New Claire Wine Ltd v The Commissioners for HMRC

Delay in issuing a tribunal decision does not, without more, establish an error of law. It may reduce the usual appellate deference to findings based on oral evidence, but the question remains whether the delay could have made a material difference to findings that were rationally and sufficiently supported by documentary material.

Permission to appeal should be granted where an alleged error of law has a realistic prospect of success, or exceptionally for another good reason. An arguable question whether deliberate tax conduct or inaccuracies require dishonesty justified permission where its resolution could affect numerous tax appeals.

New Claire Wine Ltd sought permission to appeal from a First-tier Tribunal decision released on 4 January 2024. The First-tier Tribunal had substantially dismissed its appeals against corporation-tax discovery assessments, VAT assessments and a penalty for deliberate but not concealed inaccuracies.

The Upper Tribunal had refused permission on the papers. On reconsideration after an oral hearing, the company advanced a delay ground and a new ground concerning whether a finding of deliberate conduct required an allegation and finding of dishonesty.

The central issues were whether the eleven-month delay rendered the First-tier Tribunal's credibility findings arguably unlawful, and whether the existing authority on deliberate inaccuracies was arguably wrong in light of the Supreme Court authorities relied on by the company.

1. Permission was refused on Ground 1 and granted on Ground 2. The Upper Tribunal held that permission requires an arguable, material error of law with a realistic prospect of success, subject to the exceptional alternative basis for granting permission.
2. Although an unexplained delay of more than three months in producing a decision will ordinarily be unacceptable, delay alone does not justify permission to appeal. It may weaken the ordinary deference given to factual findings based on oral evidence. Here, however, the First-tier Tribunal gave extensive reasons for rejecting the director's evidence. Those reasons principally compared his oral evidence with his witness statement and contemporaneous documents, rather than relying on an impression of his demeanour. There was no suggested error in the recording of the evidence, the identified inconsistencies, or the Tribunal's treatment of alternative explanations. The delay therefore could not arguably have made a material difference to the credibility finding or the deliberate-conduct findings.
3. Ground 2 just met the arguability threshold. CF Booth Ltd v HMRC stated that a deliberate inaccuracy for the purposes of Finance Act 2007, Schedule 24 does not require HMRC to plead or prove dishonesty. The company could nevertheless argue that this was wrong because the Supreme Court's discussion of deliberate inaccuracy in HMRC v Tooth had not been considered alongside Ivey v Genting Casinos.
4. The Upper Tribunal did not decide that issue. It observed that HMRC v Tooth concerned section 118(7) of the Taxes Management Act 1970 and was not necessarily of general application. The statutory meaning of deliberate may depend on the particular tax, provision, context and legislative history. The point warranted full argument because of its potentially wide consequences for tax appeals and HMRC's presentation of cases.

• Upper Tribunal (Tax and Chancery Chamber): On reconsideration of the renewed permission application, refused permission on the delay ground and granted permission on the deliberate-conduct ground.
• Upper Tribunal (Tax and Chancery Chamber): Judge Blackwell refused permission on 3 July 2024. A further paper refusal followed on 3 October 2024.
• First-tier Tribunal (Tax Chamber): Its decision, released on 4 January 2024, substantially dismissed the taxpayer's appeals against the assessments and penalty, subject to minor adjustments.