Scott Brothers Limited v The Commissioners for HMRC [2025] UKFTT 1206 (TC)

[2025] UKFTT 01206 (TC)Case No TC09655
FIRST-TIER TRIBUNAL
TAX CHAMBER
Hearing Heard on: 2 September 2025Date Judgment date: 12 September 2025
In public by remote video hearing
Appeal reference: TC/2022/12300
CASE MANAGEMENT – landfill tax – appeal heard in December 2024 – appellant withdrew appeal on day 2 – application for reinstatement – Pierhead and Rolls considered – application dismissed
Before
TRIBUNAL JUDGE NIGEL POPPLEWELLMR MOHAMMED FAROOQ
Between
SCOTT BROTHERS LIMITEDAppellantTHE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMSRespondentMr Michael Paulin of counsel, instructed by Gunner cooke LLP for AppellantMs Charlotte Brown of counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs for RespondentsDECISION

INTRODUCTION

[1]By an assessment dated 6 May 2022, HMRC assessed the appellant (or “the company”) to landfill tax of £425,092. A wrongdoing penalty was also issued to the company in the sum of £148,782.20. On 12 August 2022, the appellant appealed against these assessments.[2]The hearing of the appeal (“the hearing”) was listed for a four-day hearing between 2-5 December 2024 before Judge Popplewell and Mr Farooq (“the panel”). The vast majority of the first day of the hearing (“the Monday”) was taken up by evidence given by the appellant’s expert witness, Mr Luke Prazsky (“LP”).[3]On the second morning of the hearing (“the Tuesday”) negotiations took place between the parties, following which, at around lunchtime, the company orally withdrew its appeal. This was confirmed in writing by the tribunal to the parties on the following day. The tribunal’s letter explained that the company had 28 days in which to apply to reinstate its appeal.[4]An application to reinstate the appeal was made by the company (“the reinstatementapplication”) by way of an email dated 20 December 2024. That application indicated that the appellant “had to withdraw the appeal in challenging personal circumstances. It has now taken advice and wishes to take up the offer in the letter to reinstate the Appeal”.[5]This decision deals with the reinstatement application.[6]The appellant was represented by Mr Michael Paulin. HMRC were represented by Ms Charlotte Brown. While we have been much assisted by their clear submissions both written and oral, and whilst we have also considered the totality of the relevant evidence, we have not found it necessary to refer to each and every argument advanced or all of the authorities cited in reaching our conclusions. THE LAW The Rules

THE LAW

[7]The parties have agreed that the relevant legislation is set out in the First-tier Tribunal (Tax Chamber) Rules 2009 (as amended) (“the Rules” each a “Rule”) and in particular Rule 2 and Rule 17.[8]Rule 2 provides: Overriding objective and parties' obligation to co-operate with the tribunal(1) The overriding objective of these Rules is to enable the Tribunal to deal with cases fairly and justly.(2) Dealing with a case fairly and justly includes— (a) dealing with the case in ways which are proportionate to the importance of the case, the complexity of the issues, the anticipated costs and the resources of the parties; (b) avoiding unnecessary formality and seeking flexibility in the proceedings; (c) ensuring, so far as practicable, that the parties are able to participate fully in the proceedings; (d) using any special expertise of the Tribunal effectively; and (e) avoiding delay, so far as compatible with proper consideration of the issues.(3) The Tribunal must seek to give effect to the overriding objective when it— (a) exercises any power under these Rules; or (b) interprets any rule or practice direction.(4) Parties must— (a) help the Tribunal to further the overriding objective; and (b) co-operate with the Tribunal generally.[9]Rule 17 provides: Withdrawal(1) Subject to any provision in an enactment relating to withdrawal or settlement of particular proceedings, a party may give notice to the Tribunal of the withdrawal of the case made by it in the Tribunal proceedings, or any part of that case— (a) by sending or delivering to the Tribunal a written notice of withdrawal; or (b) orally at a hearing.(2) The Tribunal must notify each party in writing of its receipt of a withdrawal under this rule.(3) A party who has withdrawn their case may apply to the Tribunal for the case to be reinstated.

