"(a) HMRC's application for FTT approval of third party information notices to be served on the Third Party Applicants ('HMRC's Applications') should not be heard in private to the exclusion of the Applicants. (b) The Taxpayer Applicants and/or the Third Party Applicants should be given notice of where and when the hearing of HMRC's Applications will take place. (c) The Taxpayer Applicants and/or the Third Party Applicants should be given a summary of the representations that HMRC propose to make to the FTT at the hearing of HMRC's Applications and copies of any documents supplied by HMRC to the Tribunal. This information and documents should be provided no less than 3 working days before the date of the hearing. (d) The Taxpayer Applicants and/or the Third Party Applicants should be given the opportunity to make representations to the FTT in respect of HMRC's Applications and the questions of whether the FTT can or should approve the information notices."
"Whether taxpayers whose affairs are under investigation by the applicants ('HMRC') and third parties to whom HMRC propose to send third party notices pursuant to Schedule 36Finance Act 2008 ('Schedule 36') in connection with such investigation should be permitted to attend the hearing of HMRC's application to the Tribunal for approval of the issue of such notices."
"If the Tribunal were to make such an order, it would effectively turn the streamlined 'judicial monitoring' exercise intended by Parliament into a potentially lengthy adversarial process."
"On8 May 2018 , the Taxpayers applied (the 'Adversarial Hearing Application') to the FTT for directions to be made in connection with the Schedule 36 Application. We will set out in detail the directions that were applied for later in this decision, but in broad summary, the directions sought would have given the Taxpayers the ability to attend a public hearing of the Schedule 36 application, to be provided with a summary of HMRC's arguments in support of the application and to make submissions to the FTT as to why the Schedule 36 Application should not be approved (including by responding to HMRC's arguments)."
"… The parties were agreed that the FTT concluded that it lacked any power to make the directions sought. On balance, we think the parties' analysis of the FTT's decision is correct since (i) the FTT expressed agreement with the decision in Mr E which was quite clearly made on the basis that the FTT lacked power to make similar directions, (ii) the FTT did not conduct the kind of detailed examination of the circumstances of the case that might have been expected if it thought it had a discretionary power to make the directions sought and (iii) the 'keywords' section at the beginning of the decision (which the FTT would have drafted itself) indicated that the decision considers the 'power of the FTT to make such directions'."
"Given our conclusions as to the nature of the FTT's decision (recorded at [24] above), the key issue before us is shortly stated. We must decide whether the FTT had power to make the directions the Taxpayer was requesting. Since the FTT is a creature of statute and, unlike the courts, has no inherent jurisdiction, the scope of its power can only be deduced from the relevant primary and secondary legislation. The question, therefore, is ultimately one of statutory construction. We must determine the scope of the FTT's power from relevant primary and secondary legislation. …" (Emphasis in original)
"… given the statutory provisions that Parliament has enacted and commentary from courts senior to this on those provisions, we have reached the clear conclusion that the FTT simply lacked any power to grant the Taxpayers' request that they be permitted to participate in an inter partes determination of the Schedule 36 Application. We accept that Parliament would have been aware of the FTT's case management powers when amending Schedule 36 to provide that applications for approval of third party notices should be made to the FTT. We also acknowledge that Schedule 36 does not expressly set out a procedure that the FTT is obliged to follow when considering an application for approval of an information notice. There is, therefore, room for an argument that Parliament intended to leave matters of procedure to the FTT so that it retained the power to direct an inter partes hearing. However, we have come to the clear conclusion that, by necessary implication, the scheme of the legislation in Schedule 36 excludes the possibility of information notices being approved following an inter partes hearing. Since the FTT's case management powers could only apply in the context of directions that the FTT was authorised to give we do not consider that the existence of those case management powers supports the construction of Schedule 36 that the Taxpayers advance."
"It follows that the FTT was correct to conclude that the Schedule 36 Application could only be determined on an ex parte basis and that aspect of the Taxpayers' appeals is dismissed."
"There is no absolute bar to the FTT directing that an ex parte hearing be heard in public. It follows that, in concluding that it did not even have the limited power to direct an ex parte hearing to be heard in public, the FTT made an error of law."
