BPP Holdings Ltd and others v Commissioners for Her Majesty’s Revenue and Customs

Tribunal rules, directions and orders must be observed. Although procedural authorities concerning the courts of England and Wales do not apply directly to tribunals, tribunals should generally adopt a similarly disciplined approach to compliance and sanctions.

A tribunal deciding whether to debar a party must consider all relevant circumstances under its own rules and overriding objective. Public bodies receive no special latitude because litigation concerns the performance of public duties. An appellate court may interfere with a discretionary case-management decision only where the tribunal applied a wrong principle, considered irrelevant material, omitted relevant material, or reached an unjustifiable decision outside the generous ambit of its discretion.

The BPP companies appealed to the First-tier Tribunal against HMRC decisions concerning the VAT treatment of books supplied separately from educational services. After HMRC repeatedly failed to provide adequate particulars of its case and breached procedural deadlines, the tribunal made an order debarring it from further participation in the surviving appeal.

The Upper Tribunal allowed HMRC’s appeal. The Court of Appeal restored the debarring order in BPP’s favour: [2016] EWCA Civ 121. HMRC appealed to the Supreme Court. The central issue was whether the First-tier Tribunal had been entitled to make the debarring order under rule 8 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.

1. Appeal dismissed unanimously. Lord Neuberger delivered the judgment, with which Lord Clarke, Lord Sumption, Lord Reed and Lord Hodge agreed. The First-tier Tribunal had been entitled to debar HMRC from further participation. Although its decision was tough and approached the permissible limit of harshness, it remained within the tribunal’s discretion.

2. The tribunal correctly recognised that it was deciding whether to impose a sanction under rule 8(3), rather than whether to grant relief from an automatic sanction under rule 8(1). It considered all relevant factors and applied the overriding objective of dealing with cases fairly and justly.

3. Authorities concerning time limits and sanctions under the Civil Procedure Rules do not apply directly to tribunals. Tribunal procedural rules differ, and UK-wide tribunals must consider procedural jurisprudence from Scotland and Northern Ireland as well as England and Wales. Nevertheless, courts and tribunals throughout the United Kingdom attach substantial importance to compliance. Tribunals should generally follow an approach similar to that of the courts. The Upper Tribunal’s guidance in Revenue and Customs Comrs v McCarthy & Stone (Developments) Ltd [2014] UKUT 196 (TCC) was appropriate.

4. The tribunal’s reliance by analogy on Mitchell v News Group Newspapers Ltd [2014] 1 WLR 795 was sound. Denton v T H White Ltd [2014] 1 WLR 3926 largely clarified that guidance and did not undermine the tribunal’s balancing exercise. The tribunal had considered the prejudice and other consequences for both parties throughout its judgment.

5. HMRC’s public functions did not justify greater procedural latitude. Such an approach would discourage public bodies from meeting the standards expected of private litigants. Nor did BPP’s consequential advantage undermine the sanction, since that feature ordinarily accompanies a debarring order.

6. An appellate court may interfere where irrelevant material was considered, relevant material was omitted, the wrong principles were applied, or the decision was one no reasonable tribunal could reach. Mere disagreement is insufficient. Here the serious and prolonged failure, consequential delay, absence of explanation, lack of an alternative remedy and other procedural defaults justified the order.

1. United Kingdom Supreme Court: Dismissed HMRC’s appeal and upheld the debarring order: [2017] UKSC 55 .
2. Court of Appeal: Allowed BPP’s appeal and restored the First-tier Tribunal’s debarring order: [2016] EWCA Civ 121 ; [2016] 1 WLR 1915 .
3. Upper Tribunal: Allowed HMRC’s appeal against the debarring order: [2015] STC 415.
4. First-tier Tribunal: Judge Mosedale made the debarring order: [2014] UKFTT 644 (TC). Judge Herrington later refused to lift it but granted permission to appeal: [2014] UKFTT 917 (TC).