Pierhead

(b) Pierhead

[10]We agree with the submissions made by Mr Paulin and Ms Brown that the reinstatement application should not be considered as a relief from sanctions application, and accordingly, when considering the discretion given to us by Rule 2, we are not fettered by any principles set out in the relief from sanctions cases.[11]We also agree with their submissions that helpful guidance has been given regarding the application of that discretion to the facts of the appellant’s case by Mrs Justice Proudman in the Upper Tribunal decision in Pierhead Purchasing v HMRC [2014] UKUT 321 (“Pierhead”) in which she said:
“23. Although, as I have said, there is no guidance in the rules, the FTT applied the additional principles set out (in the context of delay in lodging an appeal) in Former North Wiltshire DC v. HMRC [2010] UKFTT 449 (TC). Those were the criteria formerly set out in CPR 3.9 (1) for relief from sanctions: see the decision of the Court of Appeal in Sayers v. Clarke Walker [2002] EWCA Civ 645 at [21]. In North Wiltshire (see [56]-[57]) the FTT concluded that it was not obliged to consider these criteria but it accepted that it might well in practice do so. The same reasoning applies to the present case. The criteria were, • The reasons for the delay, that is to say, whether there is a good reason for it. • Whether HMRC would be prejudiced by reinstatement • Loss to the appellant if reinstatement were refused. • The issue of legal certainty and whether extending time would be prejudicial to the interests of good administration • Consideration of the merits of the proposed appeal so far as they can conveniently and proportionately be ascertained. 24. I was asked by Mr Jones to provide guidance as to the principles to be weighed in the balance in the exercise of discretion to reinstate. Because of the view I have formed I do not think it is appropriate to set any views in stone. I agree with the FTT in the Former North Wiltshire case that the matters they took into account are relevant to the overriding objective of fairness. I also believe that the guidance given in Mitchell v. News GroupNewspapers Limited [2013] EWCA Civ 1537 in relation to relief from sanctions is helpful. It is perhaps instructive that CPR 3.9 (which does not of course apply to Tribunals in any event) does not now exist in its original form. Fairness depends on the facts of each case, all the circumstances need to be considered and there should be no gloss on the overriding objective”
.

THE EVIDENCE AND THE FACTS

[12]We were provided with a bundle of documents as well as a copy of LP’s original expert witness report and an authorities bundle, supplemented by three further authorities handed up to us by Mr Paulin at the hearing. Mr Robert Borthwick (“Mr Borthwick”), the managing director of the appellant and on whose instructions the original appeal had been withdrawn, tendered a witness statement on which he was cross examined. Ms Heather Wong, the lawyer employed by HMRC who had conduct of this appeal, also tendered a witness statement which was largely taken as read. She had appended to that witness statement, her notes of the evidence given by LP, and Mr Paulin referred to some of those notes in his submissions. He did not cross examine Ms Wong. Dr Anna Willets, the lawyer who was responsible for submitting the reinstatement application, also chipped in as regards her relationship with the appellant (see below).

Background

[13]From this evidence we find the facts set out at [1]-[4] above.

Mr Borthwick’s written evidence

[14]In his witness statement, as supplemented by his answers to questions asked in chief by Mr Paulin, Mr Borthwick provided the following evidence of fact: (1). At the time of the hearing, he had instructed business consultants to put together a business sale portfolio to send to prospective interested buyers of the company (or the company’s business). (2). In his view, if the reinstatement application is unsuccessful, that would be a deal breaker as far as any sale is concerned as the landfill tax liability (and the penalty) would have to be disclosed to any potential purchaser. (3). There would also be reputational consequences if the assessment and penalty were not successfully appealed. (4). He thought LP’s evidence on the Monday “went well”. (5). At the end of the first day of the hearing (i.e. the Monday) he discussed the case with his representatives (he had been represented by counsel at the hearing, and his liaison with his solicitors was via a paralegal who attended the first day of the hearing). (6). He was advised that if the appellant was successful, it was highly likely that HMRC would appeal which would result in another hearing, potentially another appeal, and then potentially another appeal after that. He gained the impression that HMRC would appeal at every stage if they were unsuccessful. (7). He “returned from the Tribunal anxious and in a panic”. He was not sure what he could say to a potential purchaser. It seemed to him that there would be a never-ending process of litigation. (8). The following morning, he instructed his representative (we understand this to be his counsel) to withdraw his appeal. In his words he “could not face a never-ending series of appeals nor could the business afford them”. He describes this decision as “not a rational one” and that it was “born out of panic and a failure to properly understand the appeals process”. (9). He went on to say that “once the dust had settled after the hearing a friend recommended Dr Anna Willets… an expert in waste” who “understands my business and the industry in which I operate” and that “she could speak my language”. (10). He asked her to make the reinstatement application which she did.

