Albion Engineering v Revenue and Customs (PROCEDURE : Other) [2017] UKFTT 560 (TC)
FTT-Tax
Albion Engineering v Revenue and Customs (PROCEDURE : Other)
[2017] UKFTT 560 (TC) · 2017-06-16
[26]“ [26] …if the addressee of the letter proves on the balance of probability that the letter was not served upon him then that matter has been proved and the section should be applied accordingly. Of course it is not enough simply to assert that someone did not receive the letter; the court will consider all the evidence and make its findings by reference to the facts which are established including issues as to the credibility of witnesses. That is the ordinary way in which a court goes about making findings of fact. ” 30. Mr Vallat submitted that the evidence of non-receipt was inadequate. In particular there was no evidence from Mr Dauppe that he had checked whether his firm’s system for incoming post was operating efficiently in May 2014. I accept that Mr Dauppe’s evidence as to the reliability of his firm’s systems might have been more comprehensive. However, Mr Dauppe was a credible witness and on balance I am satisfied that ABG and therefore the Appellant did not receive the Tribunal’s letter dated 21 May 2014. Decision 31. As mentioned above, Tribunal Rule 23(1)(b) requires the Tribunal on receipt of an appeal to give a direction allocating the case to a category. Tribunal Rule 6(4) then provides as follows: “ 6(4) Unless the Tribunal considers that there is good reason not to do so, the Tribunal must send written notice of any direction to every party and to any other person affected by the direction. ” 32. Mr Dauppe’s evidence was that he assumed that the appeal had never been categorised. Mr Vallat contended that this was an unreasonable assumption. I agree. For the reasons given above Mr Dauppe should have been aware that the Tribunal must categorise an appeal on receipt, and notify the parties of that categorisation. If Mr Dauppe had read the Tribunal Rules he would have been aware that he had not received any categorisation letter and ought to have made enquiries of the Tribunal. 33. The purpose of the costs-shifting regime for complex cases in the Tribunal Rules was considered by the Upper Tribunal in Atlantic Electronics Ltd v Commissioners for HM Revenue & Customs [2012] UKUT 45 (TCC) where Warren J described it as follows: “ The right to opt out under Rule 10 has to be exercised, as I have mentioned, within 28 days of the allocation of the case as a Complex case. There are, I think, two related reasons for that requirement. The first is to achieve certainty for both parties so that they know, at an early stage, which costs regime is to apply and can run their cases accordingly. The second is to prevent the taxpayer from waiting to see how his case progresses. To take the extreme case, if the taxpayer were entitled to wait until a decision had been given, he would obviously elect for a costs shifting regime if he had won and for a no costs shifting regime if he had lost. This would be effectively a one-way costs shifting which it was never the policy of the Tribunal Procedure Committee to produce. In a less extreme case, say half way through an appeal, the same consideration applies although it has less force; but the policy is that the taxpayer should not be able to wait and see how the wind blows but must make his election early on. The need to make an election within 28 days is well-known and causes no difficulties in practice. ” 34. Mr Southern submitted that it is necessary for an Appellant to receive written notice from the Tribunal that a case has been allocated as a complex case. Time would not start running merely because the Appellant should reasonably have known that the case had been allocated as a complex case. Imputed or constructive knowledge was insufficient. In a case of non-receipt, time would not start running. The purpose of the rule was legal certainty and anything falling short of actual written notice from the Tribunal would defeat that purpose. Mr Southern also submitted that even if the Appellant had been reliably informed that the appeal had been allocated as a complex case that would be insufficient. Legal certainty requires receipt of the written notice. 35. I do not accept Mr Southern’s submissions. In construing the Tribunal Rules to identify what amounts to sufficient notice for the purposes of Rule 10(1)(c)(ii) it is necessary to take into account the policy behind the costs-shifting provisions as described by Warren J. Tribunal Rule 2(3)(b) also provides that in interpreting the Rules the Tribunal must seek to give effect to the overriding objective of dealing with cases fairly and justly. On that basis a taxpayer should be treated as having received notice of allocation for these purposes where it would be fair and just for him to be treated as having received such notice. Such an approach is consistent with the decision of the Upper Tribunal in Hills v Commissioners for HM Revenue & Customs [2016] UKUT 266 (TCC) . In that case the Upper Tribunal held in rather unusual circumstances that a written request to opt out of the costs-shifting regime did not take effect where the interests of justice would not be served by treating it as a written request for the purposes of Rule 10(1)(c)(ii). 