right of appeal. It does not authorise the abolition of an appeal from a tribunal’s decision. An express power to amend or repeal any enactment identifies the permitted legislative method, but does not enlarge the subject matter for which that method may be used.

One Act may authorise delegated legislation to amend another Act, provided that Parliament confers that power in sufficiently clear and express terms.

The appellant challenged decisions refusing to relieve it from the requirement to pay disputed VAT before its tax appeals could be entertained. Its hardship applications had begun before responsibility for VAT appeals passed from the VAT Tribunal to the First-tier Tribunal.

Paragraph 221(5) of Schedule 1 to the Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 inserted section 84(3C) into the Value Added Tax Act 1994. That subsection declared a tribunal’s hardship decision final, notwithstanding the statutory appeal provisions.

Simon J dismissed the application for judicial review in [2011] EWHC 652 (Admin). The central issue on appeal was whether section 124 of the Finance Act 2008 authorised the Treasury, through delegated legislation, to remove the right of appeal from a hardship decision.

1. Appeal allowed. Section 124 of the Finance Act 2008 did not authorise the removal of the statutory right of appeal from a tribunal’s hardship decision. Paragraph 221(5) of Schedule 1 to the Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009, which inserted section 84(3C) into the Value Added Tax Act 1994, was ultra vires. The appellant was entitled to appeal to the Upper Tribunal.

2. Parliament does not lightly delegate power to amend primary legislation. An enabling provision conferring such a power must receive a narrow and strict construction, and doubts about its scope must be resolved restrictively. Section 124(6) permitted the amendment, repeal or revocation of primary legislation, but described only the manner in which the power could be exercised. Its permissible subject matter remained controlled by section 124(1) and (2).

3. The power to make provision “in connection with appeals against HMRC decisions” did not extend to abolishing an appeal from the First-tier Tribunal to the Upper Tribunal. A hardship determination concerned the circumstances in which the underlying tax appeal could be entertained, but it was not itself an appeal against an HMRC decision. Language about the circumstances in which an appeal may be made or concluded presupposed an existing right of appeal. It did not clearly authorise that right’s abolition.

4. The emphatic wording of section 84(3C) could not establish the vires of the delegated legislation. The relevant question concerned the scope of the enabling power in section 124. The provision made under that power could not define or enlarge the authority for its own enactment.

5. There is no absolute rule preventing subordinate legislation made under one Act from amending rights conferred by another. Such an amendment is effective where the enabling Act confers a clear and express power showing that Parliament understood the nature and scope of the authority delegated.

6. Arden LJ added, provisionally because the point had not been argued, that ending an appeal right in pending proceedings may be retrospective. The presumption against retrospectivity would independently require clear enabling words. Lord Neuberger MR agreed with Moses LJ and with Arden LJ’s additional observations.

1. Court of Appeal (Civil Division): The appeal was allowed in [2012] EWCA Civ 1401. The insertion of section 84(3C) of the Value Added Tax Act 1994 was held ultra vires, and the appellant was entitled to appeal to the Upper Tribunal.
2. High Court, Administrative Court: Simon J dismissed the judicial review claim in [2011] EWHC 652 (Admin), also reported at [2012] QB 358. He held that section 124 of the Finance Act 2008 authorised the delegated legislation.
3. First-tier Tribunal (Tax Chamber): The tribunal refused the appellant relief from the obligation to pay the disputed tax before its two tax appeals could be entertained.