"In saying that the FTT has power to direct that an ex parte hearing should be in public, we are by no means saying that power should be exercised routinely or even at all. We are aware that the FTT's normal practice is to direct that such hearings be held in private and we would regard that as justified unless a compelling reason is shown why the hearing should be in public . In practice, taking into account the aspects of Schedule 36 and surrounding case-law we have identified, we anticipate that it would be rare for a direction that the ex parte hearing should be in private to fall outside the FTT's generous ambit of discretion in the exercise of its case management powers." (Emphasis added)
"In view of our conclusion that the FTT erred in finding that it lacked jurisdiction to make the requested direction that the hearing be in public, we set the FTT's decision aside on that point and remake it. In remaking it, we have noted that HMRC clearly do not consent to the Schedule 36 Application being heard in public. Ms Anderson's submissions at the hearing made it clear that HMRC's concern was a general one; if the hearing were held in public, the natural dialogue between them and the judge considering the application could well result in HMRC having to reveal details of their investigation that they would prefer the Taxpayers not to know. That concern was necessarily explained in general terms but that does not deprive it of force: indeed it was precisely the concern that the Court of Appeal accorded considerable weight in Morgan Grenfell . We understand Mr Firth's competing submission that a public hearing could serve to reassure the public that the FTT considers applications under Schedule 36 with rigour and that they are not just rubber stamping exercises. However, we consider that in this case HMRC's concerns should be given more weight. The allegations that are made about HMRC's behaviour do not, in our view, indicate a different approach: whatever the taxpayers' frustrations with HMRC, we see little risk that HMRC would mislead the FTT at a hearing of the Schedule 36 Application. Our conclusion is only reinforced by the fact that the Taxpayers will, ultimately, have a full right to a hearing in public against any decisions that HMRC make on completion of their enquiries. We therefore remake the FTT's decision so as to lead to the same overall result: the Schedule 36 Application is to be heard in private."
"(1) An officer of Revenue and Customs may by notice in writing require a person – (a) to provide information, or (b) to produce a document, if the information or document is reasonably required by the officer for the purpose of checking the tax position of another person whose identity is known to the officer ('the taxpayer'). (2) A third party notice must name the taxpayer to whom it relates, unless the [tribunal] has approved the giving of the notice and disapplied this requirement under paragraph 3. (3) In this Schedule, 'third party notice' means a notice under this paragraph."
"(1) An officer of Revenue and Customs may not give a third party notice without – (a) the agreement of the taxpayer, or (b) the approval of the tribunal. (2) An officer of Revenue and Customs may ask for the approval of the tribunal to the giving of any taxpayer notice or third party notice (and for the effect of obtaining such approval see paragraphs 29, 30 and 53 (appeals against notices and offence)). (2A) An application for approval under this paragraph may be made without notice (except as required under sub-paragraph (3)). (3) The tribunal may not approve the giving of a taxpayer notice or third party notice unless – (a) an application for approval is made by, or with the agreement of, an authorised officer of Revenue and Customs, (b) the tribunal is satisfied that, in the circumstances, the officer giving the notice is justified in doing so, (c) the person to whom the notice is to be addressed has been told that the information or documents referred to in the notice are required and given a reasonable opportunity to make representations to an officer of Revenue and Customs, (d) the tribunal has been given a summary of any representations made by that person, and (e) in the case of a third party notice, the taxpayer has been given a summary of the reasons why an officer of Revenue and Customs requires the information and documents. (4) Paragraphs (c) to (e) of sub-paragraph (3) do not apply to the extent that the tribunal is satisfied that taking the action specified in those paragraphs might prejudice the assessment or collection of tax. (5) Where the tribunal approves the giving of a third party notice under this paragraph, it may also disapply the requirement to name the taxpayer in the notice if it is satisfied that the officer has reasonable grounds for believing that naming the taxpayer might seriously prejudice the assessment or the collection of tax."
"(1) Where a person is given a third party notice, the person may appeal … against the notice or any requirement in the notice on the ground that it would be unduly onerous to comply with the notice or requirement. (2) Sub-paragraph (1) does not apply to a requirement to a third party notice to provide any information, or produce any document, that forms part of the taxpayer's statutory records. (3) Sub-paragraph (1) does not apply if the tribunal approved the giving of the notice in accordance with paragraph 3."
