WM Morrison Supermarkets Limited v The Commissioners for HMRC [2025] UKFTT 1542 (TC)

“GROUP 1— FOOD The supply of anything comprised in the general items set out below, except— a supply in the course of catering; … General items Item No. 1 Food of a kind used for human consumption. Notes … (3) A supply of anything in the course of catering includes— (a) any supply of it for consumption on the premises on which it is supplied; and (b) any supply of hot food for consumption off those premises; (3A) ... (3B) “Hot food” means food which (or any part of which) is hot at the time it is provided to the customer and— (a) has been heated for the purposes of enabling it to be consumed hot, (b) has been heated to order, (c) has been kept hot after being heated, (d) is provided to a customer in packaging that retains heat (whether or not the packaging was primarily designed for that purpose) or in any other packaging that is specifically designed for hot food, or (e) is advertised or marketed in a way that indicates that it is supplied hot. (3C) For the purposes of Note (3B)— (a) something is “hot” if it is at a temperature above the ambient air temperature, and (b) something is “kept hot” after being heated if the supplier stores it in an environment which provides, applies or retains heat, or takes other steps to ensure it remains hot or to slow down the natural cooling process. (3D) In Notes (3B) and (3C), references to food being heated include references to it being cooked or reheated.”

“Where a person has failed to make any returns required under this Act (or under any provision repealed by this Act) or to keep any documents and afford the facilities necessary to verify such returns or where it appears to the Commissioners that such returns are incomplete or incorrect, they may assess the amount of VAT due from him to the best of their judgment and notify it to him.”

“(1) Subject to sections 83G and 84, an appeal shall lie to the tribunal with respect to any of the following matters –… (p) an assessment – (i) under section 73 (1) or (2) in respect of a period for which the appellant has made a return under this Act; …” (i) under section 73 (1) or (2) in respect of a period for which the appellant has made a return under this Act; …”

“(3) A supply of anything in the course of catering includes— (a) any supply of it for consumption on the premises on which it is supplied; and (b) any supply of hot food for consumption off those premises; and for the purposes of paragraph (b) above “hot food” means food which, or any part of which— (i) has been heated for the purposes of enabling it to be consumed at a temperature above the ambient air temperature; and (ii) is above that temperature at the time it is provided to the customer.” (a) any supply of it for consumption on the premises on which it is supplied; and (b) any supply of hot food for consumption off those premises; (i) has been heated for the purposes of enabling it to be consumed at a temperature above the ambient air temperature; and (ii) is above that temperature at the time it is provided to the customer.”

“Does the proposed legislation meet its objective of ensuring that all hot takeaway food is taxed consistently at the standard rate of VAT? If not, why not and what changes are needed?”

“The fact that this has been called a pasty tax is misleading. It will also capture rotisserie chickens sold hot. Millions of people are buying rotisserie chickens for their evening meal every week. Our research tells us that many of these are our older and less well off customers, who usually buy them to eat cold or heated up later in the day. They are popular with families because they provide a convenient healthy meal for the whole family. Rotisserie chickens will be taxed because they are sold hot. In reality though, 83% of our customers purchase them to consume later in the day when they’ve gone cold. We sell them hot because people want to know they have been freshly cooked, and we have to keep them hot for safety reasons. It’s frustrating therefore that because a chicken is freshly cooked it will cost customers 80p more than a cold chicken. It will become unaffordable for many of our customers once the retail price pushes through the £5 mark. Two thirds of our customers already tell us that £4.50 is the most they are prepared to pay.”

“Take-away food will continue to be zero-rated when cooling naturally, but standard rated where it is kept hot or the cooling process is retarded. This allows us to remove the inconsistent VAT treatment, while minimising the requirements on businesses who sell food that is cooling down after it has been cooked; they will not have to test the temperature of their products at the precise time of sale. The details of the revised policy are set out in the Consultation Responses Document which was published on 28 June and is available on the HMRC website. I should stress, however, that the intention behind the policy change was that VAT should not apply to hot take-away food when the only reason that it is hot is that at the time of sale it has not yet reached ambient temperature as part of the natural cooling process. It was not to retain the zero rate for pies, pasties and sausage rolls per se; where they are kept hot they will be liable to VAT. The same rules will apply to other food, and I consider the taxation of hot rotisserie chickens is not an anomaly; it is right that rotisserie chickens which are kept hot or marketed as hot should be liable to VAT in the same way as other hot food.”

