The Commissioners for HMRC v Ducas Ltd

There is no general principle that extended disclosure must be reciprocal. Disclosure is assessed by reference to the circumstances of each party, the pleaded issues, fairness, justice and proportionality. Rule 27 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 provides a starting point, but the First-tier Tribunal may make different or asymmetric orders where appropriate. An appellate court should not interfere with a case-management decision merely because it might have reached a different conclusion. Intervention requires a material error of law, failure to apply the correct principles, or a decision outside the generous ambit of the tribunal’s discretion.

Ducas appealed to the First-tier Tribunal against an HMRC decision under section 8 of the Social Security Contributions (Transfer of Functions, etc) Act 1999, imposing substantial liability for unpaid employer national insurance contributions. The appeal included an allegation that Ducas had provided fraudulent documents concerning tax and national insurance deductions.

The FTT ordered HMRC to disclose documents supporting Ducas’s case or undermining HMRC’s case on the Fraudulent Documents Issue. It did not impose an equivalent obligation on Ducas. The FTT refused permission to appeal. The Upper Tribunal heard HMRC’s renewed permission application together with the substantive appeal. The central issue was whether the FTT was legally required to make reciprocal disclosure orders.

1. Permission and outcome. Permission to appeal was refused on Ground 2. Permission was granted on Grounds 1 and 3, but the appeal was dismissed.
2. Application before the FTT. HMRC had made no written application for disclosure against Ducas. The Upper Tribunal accepted that an oral application was made at the case-management hearing, but held that it was advanced on the premise that reciprocal disclosure was legally required once extended disclosure was ordered against HMRC.
3. Applicable principles. Rule 27 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 is a starting point, not an inflexible rule. The FTT must exercise its disclosure powers to give effect to the overriding objective, including fairness, justice and proportionality. Relevance is assessed by reference to the pleaded issues and the parties’ respective positions.
4. There is no general principle of reciprocity in the FTT or in civil litigation. The fact that extended disclosure is ordered against one party does not require an equivalent order against another. The court or tribunal may make asymmetric orders, having regard to matters such as the availability of documents, information asymmetry, the pleaded issues and the need for a fair determination.
5. The FTT was entitled to consider the circumstances supporting disclosure against HMRC, including HMRC’s investigations and likely access to documents unknown to Ducas. Its reliance on E Buyer UK Ltd v HMRC and HMRC v Smart Price Midlands Ltd did not disclose an error of law. The FTT correctly treated those authorities as relevant to the principles governing extended disclosure, not as requiring identical orders.
6. The Upper Tribunal recognised that an order against Ducas might also have been justified. However, the appeal was not a rehearing or a case-management “do-over”. The FTT’s decision was within the generous ambit of its discretion and was not plainly wrong. HMRC remained able to apply for specific disclosure.

• First-tier Tribunal (Tax Chamber): issued case-management directions requiring extended disclosure by HMRC but not Ducas, and refused permission to appeal.
• Upper Tribunal (Tax and Chancery Chamber): refused permission on Ground 2, granted permission on Grounds 1 and 3, and dismissed the appeal.