The Commissioners for HMRC v LG Park HT1 Limited & Ors

Paragraph 45 of Schedule 10 to Finance Act 2003 requires a question of market value arising in an SDLT appeal to be referred to the Upper Tribunal (Lands Chamber), but it does not prescribe when referral must occur or transfer the appeal itself. Timing is a case-management decision for the First-tier Tribunal, governed by the overriding objective. There is no presumption of immediate referral. Referral may properly wait where market value may become irrelevant, the issues or terms of reference are unclear, or an early referral risks trespassing on matters for the FTT, duplication, delay or inconsistent findings. The Upper Tribunal must exercise particular caution before disturbing such a decision and must identify a material error of law.

HMRC appealed against a decision of the Upper Tribunal (Tax and Chancery Chamber), reported at [2022] UKUT 00178 (TCC). The Upper Tribunal had allowed the taxpayers’ appeal against the First-tier Tribunal’s refusal to refer the market value of long leasehold interests to the Upper Tribunal (Lands Chamber) under paragraph 45 of Schedule 10 to the Finance Act 2003.

The dispute concerned SDLT on leases granted as part of complex transactions. The central questions were whether paragraph 45 required an immediate reference and whether the FTT had made a material error of law in deciding that valuation should await determination of other factual and legal issues.

1. Appeal allowed. The Upper Tribunal’s decision was set aside and remade by dismissing the taxpayers’ appeal against the FTT’s decision.
2. Case-management decisions. An appeal against an FTT case-management decision requires extreme caution. The Upper Tribunal should not interfere where the FTT applied the correct principles, considered relevant matters and excluded irrelevant matters, unless the decision was plainly wrong and outside the generous ambit of its discretion. Any error of law must also be material, meaning that it might have made a difference to the decision. The approach was supported by [2014] UKUT 0062 (TCC), [2021] EWCA Civ 1559 and [2017] EWCA Civ 1427.
3. Paragraph 45. Paragraph 45 requires any question of the market value of the subject matter of a land transaction arising in an FTT appeal to be determined on a reference to the Lands Chamber. Only the valuation question is transferred. All other questions of fact and law remain with the FTT. The provision does not require valuation to be the only issue and says nothing about the timing of a reference.
4. Timing and the overriding objective. The timing of a reference is a matter for the FTT’s case-management discretion. There is no presumption in favour of immediate referral. An early reference may be unsuitable where market value may become irrelevant after other issues are resolved, the terms of reference cannot yet be framed without trespassing on matters reserved to the FTT, or referral would cause delay, expense, duplication, inconsistent findings or a later additional reference.
5. Scope and preliminary issues. The FTT was entitled not to determine the scope of the appeals at the case-management stage. The scope of the matter in question under a closure notice is for the FTT, consistently with [2020] EWCA Civ 579. A preliminary-issue hearing should generally be ordered only where there is a succinct, readily separable knockout point, as explained in [2015] UKUT 637 (TCC).
6. Application. The FTT was entitled to consider whether the taxpayers’ grounds raised issues concerning the exchange provisions, the MPR Release, the identification of the subject matter and apportionment. Those issues involved fact and law for the FTT. If the exchange provisions did not apply, market value would be irrelevant. The factual setting in [2021] UKUT 76 (LC) was materially different and did not require a different result. The FTT’s refusal to make an immediate reference was within its discretion and disclosed no material error of law.

1. Court of Appeal (Civil Division): Allowed HMRC’s appeal, set aside the Upper Tribunal’s decision and dismissed the taxpayers’ appeal against the FTT decision.
2. Upper Tribunal (Tax and Chancery Chamber): In [2022] UKUT 00178 (TCC), allowed the taxpayers’ appeal and directed a reference of the market value question to the Upper Tribunal (Lands Chamber).
3. First-tier Tribunal: Refused the taxpayers’ application for a paragraph 45 reference, concluding that other factual and legal questions required determination first.