“2.1.2 The responses to the consultation indicated that the proposed legislation would achieve the objective of taxing hot takeaway food. Many also acknowledged the inconsistencies that arise from the current rules and some businesses (mainly fish and chip shops which already charge VAT on their hot food) were supportive of the proposed change. However, most responses objected in principle to taxing cooling down food and other bakery products, and replies from private individuals strongly objected to taxing Cornish pasties. 2.1.3 However, the consistent picture from businesses was that it would be difficult for businesses to operate the ‘ambient temperature test’ on food that was cooling down naturally, and that the test would be difficult for HMRC to police. These comments came mainly from those that would have to operate the test (and representations were predominantly made in respect of cooling bakery products). 2.1.4 Under the proposed test businesses would have had to determine whether food, or any part of the food, was provided at above the ambient temperature. Even though the concept of ambient temperature exists in the current legislation, many businesses pointed to the difficulties of testing food against ambient temperature, arguing that this varies according to the season and the geographical location. 2.1.5 Businesses also maintained that in some cases (for example where the product is cooling, only partly hot, or hot on the inside) staff would find it difficult to accurately determine whether the food was above ambient temperature without temperature probing at the point the food was provided to the customer. They were also unconvinced that HMRC simplification schemes, including schemes based on sampling, would solve this issue. 2.1.6 Some respondents suggested alternative approaches for achieving the objective, for example by defining hot food as being food which is actively kept hot, or defining hot in terms of the hot holding requirements in Food Hygiene Regulations.”

“Mr Gauke: … VAT has always applied to food consumed on the supplier’s premises, notably in restaurants and cafés, and it was extended to hot takeaway food in 1984. The definition of “hot takeaway food” in the 1984 legislation is that the food “has been heated for the purposes of enabling it to be consumed at a temperature above ambient air temperature; and…is above that temperature at the time it is provided to the customer.”

“whether or not the packaging was primarily designed for that purpose”

“Catherine McKinnell (Newcastle upon Tyne North) (Lab): We have arrived at this change after 20-odd years in which, through various legal challenges, we have come to our current conclusions on this aspect of VAT. Can the Minister assure us that we are not facing another 20 years of litigation in order to get these finer details clarified? Mr Gauke: One can never rule out the fact that some people will be litigious and try to take a creative view of any particular guidance. However, we believe that we have reached the right position after much consultation and discussion with the industry and with hon. Members, many of whom have been very engaged in the matter. I look around the House and see at least two Members who have been in my office to make representations on this point. We believe that we have reached a position that is sustainable and fair, and that is what we are putting to the House in the new schedule. The additional criteria will ensure that hot food will generally be taxed at the standard rate of VAT, but if food that would be zero-rated when cold is bought when it happens to be cooling down, but is not yet cold, it will still be zero-rated provided that it does not meet any of the criteria that I set out. These changes will add further tests to make the relief less open to abuse and provide a level playing field for all businesses supplying their customers with hot food.”

“Test 1: food or drink heated for the purposes of enabling it to be consumed hot - How does this test work? Taking into account all the relevant facts and circumstances, it is the purpose of the supplier (and not the customer) in heating the food or drink that is the determining factor. This means that the sale of products that have been cooked specifically to enable consumption whilst still hot (as a result of being freshly prepared, baked, cooked, reheated or kept warm) are standard-rated. This is in contrast to products that are not intended to be eaten while hot and are sold warm simply because they happen to be freshly baked and are in the process of cooling down. Examples of standard-rated (or temporarily reduced rated) products under this test include: Examples of standard-rated (or temporarily reduced rated) products under this test include: • chips, fish and chips, and similar items • Chinese and Indian takeaway meals, pizzas, kebabs etc • baked potatoes with a hot or cold filling • hot dogs and hamburgers • pies, rolls, sausage rolls, pasties and similar items (unless the products do not meet any of the tests and are sold warm simply because they happen to be freshly baked and are in the process of cooling down) • tea, coffee, chocolate and other hot drinks • hot soup. … Test 3: food or drink has been kept hot after being heated - How does this test work? This test confirms that food or drink that is kept hot after being cooked, heated or reheated is standard-rated. This includes instances where a supplier of hot takeaway food stores the food or drink in an environment which provides, applies or keeps heat, or takes other steps to ensure that it stays hot or to slow down the natural cooling process after it’s been heated. In practice, this will mainly affect products that are kept warm in heated cabinets (for example, under heat lamps), on spits, in hot water or on hot shelves or trays. It will also include any products kept warm in cooling down ovens or other appliances that slow down the rate of cooling. Examples of standard-rated (or temporarily reduced rated) products under this test include: • freshly baked croissants, pretzels and similar items that are kept hot in a heated cabinet • hot dogs kept hot in water or on a tray • hamburgers kept hot on a hot shelf • doner kebabs kept hot on a spit • cooked chickens kept in a heated cabinet or on a hot tray • meat pies kept in cabinets during a controlled cooling process Test 4: The food is provided to a customer in heat retentive packaging – How does this test work? This test confirms that food that is provided to a customer in packaging that retains heat (whether or not the packaging was primarily designed for that purpose) or in any other packaging that’s specifically designed for hot food is standard-rated. In practice, this will mainly affect products that are sold in specialised packaging, such as foil lined bags and insulated containers including specially designed cardboard boxes. It will not affect products that are sold in ordinary paper bags or similar packaging. Examples of standard-rated products under this test include: • naan bread and garlic bread sold in a foil lined bag • Chinese and Indian takeaway meals sold in foil lined containers • pizza sold in specially designed cardboard boxes • cooked chickens that are sold in heat retentive packaging or packaging designed to prevent leakage of hot fluids or grease Test 5: food or drink advertised or marketed in a way that indicates that it is supplied hot - How does this test work? This test confirms that takeaway food or drink that is advertised or marketed in a way that indicates that it is supplied hot is standard-rated. This will be established by examining the nature of the advertising or marketing campaign and whether this indicates that the takeaway food in question is sold hot. This could include pictures of the products showing steam rising from them. ‘Advertised or marketed in a way that indicates that it is supplied hot’ does not include advertised or marketed as ‘freshly baked’. Examples of products that are standard-rated (or temporarily reduced rated) under this test, as long as they are advertised or marketed as ‘hot’, include: • rotisserie chickens • roasted chestnuts • soup which, in each case, are advertised or marketed as “hot”.”

