The Commissioners for HMRC v Abubaker Arrbab

A general Henry VIII power to make provision in connection with reviews and appeals does not, without clear words, authorise subordinate legislation to remove access to an independent tribunal. A power to regulate the circumstances or time for an appeal presupposes that a right of appeal remains. Where a mandatory review regime makes HMRC the effective gatekeeper for a late appeal, the restriction must be clearly authorised by primary legislation and reasonably necessary for the legitimate objective. Section 124 of the Finance Act 2008 did not authorise section 38(1A) of the Tax Credits Act 2002 to have that effect. Sections 21A and 21B remained valid independently, but section 38(1A) and its cross-reference were ultra vires and were treated as struck out.

Mr Arrbab appealed to the First-tier Tribunal against HMRC’s refusal to extend time for a review of a tax-credit decision. The FTT struck out the appeal for want of jurisdiction. The Upper Tribunal set that decision aside and remitted the case, construing the statutory scheme as preserving a right of appeal.

HMRC appealed to the Court of Appeal. The issues were whether sections 21A, 21B and 38 of the Tax Credits Act 2002 excluded an appeal where HMRC refused an extension of time, and whether the statutory instrument introducing the mandatory review requirement was ultra vires section 124 of the Finance Act 2008. The appeal was academic after HMRC repaid the disputed sums.

1. Academic appeal. Although the dispute between the parties had become academic, the court exercised its exceptional discretion to hear the appeal. The issue was of general importance, the respondent was protected as to costs and was not otherwise prejudiced, and both sides’ arguments were fully ventilated.
2. Construction issue. The Upper Tribunal had erred in relying on R(CJ) and SG v Secretary of State for Work and Pensions (ESA) [2017] UKUT 324 (AAC), because the statutory wording in that case was materially different. Section 38(1A) of the Tax Credits Act 2002 expressly required both an actual review under section 21A and notice of its conclusion. If HMRC refused a late application under section 21B, neither requirement was satisfied. On the statutory wording, the provision therefore excluded an appeal.
3. Ultra vires issue. Section 124 of the Finance Act 2008 was a Henry VIII power and had to be construed restrictively where there was genuine doubt about its scope. The approach in R (on the application of Public Law Project) v Secretary of State for Justice [2016] UKSC 39 was applied. Rights of access to courts and tribunals could be curtailed only by clear statutory language and only to the extent reasonably necessary, applying the principles discussed in R v Secretary of State for Home Department, Ex parte Saleem [2001] 1 WLR 443 and R(UNISON) v Lord Chancellor [2017] UKSC 51.
4. The statutory purpose and Explanatory Notes indicated a right to a formal review, not a mandatory review which made HMRC the gatekeeper of late appeals. The words of section 124, including section 124(2)(a)(ii), were insufficiently clear to authorise removal of the FTT’s jurisdiction. Section 38(1A) was therefore ultra vires. Sections 21A and 21B remained valid when read independently. The provision could not be severed under the textual and substantial severability principles explained in DPP v Hutchinson [1990] 2 AC 783.
5. Disposition. The court set aside the Upper Tribunal’s decision and remade it by allowing the appeal against the FTT’s strike-out decision. The case was not remitted because the appeal was academic. Article 6 of the Convention was not determined.

1. Court of Appeal (Civil Division): Held that the Upper Tribunal erred on the construction issue, but that section 38(1A) of the Tax Credits Act 2002 was ultra vires section 124 of the Finance Act 2008. The decision was set aside and remade.
2. Upper Tribunal: Set aside the First-tier Tribunal’s decision and remitted the appeal, holding that the legislation did not exclude an appeal after HMRC refused to extend time for review.
3. First-tier Tribunal: Struck out Mr Arrbab’s appeal on the basis that it had no jurisdiction.