Eurolaser IT Limited v The Commissioners for HMRC

An appeal from the First-tier Tribunal lies only on a point of law. A challenge to factual findings may raise such a point where the tribunal took account of an irrelevant consideration, failed to take account of a relevant consideration, or reached a conclusion unavailable on the evidence. Permission to appeal should ordinarily be granted where there is a realistic prospect that an arguable, material error of law will be established. The Upper Tribunal granted permission concerning alleged reliance on inferences inconsistent with unchallenged evidence and concerning the legal relevance of prior involvement in allegedly fraudulent transactions. The permission decision did not determine the merits of those grounds.

Eurolaser IT Limited applied for permission to appeal the First-tier Tribunal’s decision, released on 4 April 2025, dismissing its appeals against VAT assessments and related penalties. The FTT concluded that a consultant, Mr Darr, knew or should have known that the company’s transactions were connected with fraudulent evasion of VAT and attributed that knowledge to the company.

The FTT refused permission on 6 June 2025. The Upper Tribunal initially refused permission on Grounds 1 and 2, but granted permission on Ground 3. Following an oral hearing under rule 22(4) of the Tribunal Procedure (Upper Tribunal) Rules, the central questions were whether the factual inferences concerning the transactions were arguably unavailable on the evidence and whether Mr Darr’s prior involvement in transactions involving ESSL was a legally relevant factor.

1. Permission test. An appeal from the FTT lies only on a point of law under section 11 of the Tribunals, Courts and Enforcement Act 2007. Permission may be granted where there is a realistic prospect of success, or exceptionally some other good reason. The Tribunal’s practice is to grant permission where the grounds disclose an arguable error of law material to the outcome or another compelling reason.
2. Errors arising from factual findings. A pure challenge to fact is impermissible. An error of law may nevertheless arise where the FTT takes account of an irrelevant consideration, fails to take account of a relevant consideration, or reaches an overall conclusion that no properly instructed tribunal could reach. The latter category includes an irrational or perverse conclusion applying Edwards v Bairstow [1956] AC 14.
3. Grounds 1(a) and 2(a). The grounds were confined to the assertion that the FTT inferred that the transactions bore characteristics of fraudulent transactions despite evidence from Mr Pallister which was said to be inconsistent with that inference. The issue was properly arguable as an Edwards v Bairstow challenge, rather than as a pure challenge to fact. Permission was therefore granted, subject to the requirement that the Applicant establish an irrational conclusion unavailable on the evidence.
4. Ground 3. The legal relevance of Mr Darr’s prior involvement with ESSL, relied upon as evidence of a propensity to commit the same kind of offence, was an arguable question of law and was material to the FTT’s conclusion. Permission was granted on that ground in its rewritten form.
5. Permission was granted on Grounds 1, 2 and 3 as specified in paragraph 23. The merits of the appeal were not determined.

• Upper Tribunal: The present decision granted permission to appeal on Grounds 1(a), 2(a) and 3, following reconsideration at an oral hearing under rule 22(4) of the Tribunal Procedure (Upper Tribunal) Rules.
• First-tier Tribunal: The FTT dismissed the Applicant’s appeals against VAT assessments and penalties in a decision released on 4 April 2025. It refused permission to appeal on 6 June 2025.
• Earlier Upper Tribunal decision: On 31 July 2025, the Upper Tribunal refused permission on Grounds 1 and 2 but granted permission on Ground 3.