“4.4 What types of hot food are not caught by these tests and remain zero-rated The new tests ensure that the vast majority of hot takeaway food is standard-rated. The exception is food that is either not hot at the time it’s provided to the customer or that’s hot at the time it’s provided to the customer but does not satisfy any of the above tests. For example, freshly baked bread or bakery products that are incidentally hot at the time they are sold but which are frequently eaten cold (that is, when they have cooled down to ambient air temperature). Businesses selling food that is hot at the time it is provided to the customer will need to work through each test to confirm that none apply before zero rating their products. This is illustrated in the following examples. Example 1 A retailer sells a Cornish pasty that’s been baked off and left to cool naturally but is still hot at the time that it is provided to a customer (and so the precondition is satisfied). However, the retailer does not intend that the pasty will be consumed hot by the customer (Test 1 is not met); it has not been cooked to order (Test 2 is not met); it has not been kept hot after being cooked (Test 3 is not met); it has been provided to the customer in a standard paper bag (Test 4 is not met) and it is advertised as ‘freshly baked’ (Test 5 is not met). As none of the tests are satisfied, the sale of the pasty is zero-rated. Example 2 The retailer in example 1 decides to keep its pasties under heat lamps to slow the cooling process. In this example, Test 3 is met as the pasties are being kept hot after they have been cooked and the sale of the pasties is standard-rated. Example 3 The retailer in example 1 decides to advertise its pasties as ‘hot’ rather than ‘freshly baked’. In this example, test 5 is met and so the sale of the pasties is standard-rated. … Example 5 A retailer sells hot freshly cooked chickens that have not been heated for the purposes of enabling them to be consumed hot, have not been cooked to order, have not been kept hot after cooking (they have been allowed to cool naturally), are provided to customers in specially designed (foil lined) bags designed to prevent leakage of fluids and grease from the chicken and are not advertised as ‘hot’. The sale of these hot chickens is standard-rated as Test 4 is met as the chicken is provided to customers in packaging that is specially designed for hot chickens.”

“Hereby we can confirm that the Union Jack Chicken Bag which features a clear window for product visibility, was designed and manufactured with the primary intent of providing a secure and fit-for-purpose packaging solution. The typology of the bag and the combination of material type (paper and PP) and thickness was a necessary design feature for two fundamental reasons: Structural integrity: The inclusion of a clear window creates a natural weak point in the bag’s structure. The enhanced thickness of both the paper and the window material was essential to ensure the bag’s structural integrity and prevent tears or ripped during handling and transport. Leakage Prevention: The bag is constructed from a laminated material, combining Kraft paper with an inner layer of PP. This PP layer is crucial to allow the bank to be heat-sealed at both the bottom and along the longitudinal seam, creating a leak-proof barrier that effectively contents any moisture or grease from the roasted chicken. This design is different for a bag without a plastic layer, such as one laminated with aluminium, which cannot be heat sealed in the same manner (without PP). It is our explicit declaration that the design of the Union Jack Chicken Bag, including the increased thickness of its materials, was in no way intended to retain heat. The primary purpose of this design was solely to create a functional and durable windowed bag that meets the practical requirements for retail display and transport. The materials used, specifically the Kraft paper and 25-micron PP lamination, allow for significant heat dissipation. While it is true that a bag with the same materials but without a window would retain heat better, this design is not comparable to a bag specifically engineered for heat retention, which would typically involve materials like an aluminium lamination.”