"(d) permit or require a party or another person to provide documents, information or submissions to the Tribunal or a party; … (g) decide the form of any hearing; (h) adjourn or postpone a hearing."
"If a case or matter is to be determined without notice to or the involvement of a respondent– (a) any provision in these rules requiring a document to be provided by or to a respondent; and (b) any other provision in these rules permitting a respondent to participate in the proceedings does not apply to that case or matter."
"Where an enactment provides for a person or persons to make an originating application or reference to the Tribunal, the appellant must start proceedings by providing an application notice or notice of reference to the Tribunal within any time limit imposed by that enactment."
"Subject to rule 26(6) (determination of a Default Paper case without a hearing) and the following paragraphs in this rule, the Tribunal must hold a hearing before making a decision which disposes of proceedings, or a part of proceedings, unless– (a) each party has consented to the matter being decided without a hearing; and (b) the Tribunal considers that it is able to decide the matter without a hearing."
"Subject to rules 19 (proceedings without notice to a respondent) and 32(4) (exclusion from a hearing), each party to proceedings is entitled to attend a hearing."
"The Tribunal must give each party entitled to attend a hearing reasonable notice of the time and place of any hearing (including any adjourned or postponed hearing) and any changes to the time and place of any hearing."
"(1) Subject to the following paragraphs, all hearings must be held in public. (2) The Tribunal may give a direction that a hearing, or part of it, is to be held in private if the Tribunal considers that restricting access to the hearing is justified– (a) in the interests of public order or national security; (b) in order to protect a person's right to respect for their private and family life; (c) in order to maintain the confidentiality of sensitive information; (d) in order to avoid serious harm to the public interest; or (e) because not to do so would prejudice the interests of justice. … (3) Where a hearing, or part of it, is to be held in private, the Tribunal may determine who is permitted to attend the hearing or part of it. (4) The Tribunal may give a direction excluding from any hearing, or part of it– (a) any person whose conduct the Tribunal considers is disrupting or is likely to disrupt the hearing; (b) any person whose presence the Tribunal considers is likely to prevent another person from giving evidence or making submissions freely; (c) any person where the purpose of the hearing would be defeated by the attendance of that person; or (d) a person under the age of eighteen years. …"
"49. It will be recalled that in the present case the special commissioner accepted written submissions from the applicants without demur. But he held that he had no power whatever to entertain oral submissions. Mr Brennan has tenaciously, and in our ultimate view successfully, defended this entrenched and in many ways unpromising position against Mr Beloff's assault. His argument is that, both on principle and on authority, the self-evident risk of compromising the investigation shuts out any possibility of an oral procedure. 50. It has to be remembered that a right to be heard is axiomatically worth little without knowledge of the case that has to be met. Either, therefore, the inspector's hand has in some measure to be shown, or the taxpayer must be content to make submissions in the dark. The former, it is plain, is destructive of the whole purpose of the procedure; the latter, while some taxpayers may consider it better than nothing, will create a sustained pressure for disclosure. There are only two logical outcomes if these two imperatives clash in a face-to-face hearing: one is that the taxpayer will duly learn nothing, in which case it is not easy to see what will have been achieved on his behalf that could not have been achieved in writing; the other is that the special commissioner's opportunity (in Mr Beloff's happy phrase) to 'enjoy the benefit of advocacy' will lead to accidental disclosure by him or (more probably) the inspector of material to which Mr Beloff does not contend that the taxpayer is entitled and the disclosure of which at this stage will run counter to Parliament's purpose. That purpose, we apprehend, is in lieu of any inter partes procedure to instal the general or special commissioner as monitor of the exercise of the Inland Revenue's intrusive powers and to require an inspector to put everything known to him, favourable and unfavourable, before the commissioner when seeking his consent: R v Inland Revenue Comrs, Ex pTC Coombs & Co[1991] 2 AC 283 , 288. We accept Mr Brennan's contention, therefore, that the possibility of an oral hearing is excluded by the nature of the process in question. … [F]or the reasons we have given, we are satisfied that the special commissioner was right to conclude that he possessed no such power."
