Altrad Services Limited & Anor v The Commissioners for HMRC

On an application to introduce a new ground of appeal, an appellate court must first identify whether the point was fairly and squarely raised below. A reference to the same statutory provision, or to related arguments, does not make the proposed ground live. If the point is new, the court is cautious and will generally refuse it where it requires new evidence or would have changed the trial. A pure point of law may nevertheless be admitted where the respondent has adequate time, has not suffered detriment from the omission, and can be protected in costs. Factual prejudice may be addressed by assumptions in the respondent’s favour. Permission was therefore granted for a new challenge under section 11(4)(a) of the Capital Allowances Act 2001, subject to an assumption about the taxpayers’ subjective purpose.

The taxpayers appealed to the First-tier Tribunal against closure notices restricting capital allowance claims arising from transactions entered into in 2010. The FTT dismissed the taxpayers’ appeal on Issue 1 but decided other issues in their favour. The Upper Tribunal reversed the FTT on Issue 1 and upheld the relevant technical conclusions, with the taxpayers’ claims succeeding in full: [2022] UKUT 00185 (TCC).

HMRC sought permission to appeal. Permission had already been granted on Ground 1. Ground 2 alleged that the Upper Tribunal had erred in assuming that the taxpayers incurred qualifying expenditure under section 11(4)(a) of the Capital Allowances Act 2001. The central questions were whether Ground 2 was a new point and, if so, whether it could be introduced without prejudice to the taxpayers.

1. Disposition. HMRC was granted permission to rely on Ground 2. The permission was conditional on the Court assuming that the taxpayers’ subjective intention in paying the Option Price was to reacquire the assets for use in their businesses. Ground 1 had already been permitted and was not in issue on this application.
2. Applicable approach. If a ground was live before the first-instance tribunal, the Court considers whether it has a real prospect of success, applying Nadia Zaman v London Borough of Waltham Forest [2023] EWCA Civ 322. If it is a new ground, the Court must be cautious. It will generally refuse a point that would require new evidence or would have led to a different evidential trial. Even a pure point of law should be allowed only where the respondent has adequate time to address it, has not acted to its detriment because of the earlier omission, and can be adequately protected in costs. Those principles were stated in Singh v Dass [2019] EWCA Civ 360, approved in Notting Hill Finance Ltd v Sheikh [2019] EWCA Civ 1337; [2019] 4 WLR 146, with the relevant principles also reflected in Mullarkey v Broad [2009] EWCA Civ 2 and R (on the application of Humphreys) v Parking and Traffic Appeals Service [2017] EWCA Civ 24; [2017] R.T.R. 22.
3. Whether Ground 2 was new. Although section 11 of the Capital Allowances Act 2001 appeared in documents before the FTT, it arose in the context of two different arguments. HMRC had argued that the reacquisition failed section 11 because the earlier disposal was ineffective for section 61 purposes, and that the Option Price should be treated as qualifying expenditure for a different issue under section 70E. HMRC had not fairly and squarely argued that the Option Price failed section 11 independently of the earlier disposal. The burden of proof on the taxpayers did not cure that omission. Rule 25(2)(b) of the Tribunal Procedure (First-Tier Tribunal) (Tax Chamber) Rules 2009 required HMRC to set out its position in its statement of case, and no such Ground 2 was found there or elsewhere in the materials below.
4. Prejudice and case management. The question whether the Court could apply a Ramsay analysis to the reacquisition, despite the absence of specific findings below, was a question of law suitable for determination by the full Court. The potential prejudice from absent subjective evidence could be removed by assuming the taxpayers’ purpose in their favour. No further documentary prejudice had been demonstrated, although the taxpayers could apply if relevant documents were later identified. It was therefore desirable for the full Court to hear argument on Ground 2 without allowing the late point to operate unfairly.

1. Court of Appeal (Civil Division). Permission on Ground 1 had already been granted. On the present application, permission was granted on Ground 2 subject to an assumption protecting the taxpayers from prejudice.
2. Upper Tribunal (Tax and Chancery Chamber). The Upper Tribunal reversed the First-tier Tribunal on Issue 1 and upheld the taxpayers’ success on the other relevant issues: [2022] UKUT 00185 (TCC).
3. First-tier Tribunal. The FTT dismissed the taxpayers’ appeal on Issue 1 but decided other issues in their favour.