“(2) In any proceedings for an offence consisting of a contravention of paragraph 6, it shall be a defence for the accused to prove that the food — (a) had been kept for service or on display for sale for a period of less than two hours; and (b) had not previously been kept for service or on display for sale by that person.” (a) had been kept for service or on display for sale for a period of less than two hours; and (b) had not previously been kept for service or on display for sale by that person.”

“Rotisserie chickens are a focal point of our fresh food Market Street offering and the proposed changes were therefore seen as being significant for both our business and more importantly, our customer base. In light of this, in May 2012, we used customer research to assess the potential impact of the changes. The key findings were as follows: -The typical purchasers (52%) of Rotisserie chicken were socio-economic classes C2, D & E1 … - 67% of our customers felt that £4.50 was the maximum they would pay for a cooked chicken (the existing price of rotisserie chickens was £4.40). Where the supply was subject to the standard rate of VAT the price would have risen to £5.28 and could have resulted in hundreds of thousands fewer chickens being bought every month, which would have repercussions for the whole supply chain and for balanced diets of families across the UK. - 83% of customers purchased rotisserie chickens to consume at a later point in time. For example: o 59% of these customers reheated chickens for an evening meal and the remainder ate the products cold. o 28% of sales were used for making sandwiches at a later point in time. … As set out above, market research in relation to purchases of rotisserie chickens informed the development of the product. It was evident from that research that in excess of 80% of customers purchasing rotisserie chickens (which at that time were kept hot in heated cabinets) consumed them at a much later point in time as part of a meal, either cold or after re-heating. In this regard, the findings of the research continue to be reflected by the turnover of the product compared to that of hot rotisserie chickens; on average the cool down product accounts for in excess of 77% of the turnover derived from all rotisserie chicken product sales (based on an analysis of sales from February 2013 to date). This directly correlates to, and clearly supports, the research findings that identified that 80% of all customers buying rotisserie chickens eat the chicken cold or for a later meal. The position is also borne out by data provided by our Customer Insight team, who collate and analyse transactions in our stores to understand customer behaviour and spending. Data for recent periods shows that: - Baskets containing the cool down product are on average double the size of baskets containing other Oven Fresh items (£43.00 compared to £21.54) that are intended to be consumed immediately, for example chicken portions, chicken nuggets and chips. - The product is typically purchased as part of ‘Stock up’ or ‘Meal for Home’ trip. Again, this can be contrasted to other Oven Fresh products such as chicken portions, chicken nuggets and chips which are typically purchased as part of a ‘Feed me Now’ trip for consumption at breakfast or lunchtime. - Families with children and teens are more likely to purchase the product than other customer groups such as singles and couples, empty nesters and seniors.”

“As you will be aware, I did feel that this issue would benefit from a store visit and related early discussion to clarify the concerns raised. However, I do appreciate that, given the staff shortages you are experiencing, finding time to do that will be proving difficult. Clearly, as indicated in your note below, you would prefer to gain an early advice in order to consider the potential extent of the how certain physical changes etc may impact upon the tax position. I am obviously happy to provide a brief summary of the triggers which generated the concerns expressed in my recent letter. Before I do that, I would emphasise that those triggers, which are the specific physical changes to the place and amount of storage/promotion and which can be readily and assessed/demonstrated against the clearly objective criteria in Note 3B (b) to (e) in Group 1, Schedule 8 of the VAT 1994 – do also need to be considered against the criteria specified in item (a) – same note. This relates to the overall context of food “being heated for the purpose of enabling it to be consumed hot”