Mr Borthwick’s oral evidence

[15]Mr Paulin had (wholly correctly in our view) accepted that Mr Borthwick had waived legal privilege as regards advice given to him by his representatives in relation to withdrawing the appeal. Mr Borthwick was therefore asked a number of questions by Ms Brown, as well as ourselves, regarding that advice.[16]In his oral evidence Mr Borthwick provided the following evidence of fact: (1). Although he had conduct of the appeal on behalf of the company, he did not consult either his fellow directors or the shareholders regarding withdrawing the company’s appeal. He did not share the advice it had received from the legal team with them and took responsibility for instructing counsel to withdraw without discussing the position with them. (2). Nor did he discuss the impact of withdrawing on the sales process with his business consultants. Indeed, he has not discussed the ramifications of the reinstatement application with them and its impact on the ongoing sales process. (3). The potential tax and penalty liability has not been disclosed in the information prepared by the business consultants. He expects a purchaser would discover that liability through its due diligence. (4). His view that failure to reinstate would be catastrophic to the sale process is his view not that of his business consultants. (5). At the end of the Monday, his counsel had expressed the view that he had a 60:40 chance of success in his favour in the appeal. He denied that this meant that there was no sense in withdrawing. (6). He accepted that his counsel had thought that LP’s evidence had not come across as it should have done. However he denied that that evidence had significantly weakened the company’s appeal and that counsel had suggested that he should withdraw because of this. (7). He had been advised before the hearing that there was a prospect of losing. He accepted that he had been advised that HMRC might appeal if they lost. But he had not been advised that if HMRC lost, there was a prospect of ongoing litigation as HMRC would continue to appeal until they were successful. (8). The reason for withdrawing was, as set out in his written statement, that he had panicked and come to an irrational decision to withdraw on the basis of the prospect of this ongoing litigation. (9). It was not because he had been advised by counsel that his chances of success were slim and he has now received a more bullish opinion from Dr Willets and wants to have a second bite at the cherry. (10). He thought that if the company was successful, that would be it. He did not realise that there could be a continuous process of litigation lasting some years. (11). He wishes to reinstate the appeal as he thinks he will now get the right outcome (which we take to mean that the company will be successful in its appeal). His view, based on advice given to him by Dr Willets, is that the company has a strong case. (12). He confirmed (in response to an oral comment to this effect made by Dr Willets) that she had, for a number of years prior to the hearing, provided advice to the company as regards environmental audits. He had a pre-existing relationship with Dr Willets at the time of the hearing. (13). He said that while he discussed the way in which the case was going after the end of the hearing on the Monday ( at which time counsel provided him with the 60:40 chance of success) the prospect of ongoing litigation with HMRC was first raised on the Monday by the paralegal (and not counsel) at the hotel where they were both staying. This was the first time that he realised that there could be continuing litigation and caused him to panic. (14). He then discussed this continuing litigation with counsel on the Tuesday morning, as a consequence of which he instructed counsel to withdraw the appeal.

