NTK Leisure Limited v The Commissioners for HMRC

An appeal from a case-management decision succeeds only on an error of law. The appellate tribunal must respect the First-tier Tribunal’s discretion and may intervene where it applied wrong principles, considered irrelevant matters, omitted relevant matters, or reached an unjustifiable decision. Mere disagreement with the outcome is insufficient. An incorrect rule citation is an accidental slip, rather than an invalidating error, where the tribunal clearly understood the correct legal basis and the mistake can be amended.

NTK’s appeal concerned assessments for Amusement Machine Licence Duty and related Gaming Duty. The First-tier Tribunal automatically struck out the appeal after NTK failed to serve witness statements required by an unless order, and subsequently refused reinstatement.

The FTT issued full written findings and reasons on 17 March 2020. It later granted permission to appeal on the arguable ground that it had reached an unreasonable conclusion concerning NTK’s intention to provide witness evidence. The central issue before the Upper Tribunal was whether the Full Decision contained an error of law.

1. Appeal dismissed. The Upper Tribunal found no error of law in the FTT’s refusal to reinstate the appeal.
2. An appeal from the FTT lies only on a point of law under section 11 of the Tribunals, Courts and Enforcement Act 2007. Strike-out and reinstatement are case-management decisions. Applying Walbrook Trustee (Jersey) Ltd v Fattal and BPP Holdings Ltd v HMRC, the Upper Tribunal must not substitute its own view merely because it might have reached a different conclusion. Intervention requires a legal error, reliance on irrelevant matters, omission of relevant matters, or a decision no reasonable tribunal could have reached.
3. The FTT’s reference to rule 8(3)(a), instead of rule 8(1), did not make its decision ultra vires. The FTT clearly understood the unless order’s legal basis. The mistake was an accidental slip capable of amendment under rule 37.
4. The FTT correctly applied the three-stage approach in Denton v White, as applied to reinstatement applications in Chappell v the Pensions Regulator: assess the seriousness and significance of the breach, identify why it occurred, and evaluate all the circumstances, giving particular weight to efficient litigation at proportionate cost and compliance with rules and orders.
5. The FTT was entitled to reject NTK’s explanation as lacking credibility and to conclude that the appeal appeared to lack merit without the necessary witness evidence. It had considered prejudice, fairness, proportionality and the relevant procedural history. Polyclear v Wezowicz and ors was distinguishable because it concerned attempted but imperfect compliance where strict compliance was impossible; NTK had made no attempt to comply.
6. The Upper Tribunal dismissed the appeal and remade the decision only to correct the accidental rule reference. Any costs application had to comply with rule 10(5)(a) and (6) of the Upper Tribunal Rules.

• First-tier Tribunal (Tax Chamber): The FTT struck out NTK’s appeal following non-compliance with an unless order and refused reinstatement in its Full Decision dated 17 March 2020.
• Upper Tribunal (Tax and Chancery Chamber): Permission to appeal was granted by the FTT on 18 March 2021. The Upper Tribunal dismissed the appeal and corrected the accidental rule reference.