“The core issue in this matter is, of course, whether the proposed signage means that range of food products which are being sold in the areas adjacent to/below the signage concerned are considered to be “advertised or marketed in a way the indicates that it is supplied hot - see note 3B to Group 1 Schedule 8, VAT Act 1994. I must stress that my response to your request purely addresses that single issue. Any agreement that a particular sign does not meet the criteria covered by Note 3B e) does not mean that all products within that area would be considered to qualify for zero rating. It simply means that products sold above ambient temperature in that area will not inevitably be considered to be standard rated. Clearly there are a number of other circumstances which need to be considered as part of establishing the VAT liability of each individual product line (and potentially even within a product line). So, even if it is accepted that the general signage does not indicate to supply whilst hot, if any food lines are provided the above the ambient temperature (see the related note 3C) and therefore to be treated under any one, or more, of the other criteria within note 3B, the product should be standard rated. This above paragraph would cover the following examples: • product such as cooked chickens which, following cooking, are retained in the heated area of the rotisserie counter which (additionally) may also be covered by more localised signage indicating the intention to sell whilst hot • pie and pasty type products placed in any apparently “cool down” areas, which are the subject to other in-store (e.g. poster), or website, advertising indicating a supply whilst hot • products (e.g. cooked chickens) removed from the heated area of the counter to meet any requests made by customers who have found that the “cool down” stocks had become exhausted Having emphasised the overall position, in particular the limits regarding the applicability of my response, I now turn my attention to the draft sign which were included in attachments to your (20 December) email. The comments below - made against the relevant sign references - are based on the understanding that the position applying in respect of the relevant signs is that advised by Helen Gardner in her email of 30 December. If that understanding is actually incorrect, please do inform me as soon as possible and provide any appropriate clarification. Fresh format OVF0001_1211 - It is accepted at the legend “Oven Fresh” does not actually indicate the food concerned is being supplied whilst hot. The sub-heading “Fresh Out Of The Oven” does raise a greater level of concern. However, in the absence of any other “hot” indicator(s) I would be prepared to accept that, applying a blanket standard way to treatment to products which are sold both above ambient temperature and under/adjacent to such a sign, would not be (fully) justified. … Non Fresh Format OVF0035_0713 - On a similar basis to the example at OVF0001_1211 (above), it is considered that the heading “Oven Fresh” does not indicate the product is being supplied whilst hot. The (similar) follow-up line “Fresh From The Oven” is also a course for some concern. However, in the absence of any other hot indicator(s) I would be prepared to accept that applying a blanket standard rated treatment of products which are sold both above ambient temperature and under/adjacent to such a sign would not be (fully) justified. … Conclusion On the basis of assurance has given by the group with regard to intention and in the absence of other indicators, although I do have some concerns – as to inferences that could be drawn from certain phases included within the proposed signage – in the vast majority of cases, I do accept that applying a blanket standard rated treatment to pots which are sold both above ambient temperature and under/adjacent to such a sign, would not be (fully) justified. However, I must advise that the above view does not apply in relation to the draft OV2 and OV3 signs [which used the phrase “Straight From The Oven”]. Should such signs be adopted, using the current draft format, I am of the opinion that – under Note 3B(e) - standard rated treatment would be fully justified. Clearly, any decision as to the precise format/wording of any marketing/ advertising material adopted is a matter for the group but I do hope these comments are useful in informing your deliberations.”

“Throughout the period the focus of Morrisons’ Group Tax team has been to ensure that the treatment of the product is compliant with Note (3B). Similarly, Morrisons recognises that the application of Note (3B) is potentially complex and can be impacted by a number of factors (e.g. the way in which products are marketed or held out for sale). ... With regard to reviews undertaken in the period from January 2014 to date, I joined Morrisons at the end of November 2014 and during my tenure we have reviewed the VAT liability of the product on numerous occasions, to ensure that the conditions for zero rating continued to be met. Examples include: - - Visits to various stores in the Leeds and Bradford area as part of a category wide review of Oven Fresh lines in submitting the voluntary disclosure dated 11 September 2015 for underpaid VAT on sales of hot food. We would again highlight that the voluntary disclosure did not include any errors in respect of rotisserie chickens and moreover, in the letter, Morrisons specifically advised HMRC of the zero rated treatment of the product to ensure transparency and remove any potential uncertainty - A visit to our Guiseley store in August 2017. - Visits to our Yeadon and Thornbury stores in July 2019.”

“Chickens sold from the hot counter attract VAT however if we sell the chickens from an ambient display we can sell them VAT free. The following procedure must be adhered to without deviation to sell VAT free chicken. An Oven Fresh Temperature Check and Time Displayed Log is used to record the following when product is monitored by time and must be sold within <2 hours.”

“Unload the Ovens as per standard procedure and record onto the Temperature Check and Time Displayed log.  A decision is required on how many chickens are to be sold from the counter and how many from the table or ambient display, bearing in mind the table chickens must be sold within 2 hours and cannot be transferred from the hot counter on to a table.  Place the counter chickens into the counter then pack the remaining ‘table’ VAT Free chickens into 4100125 Hot Chicken strip window bag and hot seal. Apply a GLP or scale label using the correct codes for VAT Free Extra Tasty Chicken and VAT Free Roast Chicken  It is best practice to label a batch of chickens at the same time to aid time checking. Unloading and labelling must take place without delay.”

“ The log must be referred to on a regular basis and product checked on the tables every 20 minutes to ensure that the 2 hour limit is not exceeded - a salad bar countdown timer can be used to assist.  Check on the hour, 20 past and 20 to the hour referring to the time printed on the GLP or scale label which displays the time the product requires removing from sale. …  A VAT Free Chicken may be reduced in price when it has 20 minutes of its life remaining by a suitable amount to clear through depending on the volumes.  Any reductions should be actively sold by offering these to customers as they browse.  Just before (1 minute) a product has reached the 2 hour time limit, it must be removed from sale and placed into a food waste sack labelled not for resale. Implement current waste procedures. …  We must not incur any extra markdown and waste from the VAT free display so little and often is a must with tight production controls.  VAT free chickens cannot be displayed from the hot counter top as this is deemed as keeping the product warm attracting VAT.”

