L Rowland& Co (Retail) Limited v The Commissioners for HMRC

In adversarial proceedings before the First-tier Tribunal, party autonomy generally entitles represented parties to decide which witnesses to call. The Tribunal nevertheless has jurisdiction under rule 16 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 to summon and call a witness on its own initiative. That power should be exercised very sparingly, particularly where both parties can identify relevant witnesses and apply for summonses.

A respondent must plead its position sufficiently to enable the appellant to know the case it must meet before deciding what evidence to call. Case management directions which require evidence to be obtained before the respondent pleads a material part of its case invert the proper procedural sequence.

The appeal arose from an FTT case management decision in Rowlands’ substantive challenge to PAYE and National Insurance assessments concerning approximately 1,400 locum pharmacists. The FTT directed each party to identify five additional locum witnesses, indicated that it would summon them on its own initiative if necessary, and postponed HMRC’s provision of further and better particulars on the third stage of the Ready Mixed Concrete test until after that evidence was available.

Rowlands argued that the FTT lacked jurisdiction to require or procure evidence from witnesses whom it did not wish to call and that the directions were contrary to party autonomy, the overriding objective and the requirement that it know HMRC’s case. The central issues were the scope of the FTT’s witness-summons power and whether the directions were a lawful exercise of case management discretion.

1. Jurisdiction. The appeal succeeded on Ground 2, although Ground 1 was dismissed. On a fair reading, the FTT had directed that it would summon the additional witnesses as its own witnesses if Rowlands did not call them voluntarily. Rule 5(3)(d) permitted the FTT to require the parties to provide names of potential witnesses, while rule 16 empowered it, on its own initiative, to summon and call witnesses. Rule 15 did not empower it to require evidence from a particular witness.
2. Party autonomy. The power under rule 16 exists, but must be used very sparingly. In this complex, high-value appeal between sophisticated and well-represented parties, the FTT’s directions intruded into the parties’ tactical and strategic choices about the evidence they wished to adduce. They also risked enabling HMRC to obtain witnesses whom it wished to cross-examine without calling them as its own witnesses. The parties could identify relevant witnesses and apply for summonses themselves.
3. Pleading sequence. The direction postponing HMRC’s further and better particulars on RMC3 until after additional witness evidence was wrong in principle. Rule 25(2) required HMRC to set out its position. Rowlands was entitled to know the case it had to meet before deciding what evidence to call. The FTT had inverted the proper sequence by using evidence to inform HMRC’s pleading.
4. RMC3. The third stage required consideration of all relevant circumstances and was materially fact-sensitive. That did not relieve HMRC of pleading its case in broad terms, including its response to the factors relied on by Rowlands. The absence of detailed individual evidence could be addressed through later evidence, particulars or applications under the Rules.
5. The UT set aside the directions at [18]–[21]. It dismissed HMRC’s application for the additional witnesses, directed HMRC to provide further and better particulars of its RMC3 case within 28 days, and allowed subsequent evidence and replies in the sequence specified at [194].

• Upper Tribunal (Tax and Chancery Chamber): allowed the appeal on Ground 2, dismissed Ground 1, set aside the FTT’s directions concerning additional witnesses and delayed particulars, and remade the case management directions.
• First-tier Tribunal (Tax Chamber): by decision dated 6 June 2024, directed additional locum evidence and postponed HMRC’s further and better particulars on RMC3.