36. A similar issue was recently considered in this Tribunal in Clipper Group Holdings Ltd v Commissioners for HM Revenue & Customs [2016] UKFTT 712 (TC) where the letter categorising the appeal as complex was not received by the Appellant and only came into its possession when it was included in a large bundle handed to the Appellant’s counsel during the course of an application hearing. In that case Tribunal Judge Beare held that the Appellant had not received notice of the allocation for the purposes of Rule 10(1)(c)(ii). He stated at [41] as follows: “ 41. So I would summarise my view by saying that, on a fair and just interpretation of the language used in rule 10(1)(c)(ii) of the Tribunal Rules, notice can be said to be received for the purposes of rule 10(1)(c)(ii) of the Tribunal Rules only if the recipient either is actually aware that it has received the notice or ought to be aware that it has received the notice given the circumstances in which the notice was received. ”37. Construing the Rules purposively it seems to me that knowledge derived from something other than a written direction given by the Tribunal pursuant to Rules 23(1)(b) and 6(4) can amount to notice in appropriate circumstances. Rule 10(1)(c)(ii) refers to “receiving notice” and not receiving “the” notice. Whether oral notice or what Mr Southern described as imputed notice or constructive notice is sufficient for these purposes will depend on all the circumstances of the case.38. I will not seek to set out in this decision any general principle as to what might be sufficient to constitute “notice” for these purposes. Each case will no doubt turn on its own facts. I am satisfied that where the categorisation letter is not received, receipt of the Statement of Case with a concluding request for the appeal to be dismissed with costs does not constitute sufficient notice for the purposes of 10(1)(c)(ii). In particular the Statement of Case did not originate from the Tribunal and it did not particularise on what basis the Respondents would be seeking their costs. Costs might have been sought on the basis that the appeal was a complex case, or on the basis that the Appellant had acted unreasonably in bringing the appeal because there was no real prospect of success.39. I am also satisfied that receipt of suggested draft directions from the Tribunal in electronic form in a document with a file name “Complex Directions.doc” does not constitute sufficient notice, either by itself or together with the Statement of Case.40. Mr Vallat submitted that the reference to costs in the Statement of Case and the receipt of draft directions from the Tribunal in a document named “Complex Directions.doc” ought to have put Mr Dauppe on notice in the sense that he ought to have checked the position as to categorisation and costs when he received those documents . For the reasons already given above I am satisfied that Mr Dauppe ought to have been aware that the Tribunal would allocate a case to a category and he ought to have been aware of the rules as to costs. I accept therefore that in 2014 Mr Dauppe ought to have queried with the Tribunal the category to which the appeal had been allocated. Those failings however are not sufficient in my view to constitute notice that the appeal had been categorised as a complex case. It is one thing to say that there was sufficient information in the hands of a party to know that the appeal had been categorised as complex. It is another to say that with further enquiries a party would have discovered that the appeal had been categorised as complex. In my view the failure of Mr Dauppe to make himself familiar with the Tribunal Rules or to make enquiry of the Tribunal is more appropriately a matter to be taken into account in relation to any application for costs which might be made under Rule 10(1)(b) based on unreasonable conduct. That would be a matter to be addressed at the conclusion of the appeal and I express no view as to whether Rule 10(1)(b) would be engaged.41. I am satisfied that the Appellant first became aware that the appeal had been categorised as a complex case when Mr Dauppe contacted the Tribunal on 21 February 2017 and was told that the appeal had been allocated as a complex case in 2014. On the present facts the earliest date on which the Appellant might be said to have received notice of the categorisation is 21 February 2017. The Appellant then delivered a written request to the Tribunal opting out of the costs regime on 15 March 2017. The written request was sent to the Tribunal within 28 days of 21 February 2017 and was therefore effective to exclude potential liability for costs.42. In the light of my findings this is not a case where the Tribunal needs to exercise discretion to extend the time for opting out of the costs-shifting regime. I shall simply say that if, contrary to my findings, the Appellant did receive notice of allocation in 2014 then I would not have been minded to extend the time for opting out. I agree with Mr Southern that the applicable principles are those in Data Select Ltd v Commissioners for HM Revenue & Customs [2012] UKUT 187 (TCC) . A pplying those principles, in the light of the purpose of the Rule described in Atlantic Electronics Ltd I would not have extended time. Put briefly, the purpose of the 28 day time limit is clearly to promote certainty and fairness. There would have been no good reason for the delay. The Respondents have conducted the proceedings to date on the basis that costs-shifting applied. Those factors would have outweighed the prejudice to the Appellant of an unwanted potential liability for costs. Conclusion43. For the reasons given above I am satisfied that the Appellant has delivered a written request to the Tribunal within the 28 day time limit in Tribunal Rule 10(1)(c)(ii) and it is excluded from potential liability for costs under Rule 10(1)(c)(i).44. This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. JONATHAN CANNAN TRIBUNAL JUDGE RELEASE DATE: 13 JULY 2017