“When considering how Note (5) is to be construed, the following principles are to be borne in mind: i) “The courts in conducting statutory interpretation are ‘seeking the meaning of the words which Parliament used’: Black-Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg AG [1975] AC 591, 613 per Lord Reid” and the “primary source by which meaning is ascertained” is “the words which Parliament has chosen to enact as an expression of the purpose of the legislation”: R (Project for the Registration of Children as British Citizens) v Secretary of State for the Home Department [2022] UKSC 3, [2023] AC 255 (“Project for the Registration of Children”), at paragraph 29, per Lord Hodge; ii)“Explanatory Notes, prepared under the authority of Parliament, may cast light on the meaning of particular statutory provisions”: Project for the Registration of Children, at paragraph 30, per Lord Hodge. However, “[e]xternal aids to interpretation … must play a secondary role” and they do not displace the meanings conveyed by the words of a statute that, after consideration of the context, are “clear and unambiguous and which do not produce absurdity”: Project for the Registration of Children, at paragraph 30, per Lord Hodge; iii)“[I]t is without question a legitimate method of purposive statutory construction that one should seek to avoid absurd or unlikely results”: Project Blue Ltd v Revenue and Customs Commissioners [2018] UKSC 30, [2018] 1 WLR 3169, at paragraph 31, per Lord Hodge. In R (Edison First Power Ltd) v Central Valuation Officer [2003] UKHL 20, [2003] 4 All ER 209, Lord Millett said in paragraphs 116 and 117 that the Courts “will presume that Parliament did not intend a statute to have consequences which are objectionable or undesirable; or absurd; or unworkable or impracticable; or merely inconvenient; or anomalous or illogical; or futile or pointless” but that “the strength of these presumptions depends on the degree to which a particular construction produces an unreasonable result”

“[44] …I agree with Mr Watkinson that, having regard to the principles mentioned in paragraph 34(iii) and (iv) above, a product which can be said to fall within Note (5) if read literally will nevertheless not be “confectionery” for the purposes of Item 2 if that would be absurd or it is obvious that, in the light of their purpose, the provisions were not intended to apply to the product. “Cooked sweet chilli flavoured chicken skewers” would be excluded on this basis. [46] In short, I agree with Mr Watkinson that, absent absurdity or the like, Note (5) is conclusive. If, accordingly, a product is “sweetened prepared food which is normally eaten with the fingers”, it is “confectionery” for the purposes of Item 2. The Upper Tribunal was mistaken in thinking that Note (5) is just “akin to a presumption” and that “other factors might lead to a conclusion that the product is not confectionery”

“[119] In the present case we have been referred to Hansard, which shows that the government positively intended not to interfere with the court’s exercise of the power to determine what information should be made available to the public about judicial proceedings, and that it viewed statutory inquiries in the same way as judicial proceedings. I do not consider this to be relevant or admissible for the purposes of construing s 32, which is unambiguous; but it is relevant background material when considering whether questions of disclosure of information about statutory inquiries are properly a matter for the courts, applying the common law.”

“In answering this question within its overarching inquiry into the alleged violation of Convention rights, the court can, without constitutional impropriety, have regard to Parliamentary materials which explain the background to the government’s decision and in particular its policy objectives: Wilson v First County Trust Ltd (No 2)[2003] UKHL 40, [2004] 1 AC 816, paras 61 to 66.”

“By a narrow margin I am driven to conclude that, in relation to its refusal to amend the 2006 Regulations so as to exempt the appellant cohorts from the revised cap, the government did not breach article 3.1 of the UNCRC in either of the relevant dimensions of its concept of the best interests of a child. The Parliamentary and other materials to which I have referred demonstrate that it did evaluate the likely impact of the revised cap on lone parents with young children; and that it did assess their best interests at a primary level of its overall consideration. This court must impose on itself the discipline not, from its limited perspective, to address whether the government’s evaluation of its impact was questionable; nor whether its assessment of the best interests of young children was unbalanced in favour of perceived long-term advantages for them at the expense of obvious short-term privation.”

“I take on board my hon. Friend’s perfectly reasonable point that something that is presented essentially as fresh, but cooling, is different from something that is clearly presented as hot at the point at which one purchases it”

“‘Advertised or marketed in a way that indicates that it is supplied hot’ does not include advertised or marketed as ‘freshly baked’”

““The task of the court is often said to be to ascertain the intention of Parliament expressed in the language under consideration. This is correct and may be helpful, so long as it is remembered that the ‘intention of Parliament’ is an objective concept, not subjective. The phrase is a shorthand reference to the intention which the court reasonably imputes to Parliament in respect of the language used. It is not the subjective intention of the minister or other persons who promoted the legislation. Nor is it the subjective intention of the draftsman, or of individual members or even of a majority of individual members of either House. … Thus, when courts say that such-and-such a meaning ‘cannot be what Parliament intended’, they are saying only that the words under consideration cannot reasonably be taken as used by Parliament with that meaning.”