The reliability of Mr Bortwick’s evidence

[17]There are two glaring inconsistencies between the evidence given by Mr Borthwick in his witness statement and that which he subsequently gave in his oral testimony. These are matters of considerable substance.[18]The first concerns involvement of Dr Willets. In his written statement, Mr Borthwick said that Dr Willets was recommended to him by a friend and that he contacted her after the end of the first hearing (“once the dust had settled”). Yet Dr Willets herself, as confirmed by Mr Borthwick, said that by the date of the hearing she had been advising the company in connection with environmental audits for a number of years.[19]The second concerns the details of the advice given to him on the Monday and the Tuesday concerning the prospect of ongoing litigation by HMRC. In his written statement he says that this was given to him by his counsel after the hearing on the Monday, following which he “returned from the Tribunal anxious and in a panic”. He could see litigation extending into the future and “the following morning I instructed my representative to withdraw my appeal”.[20]No mention was made of the involvement of the paralegal. Yet in his oral testimony he says that the advice regarding the prospect of ongoing litigation should HMRC succeed was given to him initially not by counsel at the tribunal after the hearing on the Monday, but by the paralegal back at the hotel.[21]And it was only the following morning, the Tuesday, that having discussed this with counsel, he instructed counsel to withdraw.[22]These inconsistencies have caused us to doubt the reliability of other evidence given by Mr Borthwick. In particular whether he was indeed given a 60:40 prospect of success by counsel; whether he indeed thought that LP’s evidence went well; and whether, as suggested by Ms Brown, the real reason he is pursuing the reinstatement application is not because he panicked at the first hearing and made an irrational decision, but rather because he now thinks he has a better chance of success than that given by his advisers, following LP’s evidence, either on the Monday evening or the Tuesday morning, on the basis of advice now given by Dr Willets.[23]We will consider the impact of this in the context of our discussions in light of the submissions made by the parties.

THE POST HEARING CONCESSION

[24]One of the points made by Ms Brown in her written and oral submissions concerned prejudice to HMRC of reinstatement as the assessing officer had retired from HMRC and would not, therefore, be available to justify the basis on which she made the assessment. This is highly relevant to the issues in the case since the appellant has challenged the assessment on the basis that it was not made to best judgment, nor was it in time or correctly quantified.[25]In response Mr Paulin pointed out that the tribunal, at any reinstated hearing, and subject to the appropriate direction having been made that the assessing officer need not attend to support her witness statement, can consider the evidence in that statement and give it such weight as the tribunal thinks fit. He went on to suggest, perfectly correctly, that in fact it was the appellant who might be prejudiced by the assessing officer’s inability to attend, since the appellant would not be able to cross examine her.[26]The day after we heard the reinstatement application, the judge received a letter dated 3 September 2025 from the appellant’s instructing solicitors in which they identify Ground 1 of the Amended Grounds of Appeal as setting out this challenge to the assessment (i.e. it was not made to best judgement and was not made in time). It went on to state that “In order to narrow the issues and remove any potential prejudice to HMRC, the Appellant hereby formally amends its application for reinstatement to withdraw and/exclude Ground 1. The application to reinstate [the appeal] therefore proceeds only on Grounds 2 and 3, as pleaded at paragraphs 37-73 of the Amended Grounds of Appeal…” (“thebest judgement concession”).[27]In their view this means that there is no prejudice to HMRC by virtue of the fact that they cannot call the assessing officer and her unavailability is either wholly irrelevant or carries negligible weight in the balancing exercise which we must undertake when exercising our discretion. DISCUSSION Submissions

