Cheon Fat Limited v The Commissioners for HMRC

Permission to appeal from the First-tier Tribunal is granted only where there is a realistic prospect of showing a material error of law. An appeal is not a rehearing of factual issues. Findings of fact and evaluations of evidence may be challenged only where the tribunal ignored relevant considerations, relied on irrelevant matters, reached an unsupported conclusion, or reached a conclusion that no properly directed tribunal could reach. A new point involving mixed fact and law will generally not be permitted where it was not advanced below. Procedural fairness depends on the circumstances, including the representation available and whether an objection was made when evidence was introduced.

The appellant appealed against VAT and corporation tax assessments and penalties before the First-tier Tribunal, which found that takings had been understated, that a charge under CTA 2010 section 455 could be imposed, and that the conduct was deliberate. Permission to appeal was refused by the First-tier Tribunal and initially refused by the Upper Tribunal on the papers.

At an oral reconsideration, three grounds were pursued: the section 455 charge, the VAT time limit, and procedural unfairness arising from evidence produced during the hearing. The central question was whether any ground disclosed an arguable material error of law.

1. Permission threshold. Under Tribunals, Courts and Enforcement Act 2007 section 11, permission requires an arguable point of law with a realistic prospect of success. Any error must have had the potential to affect the outcome.
2. Findings of fact. The Upper Tribunal will not interfere with primary factual findings or evidential evaluations merely because it might have reached a different conclusion. Intervention is justified where the finding is irrational, unsupported by the evidence, or results from ignoring relevant or relying on irrelevant considerations. The weight and reliability of evidence are principally matters for the First-tier Tribunal.
3. Ground 1. Permission was granted because it was arguable that the First-tier Tribunal had approached the section 455 issue on the assumption that suppressed profits had been extracted by participants without identifying an individual who had received a loan or advance. It was also arguable that the tribunal had proceeded on the basis that a director was necessarily a participator. The Upper Tribunal did not determine those legal issues.
4. Ground 3. Permission was refused. The time-limit issue under VATA 1994 section 73(6) had been addressed in the respondents’ evidence and statement of case. In the absence of a dispute about the relevant facts, the First-tier Tribunal was not required to go behind them.
5. Ground 4. Permission was refused. The First-tier Tribunal had raised the admission of the evidence with the appellant’s representative, who did not object. The evidence was not the only basis for the findings and was consistent with other evidence of suppressed sales. The proceedings were therefore not procedurally unfair.

Permission to appeal was granted on Ground 1 only and refused on Grounds 3 and 4.

• Upper Tribunal (Tax and Chancery Chamber): permission to appeal granted on Ground 1 and refused on Grounds 3 and 4.
• First-tier Tribunal (Tax Chamber): appeal against VAT and corporation tax assessments and penalties dismissed, [2024] UKFTT 180.
• First-tier Tribunal: permission to appeal refused on 13 June 2024.
• Upper Tribunal: permission initially refused on the papers on 6 October 2024; oral reconsideration then heard.