IT Way Transgroup Clearance LLP v The Commissioners for HMRC

An application for permission to appeal lies only on an arguable point of law with a realistic prospect of success. The Upper Tribunal will not re-evaluate findings of fact by the First-tier Tribunal unless the high threshold for demonstrating an error of law is met. An evidential burden may shift where a taxpayer has produced evidence which, on its face, shows that an assessment is wrong. Whether that stage has been reached depends on the evidence actually adduced. A taxpayer’s expectation that HMRC will read correspondence does not, without more, shift the burden where the underlying evidence does not establish the relevant factual case. The statutory best-judgment duty considered in Van Boeckel v Customs and Excise Commissioners did not apply where the amount assessed was not challenged and no equivalent statutory provision governed the issue.

HMRC assessed IT Way jointly and severally with an importer for customs duty and import VAT after IT Way declared itself to be the importer’s indirect agent. IT Way contended that a later Direct Representation Letter established direct representation and removed its liability.

The First-tier Tribunal dismissed the appeal, finding that IT Way had not proved, on the balance of probabilities, either the existence or sufficient contents of the alleged letter. It refused permission to appeal. The Upper Tribunal initially refused permission on the papers. Following an oral renewal hearing, the central issue was whether the FTT had arguably erred in law by failing to consider whether HMRC’s failure to read correspondence shifted an evidential burden to HMRC.

1. Permission refused. IT Way had not demonstrated an arguable error of law in the FTT’s approach to the burden of proof or its conclusions on the evidence.
2. The challenge to the FTT’s factual findings was subject to a deliberately high threshold. The FTT had considered the evidence as a whole and was entitled to find that the Direct Representation Letter had not been proved to exist and that its contents, even if it existed, had not been established. The proposed challenge amounted to impermissible evidential “island hopping”, contrary to the approach identified in FAGE UK Ltd v Chobani UK Ltd [2014] EWCA Civ 5. The reference to Volpi v Volpi [2022] EWCA Civ 464 reinforced the high threshold.
3. The principle referred to in Wood v Holden [2006] EWCA Civ 26, that the evidential basis may pass to the Revenue once a taxpayer has produced enough evidence to show that an assessment appears wrong, had to be understood in the context of that case. Here, the FTT had made no finding that Letter 2 contained the Direct Representation Letter or that it would have displaced IT Way’s declaration of indirect representation.
4. Van Boeckel v Customs and Excise Commissioners [1981] 2 All ER 505 did not assist. That decision concerned the statutory requirement that HMRC assess tax to the best of its judgment. No equivalent provision applied here, and the amount of customs duty and import VAT was not challenged.
5. The Tribunal recognised that HMRC’s handling of correspondence might require consideration in another case when addressing burden of proof. This was not such a case. Permission to appeal was refused.

• Upper Tribunal (Tax and Chancery Chamber): permission to appeal refused. The Tribunal upheld the conclusion that no arguable error of law had been shown.
• First-tier Tribunal (Tax Chamber): appeal dismissed in decision released on 2 December 2024 (TC/2021/03135). Permission to appeal was refused on 23 June 2025.