DISCUSSION

[28]In summary Mr Paulin made the following written and oral submissions: (1). The appellant has exercised his right under Rule 17 to make an application for reinstatement. He is simply exercising his statutory right. (2). Issues of fairness and the interests of justice weigh in favour of the application being granted. Prejudice to the appellant outweighs any prejudice to HMRC. Any prejudice to HMRC can be compensated by costs. (3). When exercising discretion under Rule 2, we should consider the principle set out in Pierhead and in particular whether HMRC would be prejudiced by the reinstatement, what loss there would be to the appellant if the application was refused, and what are the merits (or otherwise) of the appeal to the extent they can be conveniently and proportionately ascertained. Prejudice to HMRC (4). There will be little or no prejudice to HMRC if we were to reinstate. In light of the best judgement concession, the fact that the assessing officer will be unavailable to give evidence is of no relevance or negligible weight. (5). To ameliorate any prejudice to HMRC concerning the fact that LP has already spent a day giving evidence, the appellant proposes that LP will still act as their expert witness, and will simply supply a further, short, witness statement, dealing with the matters raised in Ms Wong’s note of his evidence, on which he can then be cross examined by HMRC’s counsel. This should not take long and gives HMRC the chance to challenge any changes made by LP to his original report arising from the answers that he gave in cross examination at the hearing. (6). Any financial consequences to HMRC can be compensated for by an appropriate costs order. This can compensate HMRC for any additional preparation time. (7). HMRC claim that a new hearing will be inconvenient as they will have to allocate time and resources to an appeal which they could justifiably have considered had been determined. This does not reflect any substantive prejudice to the interests of justice. Loss to the appellant (8). The loss to the appellant of not reinstating is significant. Over and above the liability to the tax and the penalty, the business will suffer intangible reputational damage which cannot be assessed financially. It will suffer financial damage as, in Mr Borthwick’s words, failure to reinstate would be “catastrophic” to the sale of his business. The tax and penalty liability would be a “deal breaker”. Even if he could sell it, the price would be seriously diminished. Merits (9). This is an unmeritorious assessment which should not be allowed to stand. This is clear from the evidence of LP which clearly establishes that to the extent that there was a disposal, it was not a taxable disposal as the material was not waste. LP was cross examined and came up to proof. (10). The appellant’s grounds of appeal and skeleton argument make out a strong prima facie case. (11). Mr Borthwick’s evidence was that he was advised by counsel that he had a strong (60:40) case. (12). Given the strength of its case, the appellant has a right to property within Article 1 Protocol 1 of the European Convention of Human Rights. Any violation to this right can only be done lawfully if it is done proportionately i.e. a fair balance must be struck between the rights of the individual and the rights of the community. In this case this proportionality “right” favours reinstatement as there is no prejudice to HMRC in doing so, and considerable prejudice to the appellant in not doing so. (13). If HMRC consider that they have a strong case, then they can make that out in the reinstated hearing. They would not be prejudiced in this regard if the appeal was reinstated. The overall balancing exercise (14). When exercising our discretion under Rule 2, an important consideration is the reason why the appellant withdrew its appeal. (15). It is clear from the evidence that Mr Borthwick made an irrational decision. He was unaware until the Monday evening that if HMRC were unsuccessful, it was likely that they would continue litigating until they were successful. This would take time and money and would have a detrimental impact not just on his mental health but also on the ability to sell the business. He panicked. He came back to the tribunal on the Tuesday and directed counsel to withdraw. In the cold light of day, having consulted Dr Willets he reconsidered, and instructed her to make an application to reinstate. (16). Rule 17 is designed to give an appellant who has withdrawn, an opportunity to reinstate. It is designed to allow an appellant who has made a mistake (as Mr Borthwick has done in this case) an opportunity to correct that mistake. Humans make mistakes. (17). The reason why Mr Borthwick directed counsel to withdraw was not because he had been advised that his expert had not come up to proof, nor that he had a weak case. It was because he had been advised that HMRC might continue litigating should they be unsuccessful. Even if this was not an irrational decision, it was certainly a rash one. (18). In light of all these considerations, the balance of prejudice weighs heavily in allowing the application. It is fair and just, and in the interests of justice, that the appellant be given the opportunity to reinstate his appeal and have a full hearing of the issues.