"68. The purpose of the statutory scheme is to assist HMRC at the investigatory stage to obtain documents and information without providing an opportunity for those involved in potentially fraudulent or otherwise unlawful arrangements to delay or frustrate the investigation by lengthy or complex adversarial proceedings or otherwise. It is inevitable in many cases, particularly where there are complex arrangements designed to evade tax, that at the investigatory stage it will be difficult, if not impossible, for HMRC to be definitive as to the precise way in which particular documents will establish tax liability. It is also clear that in many cases disclosure of HMRC's emerging analysis and strategy and of sources of information to the taxpayer or those associated with the taxpayer may endanger the investigation by forewarning them. 69. Those considerations explain the principal features of Schedule 36 relating to the service of third party notices. In the first place, Parliament has deliberately chosen a judicial monitoring scheme rather than a system of adversarial appeals from third party notices, which could take years to resolve. Secondly, paragraphs 2 and 3 of Schedule 36 make a clear distinction between the rights and obligations of (1) the taxpayer whose tax position HMRC wish to check, (2) the third party, and (3) any entity ('the non-taxpayer entity') whose documents or copies of whose documents are required to be produced by the third party or about whom information is sought from the third party. Common to the statutory treatment of all of them, however, is the very limited scope for objection by them to the request for production of the documents and information specified in the third party notice." (Emphasis added)
"71. Consistently with the legislative objectives I have described, the giving of summary reasons to the taxpayer is not for the purpose of enabling the taxpayer to make representations directly or indirectly to the FTT. It was already established in R (Morgan Grenfell & Co Ltd) v Special Comr of Income Tax[2003] 1 AC 563 , in relation to the former scheme under section 20 of the TMA that, in the case of a notice to the taxpayer for production of documents, the fact the notice came at the investigatory stage as well as the need to avoid frustrating the intention of the legislation led to the conclusion that the taxpayer had no right to demand an inter partes oral hearing. 72. The reason for the giving of summary reasons to the taxpayer under Schedule 36 is purely to guard against arbitrary conduct by the tax authority and to provide the context for any application to the FTT for approval of the third party notice, approval which cannot be given unless the FTT is satisfied pursuant to paragraph 3(3)(b) that the officer giving the notice is justified in so doing."
"74. Paragraph 3(3)(c) provides that the third party must be told that the information or documents referred to in the notice are required and be given a reasonable opportunity to make representations to the officer. Schedule 36 does not, however, require that the third party is given any explanation of the reasons why the officer requires the information and documents. It does not expressly confer on the third party a right to make representations directly to the FTT or a right to appear before the FTT. 75. It seems fairly clear that the reason the third party is to be told that the information or documents are required and be given a reasonable opportunity to make representations to HMRC is to enable it to state any practical difficulties with compliance. That is consistent with paragraph 30 of Schedule 36, which provides that a person given a third party notice may appeal on the ground that it would be unduly onerous to comply with the notice or any requirement in it. It is equally clear that the reason the third party does not have to be given any explanation as to why the officer requires the information and documents is because it is not for the third party to argue any case for the taxpayer as to the width or nature of the investigation. It does not need to know confidential information relating to the affairs of the taxpayer. The third party is not given any right to appear before the FTT because, consistently with the judicial monitoring scheme rather than an adversarial one and with the limited right of objection by the third party, it is sufficient that the third party is given a right to make representations to the officer, and the officer is obliged to provide the FTT with a summary of those representations."
"In the light of what I have said about the scheme and purpose of Schedule 36, and particularly the clear distinction made by Parliament between the taxpayer, the third party and the non-taxpayer entity, there is no scope on ordinary principles of construction for a purposive interpretation of Schedule 36 which (1) requires, in the case of third party notices, that in every case all of those persons be told the reasons why the documents are required and that they be given a reasonable opportunity to make representations to HMRC or the FTT, and (2) precludes the FTT approving such notices unless that is done. Such an interpretation is quite simply inconsistent not merely with the literal wording of Schedule 36 but also with the manifest intention of Parliament."
"what the claimants advance is something more akin to adversarial litigation than a judicial monitoring model in which applications are normally made ex parte and heard in private, with very limited rights of participation by those to whom information notices under Schedule 36 are sent or who are affected by them."
