Josoemag Services Limited v The Commissioners for HMRC

An appellate point is “new” when, considering how clearly and when it was identified below, the opposing party lacked fair warning of the issue and a fair opportunity to meet it. Mentioning a relevant fact does not necessarily give notice of a legal claim based on that fact.

Permission to appeal on an arguable ground does not itself grant permission to advance a new point. The appellate court must consider whether fairness permits it, including whether it would require new evidence or have changed the conduct of the proceedings below. A pure point of law is more likely to be admitted, but there is no general requirement that a case be exceptional.

Josoemag Services Limited claimed support payments for employees under the Coronavirus Job Retention Scheme. HMRC later assessed the company to income tax on amounts said to have been overclaimed. The First-tier Tribunal (Tax Chamber) dismissed the appeal in a decision issued on 15 August 2024.

The Upper Tribunal granted permission to appeal only on whether the FTT had jurisdiction to consider a claim that a telephone call with an HMRC officer gave the company a legitimate expectation that assessments would not be issued. HMRC objected that this claim was a new point, not raised below, and could not fairly be advanced on appeal. The central issue was whether the point was new and, if so, whether it should be permitted.

1. The procedural issue was decided first. Permission to appeal established only that the alleged error was arguable. It did not give the appellant an automatic right to rely on a new point at the appeal hearing. The court had to decide separately whether the point could be advanced.

2. Whether a point is new depends on fair warning. The court considered how clearly the issue had been identified and when it was raised. The overriding question was whether the opposing party had fair warning before the hearing and could meet the point, with evidence if appropriate. The question is not answered with hindsight. Mentioning the underlying fact alone may not give notice of the legal argument to be built on it.

   The company had referred to the call in some documents and its director gave evidence about it. But the call was not identified in the amended grounds, and the director did not identify it as the basis of a legitimate expectation claim when the FTT judge checked the grounds of appeal with him. The other elements of such a claim were also not advanced. HMRC therefore lacked fair warning that the call was said to preclude assessments.

3. Permission to raise a new point is a fact-sensitive exercise. An appellate court is cautious where the point would require new evidence or would have changed how the hearing below was conducted. A pure point of law based on facts already found is more likely to be admitted if the other party has adequate time, has suffered no detriment, and can be protected in costs. There is no general requirement for exceptional circumstances. Relevant matters include the nature of the proceedings, the point, and the prejudice caused.

   This claim was not a pure point of law. It could have required evidence from the HMRC officer, cross-examination of the company’s director and inquiry into the other elements of legitimate expectation. The prejudice to HMRC and the interest in finality outweighed the company’s unrepresented status, the FTT’s inquisitorial role and the general interest in determining the correct tax position. Permission to rely on the point was refused.

4. The jurisdiction issue was academic. The Tribunal nevertheless stated its view that the FTT’s jurisdiction is statutory and must be construed by reference to the provisions conferring tribunal powers, the liability and assessment provisions, and the appeal rights. On the wording of Schedule 16 to the Finance Act 2020 and section 50(6) of the Taxes Management Act 1970, it would have concluded that the FTT could not set aside these assessments on legitimate expectation grounds. It left open HMRC’s proposed construction of section 50(6). The substantive legitimate expectation claim was not determined.

5. The appeal was dismissed.

1. Upper Tribunal (Tax and Chancery Chamber) The appeal was dismissed because permission to advance the new legitimate expectation point was refused. The Tribunal’s views on FTT jurisdiction were academic.
2. First-tier Tribunal (Tax Chamber) The FTT dismissed the company’s appeal against the income tax assessments. The Upper Tribunal’s appeal concerned only the legitimate expectation issue.