[29]In summary Ms Brown made the following written and oral submissions: (1). The balance of prejudice weighs heavily in dismissing the application to reinstate. (2). The FTT’s decision in Rolls Group & Others v HMRC [2015] UKFTT 0404 (“Rolls”) citing Pierhead is authority for a number of propositions. Reinstatement is a matter of discretion for the tribunal; an applicant must show sufficient reasons to justify reinstatement taking into account the overriding objective; each case must be considered on its own facts; the tribunal will need to consider the reasons for the withdrawal and the circumstances in which reinstatement is being sought. (3). She couched her submissions for opposing the application under a number of headings as set out below. No automatic right to reinstatement (4). It is for the appellant to justify why the appeal should be reinstated. It appealed against the assessment to the tax and penalty which it had a right to do. It then voluntarily withdrew that appeal having been fully advised by counsel and following negotiations with HMRC. It must, therefore, have been fully aware of the consequences of withdrawal, and should accept those consequences. It should not be allowed another bite at the cherry. No good reasons (5). No good or sufficient reasons have been provided by the appellant to justify reinstatement. The reason appears to be that Mr Borthwick panicked following advice by initially a paralegal and subsequently by counsel, that because of ongoing litigation which HMRC might pursue if they were unsuccessful, there would be a financial and reputational detriment on the sale of his business. (6). Even if this is to be believed, the major flaw in it is that there is nothing wrong with this advice. There has always been a risk of ongoing litigation if the appellant was successful. Mr Borthwick knew from 2022 when he made the appeal of the risks of winning and losing that appeal. He accepted that he knew that if he succeeded, HMRC had the right of appealing. (7). His decision to withdraw following advice that HMRC might continue to litigate if they were unsuccessful was a rational decision based on accurate legal advice. (8). And his situation has not changed. If the appeal is reinstated, he still runs the risk of ongoing litigation by HMRC if the company is successful. He has provided no satisfactory explanation as to why this risk is any less now than it was when he withdrew his appeal. (9). It is far more likely that the real reason why he withdrew was because he realised on the Monday evening that LP had not come up to proof and he had not been given the 60:40 chance of success which he suggests now had been given by counsel. Discussions with counsel were not limited to the ongoing litigation point but were about the prospects of success in the appeal, generally, and the real reason why the appellant withdrew was because LP’s evidence did not go well. (10). And the real reason for reinstatement is that he has had an opinion from Dr Willets that the company has a better chance in the appeal than it had been given following those discussions with counsel. In Rolls a change of advice was not a sufficient reason to justifyreinstatement. Prejudice to the parties (11). HMRC will be prejudiced if LP is allowed to give evidence at any reinstated hearing. HMRC’s position is that LP has finished giving his evidence. The suggestion that he should now be able to provide a further witness statement based on the attendance note made by Ms Wong which will deal with weaknesses in his report is not due process and is not fair. He can deal with those weaknesses in his supplemental witness statement. It cannot be right that he is given the opportunity to do so. This cannot be compensated for by an award of costs. (12). HMRC are also prejudiced as they will suffer additional time and cost in preparing for the hearing. It is accepted that these could be compensated for by an award of costs. Merits (13). The fact that the appellant withdrew its appeal after LP’s evidence is no coincidence. It should have been clear to all who attended the hearing that LPs evidence did not support the company’s appeal, and it is the effect of that evidence, and the fact that the appeal was withdrawn after that unhelpful evidence which suggests that the merits are not, as submitted by the appellant, in its favour. The overriding objective (14). Dismissing the application would be in line with the overriding objective. It would be unfair and a waste of resources to reinstate the application simply because the appellant now thought it had a better chance of success on the basis of new advice. The appellant, which was properly represented by a legal team throughout the conduct of the appeal, would have been well aware of the consequences of the success or failure of that appeal, including consequences for the sale of the business. (15). Even if it is accepted that Mr Borthwick made an irrational decision, that is not a good or sufficient reason to allow reinstatement. (16). Procedural issues regarding the evidence of LP, which will be highly prejudicial to HMRC, cannot be cured by an award of costs. (17). The appellant’s problems are all of its own making. The appellant was fully aware of the consequences of withdrawing. There is no ECHR right to property. The concept of proportionality is thus not engaged.

