HBOS Plc & Lloyds Banking Group Plc v The Commissioners for HMRC

An appeal lies against the tribunal’s decision, identified by reference to its jurisdiction and the issues referred for determination, rather than against its reasons in isolation. A party successful on the decision cannot appeal merely because some reasoning was adverse to it. A successful respondent may defend the decision on alternative grounds without permission where it does not seek to improve its position or obtain a different, better outcome. Alternative views expressed on the hypothesis that the tribunal’s actual decision was wrong do not themselves form part of the decision.

The appellants challenged HMRC’s inclusion of two matters in its response to their appeal from the First-tier Tribunal’s decision in HBOS Plc and Lloyds Banking Group Plc v HMRC [2021] UKFTT 0307 (TC). The underlying appeal concerned interest under section 78 of the Value Added Tax Act 1994 on bad debt relief claims.

The appellants argued that HMRC required permission from the First-tier Tribunal to raise an alternative construction of section 78(1)(d), and a further issue concerning the date from which interest would run. The Upper Tribunal had to decide whether those matters challenged the First-tier Tribunal’s decision, or merely supported its result on alternative reasoning.

1. Application dismissed. The appellants’ objection to HMRC raising the section 78(1)(d) issue and the Further Issue was dismissed. Costs were reserved to the substantive hearing.
2. The relevant decision was that the appellants were not entitled to further interest under section 78 of the Value Added Tax Act 1994. The issue referred to the First-tier Tribunal was whether interest was due from the claim dates or earlier dates. The tribunal’s jurisdiction under section 83(1)(s) did not create separate appealable decisions merely because different statutory provisions or alternative analyses were considered.
3. Following Steven Price v HMRC [2015] UKUT 164 (TCC), an appeal lies against the decision, not the reasons. Identifying the decision requires consideration of the tribunal’s jurisdiction and the issues placed before it. Only a party unsuccessful in that decision may appeal. A successful respondent may rely on different or additional reasons to uphold the same result.
4. The First-tier Tribunal had not determined the Further Issue. Its discussion of section 78(1)(d) was expressly alternative and did not address the Further Issue. The conclusion that the agreed issue disposed of the appeal meant that the Further Issue did not arise.
5. The fact that HMRC’s alternative argument might lead to a different result if the appellants succeeded did not itself make permission necessary. The relevant question was whether HMRC sought to “do better” than its success in the First-tier Tribunal’s decision. HMRC sought to preserve the result that no further interest was payable, not to improve its position.
6. The same analysis applied to HMRC’s section 78(1)(d) ground. HMRC did not seek to alter the decision and could support it by agreeing with reasons given by the First-tier Tribunal, even though those reasons had not been advanced by HMRC below.

• First-tier Tribunal: In HBOS Plc and Lloyds Banking Group Plc v HMRC [2021] UKFTT 0307 (TC), the appellants’ appeal against HMRC’s interest decision was dismissed.
• Upper Tribunal: The application objecting to HMRC raising the section 78(1)(d) issue and Further Issue without first obtaining permission was dismissed.