The Commissioners for HMRC v Lanfranco Dettori

A tribunal may depart from the default of public hearings under Rule 32 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 only on rational and persuasive grounds. Under Rule 32(2)(e), it must conclude that a public hearing would prejudice the interests of justice and must assess the practical scope and proportionality of the restriction.

A pending, unsubstantiated application for privacy or anonymity at a future substantive hearing does not justify an open-ended direction that all preliminary proceedings be private. Privacy may be necessary where a public hearing would itself defeat the privacy application, or frustrate an existing privacy decision pending appeal. Otherwise, each application must be determined on its evidence and merits, consistently with open justice.

HMRC appealed against the First-tier Tribunal’s September 2021 direction that all preliminary proceedings in the taxpayer’s income-tax appeal be heard in private. The taxpayer’s substantive appeal concerned claimed deductions connected with arrangements addressed in two lead appeals.

The First-tier Tribunal had stayed the substantive appeal and deferred consideration of an application for anonymity at the substantive hearing. It made the private-hearing direction because otherwise that outstanding application might be rendered futile. HMRC contended that the direction lacked evidential support, departed unlawfully from open justice, and was disproportionate.

The central issue was whether that case-management direction was justified under Rule 32(2)(e) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 because a public preliminary hearing would prejudice the interests of justice.

1. Appeal allowed. The First-tier Tribunal made material errors of law in directing that all preliminary proceedings be heard in private. The Upper Tribunal set aside Direction 3 and remade the decision by setting it aside.

2. An appellate tribunal will interfere with a case-management decision only where the correct principles were not applied, relevant matters were ignored, irrelevant matters were considered, or the decision was outside the generous ambit of discretion. That threshold was met here.

3. Rule 32(1) establishes a strong default that every hearing is public. Rule 32(2)(e) does not require the particular evidence of personal harm ordinarily relevant under Rule 32(2)(a)–(d), but it still requires rational and persuasive reasons for derogating from open justice. The tribunal must be satisfied that a public hearing would, rather than might, prejudice the interests of justice.

4. The First-tier Tribunal wrongly treated the deferred application concerning anonymity and possible privacy at the substantive hearing as capable of being made futile by public preliminary proceedings. A privacy restriction may be justified where a public hearing would decide or disclose the very matter protected by the application, or would frustrate an existing privacy decision pending appeal. This case was in neither category: no privacy decision had been made, the substantive application was unsupported by evidence, and it concerned a different future hearing.

5. The direction was also impermissibly blanket and disproportionate. It covered every preliminary matter, including potentially significant strike-out or preliminary-issue hearings, without explaining why such a broad derogation was necessary. Any renewed application for privacy or anonymity in preliminary proceedings must be decided by the First-tier Tribunal on its evidence and merits; it cannot rest solely on the unresolved substantive-hearing application.

6. The Tribunal added that privacy and anonymity applications should generally be determined promptly. Deferral can create an unjustified practical avoidance of open justice, although such applications will usually be capable of swift determination.

• Upper Tribunal (Tax and Chancery Chamber): Allowed HMRC’s appeal and set aside the First-tier Tribunal’s direction that preliminary proceedings be heard in private.
• First-tier Tribunal (Tax Chamber): In the September 2021 Decision, stayed the substantive tax appeal and directed that preliminary proceedings be held in private while deferring the substantive-hearing anonymity application.