"59. First, it is important to recognise the purpose of the statutory scheme in Schedule 36. This represents a balance between the interests of individual taxpayers and the interests of the wider community by enabling HMRC to investigate tax avoidance and tax evasion in a proportionate but efficient manner. As was explained in Derrin Brothers , this is achieved through the means of a judicial monitoring scheme rather than a system of adversarial appeals from third party notices which could allow taxpayers and others to delay or frustrate an investigation and could take years to resolve. The Schedule 36 scheme differentiates between the recipient of a third party notice and the taxpayer whose tax position is being checked but common to the treatment of each of them is the limited scope for objecting to a third party notice. There is no appeal on the merits and it is not open to the taxpayer or third party recipient to challenge a notice on its merits. 60. Secondly, the question for the HMRC officer (and therefore the FTT judge) is an expressly limited one: the officer must be satisfied that the information or documents to be sought by a third party notice are 'reasonably required' for the purpose of 'checking' the tax position of the taxpayer. It is not for the officer to investigate the merits of the underlying tax investigation, or whether the investigation is itself reasonably required or justified as a precondition for the giving of a notice. That is unsurprising given that the scheme is directed at an early investigatory stage and in any investigation some lines of enquiry may prove more fruitful than others but nevertheless may need to be pursued. … Thus, provided there is a genuine and legitimate investigation or enquiry of any kind into the tax position of a taxpayer that is neither irrational nor in bad faith, that is sufficient. The challenge is not to the lawfulness of the investigation, but is limited to the rationality of the conclusion that the information/documents are reasonably required for checking the taxpayer's tax. 61. Nor is it necessary (as Mr Simpson submits) as a precondition for giving a third party notice to show that a positive liability to tax will arise or that liability will arise in a particular way. A valid investigation may result in no tax charge at all. 62. Thirdly and for the same reasons, the question for the FTT in relation to the information and documents sought by a third party notice is also expressly limited: the FTT must be satisfied that in all the circumstances, the officer giving the notice is justified in concluding that the information or documents are reasonably required for checking the tax position of the taxpayer. Again, that does not require any examination of the nature and extent of the underlying tax investigation, but rather a focus on whether there is a rational connection between the information and documents sought and the underlying investigation. The very purpose of the investigation is to establish the correct position by reference to all the evidence gathered and it is therefore unsurprising that the legislation does not make the approval of a notice conditional on the tax investigation itself being reasonably required."
"… I consider that the scheme authorised by Parliament for use in the Magistrates' Court and Crown Court, combined with Parliament's evident understanding and intention as to the basis on which judicial review should operate, lead to a conclusion that the High Court can conduct a closed material procedure on judicial review of a Magistrate's order for a warrant under section 8 PACE or a Magistrate's order for disclosure, or a Crown Court Judge's order under section 59 of the CJPA [Criminal Justice and Police Act 2001 ]."
"(1) Where, on an application by an authorised person, a Justice of the Peace is satisfied that there are reasonable grounds for believing – (a) that an offence in connection with VAT is being, has been or is about to be committed, and (b) that any recorded information (including any document of any nature whatsoever) which may be required as evidence for the purpose of any proceedings in respect of such an offence is in the possession of any person, he may make an order under this paragraph."
"My conclusion therefore is that although para 11 of Sch 11 enables the commissioners to seek orders ex parte they must in each case consider, and any magistrate to whom they apply must also consider, whether it is appropriate to proceed in that way, bearing in mind that the balance is always in favour of proceeding inter partes unless there is real reason to believe that something of value to the investigation may be lost if that course is adopted. If it is decided to proceed inter partes then normally it will be appropriate to give notice of the application not only to those from whom access is sought (in this case the banks), but also to others who are obviously likely to be directly affected by the order (in this case the suspects). Even if they are not given notice by the commissioners they will, as this case shows, soon learn of the application from their bank, and the object of proceeding inter partes is best achieved if everyone who has a genuine interest in the proposed order is heard before it is made."
"An application for approval under this paragraph may be made without notice …" (Emphasis added)
"If a case or matter is to be determined without notice to or the involvement of a respondent …"
"There is no general exception to open justice where privacy or confidentiality is an issue. Applications will only be heard in private if and to the extent that the court is satisfied that by nothing short of the exclusion of the public can justice be done. Exclusions must be no more than the minimum strictly necessary to ensure justice is done …"