“Such references are not a legitimate aid to statutory interpretation unless the three conditions set out by Lord Browne-Wilkinson in Pepper v Hart [1993] AC 593, 640 are met. The three conditions are (i) that the legislative provision must be ambiguous, obscure or, on a conventional interpretation, lead to absurdity; (ii) that the material must be or include one or more statements by a minister or other promoter of the Bill; and (iii) the statement must be clear and unequivocal on the point of interpretation which the court is considering. It was not argued, and I am not satisfied, that the first and third conditions are met in this case.”

“External aids to interpretation therefore must play a secondary role. Explanatory notes, prepared under the authority of Parliament, may cast light on the meaning of particular statutory provisions. Other sources, such as Law Commission reports, reports of Royal Commissions and advisory committees, and Government White Papers may disclose the background to a statute and assist the court to identify not only the mischief which it addresses but also the purpose of the legislation, thereby assisting a purposive interpretation of a particular statutory provision. The context disclosed by such materials is relevant to assist the court to ascertain the meaning of the statute, whether or not there is ambiguity and uncertainty, and indeed may reveal ambiguity or uncertainty: Bennion, Bailey and Norbury on Statutory Interpretation, 8th ed (2020), para 11.2. But none of these external aids displace the meanings conveyed by the words of a statute that, after consideration of that context, are clear and unambiguous and which do not produce absurdity.”

“My Lord, Briggs LJ, in argument invited Mrs Hall to comment on whether the distinction was to be found in the objective assessment of whether the temperature of the food, enabling consumption of it ‘hot’, was or was not the essential nature of the ‘deal’ between supplier and customer. In other words, was the deal that the supplier was selling and the customer was buying a sandwich which could be eaten ‘hot’.”

“Stephen Gilbert (St Austell and Newquay) (LD): …. On packaging, new schedule 1 uses the wording: “whether or not the packaging was primarily designed for that purpose”

“HMRC’s case is that these words implied the food was hot and customers would understand that that was what those words implied. I am unable to agree. Braising and grilling are cooking processes and I do not accept that a customer ought to or would understand the words to mean anything other than that the meat had been cooked by those processes. The words did not imply that the meat would still be hot when eaten. Similarly the word ‘fresh’ would import that the food was recently prepared from raw ingredients, which would imply recently cooked, but again would not necessarily imply the cooked food was still hot. There was in my view nothing in the use of these words that would contribute to any common understanding that the food was intended to be consumed hot.”

“(1) There is to be a tribunal, known as the First-tier Tribunal, for the purpose of exercising the functions conferred on it under or by virtue of this Act or any other Act. (2) There is to be a tribunal, known as the Upper Tribunal, for the purpose of exercising the functions conferred on it under or by virtue of this Act or any other Act.”

“We are concerned to determine what powers a value added tax tribunal has to review the exercise of the commissioners' discretion under the value added tax legislation contained in the Finance Act 1972 and the regulations and notices made and issued thereunder.”

“If it had been intended to give a supervisory jurisdiction of that nature to the tribunal one would have expected clear words to that effect in the Act. But there are no such words to be found. Section 40 (1) sets out nine specific headings under which an appeal may be brought and seems by inference to negative the existence of any general supervisory jurisdiction.”

“…The substantial complaint made by Mr Aspin in this case is founded on the wrong advice it is said was given to him by the inspector. Under this head Mr Aspin is saying that an assessment ought not to have been made. In saying that, he is not, under this head, saying that in this case there do not exist in relation to him all the facts which are prescribed by the legislation as facts which give rise to a liability to tax. What he is saying is that, because of some further facts, it would be oppressive to enforce that liability. That is a matter in respect of which, if the facts are as alleged by Mr Aspin, the remedy provided is by way of judicial review.”

“An appeal shall lie to a value added tax tribunal … against the decision of the Commissioners with respect to any of the following matters – (o) any liability to a penalty or surcharge by virtue of any of sections 13 to 17 and 19 of the Finance Act 1985; (p) the amount of any penalty or surcharge specified in an assessment under section 21 of that Act …”

“(1) … an appeal shall lie to the tribunal with respect to any of the following matters— … (c) the amount of any input tax which may be credited to a person ….”