Our view

[30]We agree with Mr Paulin that in making this application, the appellant is simply exercising his right under Rule 17 which effectively give an appellant a second bite at the cherry if they have withdrawn an appeal by allowing them to seek reinstatement. And in determining such an application, we are exercising judicial discretion and should carry out a balancing exercise taking into account all of the circumstances and the overriding objective to deal with the application fairly and justly (Rule 2).[31]It is clear from Pierhead and Rolls that there is no right to reinstatement and the onus is on the appellant to establish that the balance favours reinstatement.[32]We must consider the reasons for the withdrawal; the prejudice to the parties of granting or dismissing the application; and the merits of the appeal (to the extent that they can be conveniently and proportionately ascertained).

The factors

[33]We start by considering prejudice, and in particular prejudice to HMRC if we were to grant the application. We accept given the best judgement concession that the absence of the assessing officer is largely irrelevant to this consideration.[34]However, it is our view that HMRC will be profoundly prejudiced if LP’s expert report and evidence given on the Monday is retained, and LP is permitted to consider the attendance note made by Ms Wong of that evidence and permitted to submit a supplemental witness statement to deal with issues raised in that attendance note.[35]This gives LP the opportunity to revisit any weaknesses in his report or oral evidence which were not satisfactorily dealt with in re-examination, and deal with them in the cross-examination of his supplemental witness statement.[36]This cannot be right. He is a rehearsed witness. He should not be permitted a second bite at the cherry. He should not be given the opportunity to put right any flaws or weaknesses in the evidence that he gave first time round. To allow to do so would not fair or just to HMRC.[37]The nature of the material which was purportedly disposed of by the appellant, and which attracts the assessment to tax, lies at the heart of the appeal. It is the appellant’s case that it was not “waste” and thus could either not be disposed of or that there was no environmental permit required for the material to be placed on the land.[38]LP is an expert on waste. His report is an expert report on inter alia the definition of waste and the end of waste criteria. His evidence therefore is of fundamental and crucial importance to the appellant.[39]He is not a witness of peripheral relevance only. His evidence goes to the heart of the appellant’s case.[40]And because of this it is all the more important that the process by which his evidence is adduced is treated with respect and in a proper and fair way. That due process must be fair and just to both parties. By allowing LP to review his evidence and to present it at a new hearing would not be fair and just to HMRC. This cannot be compensated by costs.[41]We accept that the appellant will suffer prejudice if the appeal is not reinstated. It will lose the opportunity to contest the assessment and the penalty. It will also suffer financial detriment in connection with the sale of the business and reputational damage. But these were all matters which were known to the appellant when it withdrew its appeal. We do not accept that the financial consequences of dismissing the application will be “catastrophic” as submitted by Mr Borthwick. He has taken no professional advice on this notwithstanding that he has retained professional advisers dealing with the sale. We take judicial notice of the fact that catering for liabilities like this in transactions involving the sale of businesses can readily be catered for in a number of ways and usually affect price rather than the underlying viability of the deal.[42]Any such financial and reputational loss is a result of a conscious decision made by the appellant.[43]It was Mr Borthwick’s evidence that he only realised on the Monday evening that there was a possibility, should HMRC be successful, that they would carry on litigating into the future, and it was this possibility which panicked him into making a decision on the Tuesday morning to withdraw the appeal. And that panicked decision was an irrational one from which he should be protected by being permitted to reinstate the appeal.[44]We have a number of observations on this.[45]Firstly, we do not accept the only reason for the withdrawal was the sudden realisation of this possible ongoing litigation by HMRC. We think it inherently implausible that during discussions which took place on the Monday evening and the Tuesday morning, the only discussions about the impact of LP’s evidence and the appellant’s prospects of success appear to be, as reported by Mr Borthwick, that the evidence “went well” and counsel gave them a 60:40 chance of success. We think it far more likely that there was a much broader discussion about the merits of the appeal as well as the implications regarding further litigation if that appeal was successful or unsuccessful. And that the decision to withdraw was taken in light of all that advice and not solely on the basis of Mr Borthwick’s panicked decision arising from his concern about future litigation by HMRC.[46]We have explained our misgivings regarding the reliability of Mr Borthwick’s evidence. He has tendered no corroborating evidence concerning his discussions with counsel or the paralegal (we suspect he could readily have obtained an attendance note from either in which we have no doubt that they recorded the discussions concerning the withdrawal with him), and we consider that the purported basis for the withdrawal is not as he has described.[47]Furthermore, we do not accept that this was an irrational decision. It seems to us entirely rational to be concerned about the prospect of future litigation by HMRC and the time, cost and uncertainty implications (not only about litigation itself but about the future sale of the business) which goes with that litigation. And to decide, on the basis of that, to withdraw the appeal. If that was the basis of the decision that Mr Borthwick made, we can see nothing irrational about it. Finally, even if it was an irrational decision, we cannot see how this supports the application. We accept the Rule 17 gives an appellant the right to apply for reinstatement. This applies as much to a rational as an irrational decision to withdraw in the first place. We do not see why an irrational decision is a “better” reason for withdrawing than a rational one.[48]We accept Ms Brown’s submission that it is more likely than not that following LP’s evidence at the end of the Monday, he discussed the overall position with his legal team. On the basis of that advice he decided to withdraw. This was for a number of reasons including a realisation that his case was weak (as well perhaps that there may be ongoing litigation with HMRC should the appellant succeed). And what has happened now is that the appellant has been given a more bullish opinion regarding the appeal, and in particular the nature of waste, by Dr Willets.[49]As far as the merits of the appeal are concerned, we reject Mr Paulin’s submission that the case is a strong one by dint of the evidence given by LP. LP gave evidence which was challenged in a number of areas and it was up to the tribunal to decide whether or not his evidence (that the material was waste or not) was right. To do this it would need to consider the evidence of HMRC’s expert as well as the evidence of fact. The tribunal never heard this evidence and so was in no position to come to any conclusion. All we have is an expert witness who has given evidence. We are, frankly, more inclined to agree with Ms Brown’s submission that “it should have been clear to all who attended the hearing that [LP’s evidence] did not support [the company’s appeal] and it is the effect of that evidence and the fact that the appeal was withdrawn after that unhelpful evidence that HMRC relies upon to assert that the merits are not in [the companies] favour”.[50]Indeed this appears to be reflected in Mr Borthwick’s oral evidence that counsel had told him that LP’s evidence hadn’t come across as it should have.[51]For the reasons given above, we are not inclined to accept Mr Borthwick’s evidence that he was given a 60:40 chance of success by counsel following LP’s evidence given on the Monday.[52]The best we can say about the respective merits is that both parties have respectable technical arguments and reasonable prospects of success.

The balancing exercise

[53]We now come to the balancing exercise taking into account the foregoing circumstances and the overriding objective. We have taken the view that there will be considerable prejudice caused to HMRC if LP is permitted to give evidence again at a reinstated hearing. There will be prejudice both financial and reputational to the appellant both directly and to the sale of the business. However, this is prejudice of which the appellant was entirely aware both before and at the time of withdrawing the appeal, and we are not satisfied that any prejudice would be as catastrophic as suggested by Mr Borthwick.[54]The appellant was advised throughout by a firm of solicitors and by counsel, and it was on the basis of their advice that it withdrew the appeal. We have set out above our misgivings concerning Mr Borthwick’s evidence as to the reasons for that withdrawal. We consider that it is just as likely that it was because he was advised that the first day did not go well as it was because of his anxiety about ongoing litigation should HMRC be successful.[55]Furthermore, that anxiety must still be there. Although his evidence was that he thinks that he will get the “right result” if the appeal is reinstated (presumably on the advice of Dr Willets) the company still runs the risk of ongoing litigation should that result go against it. Mr Borthwick was unimpressive when faced by this possibility. He simply said that he would deal with it if that situation arose. Presumably that is something which he could have done if the company had continued with its appeal in December 2024 once the decision in that appeal had been released.[56]We have assessed the merits of the case and do not consider that the appellant has such a high prospect of success as to warrant Mr Paulin’s submission that the appellant has a right to property which attracts the protection of the ECHR.[57]But even if it does and thus attracts the “protection” of the doctrine of proportionality, it is clear to us that proportionality lies at the heart of the Rule 2 principle that we must deal with cases fairly and justly. So the appellant benefits from a consideration of proportionality in any event.[58]The prejudice to HMRC cannot be compensated for by an award of costs. The appellant has known about the implications of being successful or unsuccessful in his appeal since it first made its appeal in 2022. It was advised by counsel and a firm of solicitors throughout its preparation for and its attendance at the hearing. It was advised whether it should withdraw by those same legal advisers. It is our view that it was fully aware of the consequences of withdrawal at the time that it decided to do so. The financial and reputational consequences of that withdrawal, therefore, are of its own making.[59]We have considered all of the circumstances of this case and we have considered Rule 2. We have undertaken the relevant balancing exercise. We have concluded that, on balance, it would not be appropriate to reinstate the appeal.

DECISION

[60]The reinstatement application is dismissed.

RIGHT TO APPLY FOR PERMISSION TO APPEAL

[61]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. Release date: 12th SEPTEMBER 2025

Cited in 1 later judgment