“On the ordinary meaning of the language of that provision, it appears that it covers all the issues between Oxfam and HMRC regarding the question whether HMRC should have allowed Oxfam credit for a higher amount of input tax under the approved method formula, including both the contract issue and the legitimate expectation issue. The words, ‘with respect to’, in s 83(1) appear clearly to be wide enough to cover any legal question capable of being determinative of the issue of the amount of input tax which should be credited to a taxpayer. The tribunal’s jurisdiction is defined by reference to the subject matter specified in the section, not by reference to the particular legal regime or type of law to be applied in resolving issues arising in respect of that subject matter.”

“[66] However, the parties thought that the tribunal did not have jurisdiction to consider Oxfam’s alternative legitimate expectation argument. In my view, this is not correct. By the same construction of s 83(1)(c) and the same reasoning which led to the conclusion that Oxfam’s contract claim was within the jurisdiction of the tribunal, Oxfam’s legitimate expectation argument also fell within the jurisdiction of the tribunal. I can see no sensible basis in the language of that provision for differentiating between Oxfam’s contract claim and its legitimate expectation claim. In both cases, if Oxfam’s claim had been made out, an error of law on the part of HMRC in arriving at its decision on the amount of input tax to be credited to Oxfam would have been established (either a failure to respect Oxfam’s contractual rights or a failure to treat Oxfam fairly, in breach of Oxfam’s legitimate expectation) which would, on the face of it, be a proper basis for an appeal to the tribunal against HMRC’s decision within the terms of s 83(1)(c). [67] Usually, of course, an appeal under one of the sub-paragraphs of s 83(1) will be on the merits of [a] decision taken by HMRC, and questions of private law or public law (such as whether HMRC took into account irrelevant considerations or failed to take account of relevant considerations) will simply not be relevant to the tribunal’s task on the appeal. But in my view it does not follow from this that the tribunal will never have jurisdiction to consider issues of general private law and general public law where that is necessary for it to determine the outcome of an appeal against a decision of HMRC whose subject matter falls within one of the sub-paragraphs of s 83(1). [68] I do not think that it is a valid objection to this straightforward interpretation of s 83(1)(c) according to its natural meaning that it has the effect that sometimes the tribunal will have to apply public law concepts in order to determine cases before it. It happens regularly elsewhere in the legal system that courts or tribunals with jurisdiction defined in statute by general words have jurisdiction to decide issues of public law which may be relevant to determination of questions falling within their statutorily defined jurisdiction. No special language is required to achieve that effect. Where they are themselves independent and impartial courts or tribunals (as the tribunal is) there is no presumption that public law issues are reserved to the High Court in the exercise of its judicial review jurisdiction. So, for example, a county court may have to consider whether possession proceedings issued by a local authority have been issued in breach of its public law obligations (Wandsworth London BC v Winder [1994] 3 All ER 976, [1985] AC 461); magistrates’ courts and the Crown Court may have to decide issues of public law in so far as they arise in relation to criminal proceedings (eg to determine if a byelaw is a valid and proper foundation for a criminal charge: Boddington v British Transport Police [1998] 2 All ER 203, [1999] 2 AC 143 or to determine the validity of a formal instrument which is in some way a necessary foundation for the criminal charge: DPP v Head [1958] 1 All ER 679, [1959] AC 83); and employment tribunals may have to decide issues of public law in employment proceedings (eg to determine whether a contract of employment with a public authority is vitiated as having been made ultra vires). [69] I cannot see any good reason for adopting a different approach to the interpretation of the jurisdiction of the tribunal in s 83 of VATA. The tribunal is used to dealing with complex issues of tax law. There is no reason to think that it would not be competent to deal with issues of public law, in so far as they might be relevant to determine the outcome of any appeal. That view is reinforced by the fact that the tribunal may have to deal with complex public law arguments in relation to Convention rights when construing legislation under s 3 of the Human Rights Act 1998, and is recognised by Parliament as being competent to do so. [70] Moreover, there is a clear public benefit in construing s 83 by reference to its ordinary and natural meaning which strongly supports that construction. It is desirable for the tribunal to hear all matters relevant to determination of a question under s 83 (here, the amount of input tax to be credited to a taxpayer) because (a) it is a specialist tribunal which is particularly well positioned to make judgments about the fair treatment of taxpayers by HMRC and (b) it avoids the cost, delay and potential injustice and confusion associated with proliferation of proceedings and ensures that all issues relevant to determine the one thing the HMRC and taxpayer are interested in (in this case, the amount of input tax to be recovered) are resolved on one occasion in one place. It seems plausible to suppose that Parliament would have had these public benefits in mind when legislating in the wide terms of s 83. [71] Therefore, apart from any authority on this question, I would hold that s 83(1)(c) bears its ordinary and natural meaning, so that resolution of the issue of legitimate expectation which arose between Oxfam and HMRC fell within the tribunal’s jurisdiction.”

“… an officer of the Board authorised by the Board for the purposes of this section may make a determination imposing a penalty under any provision of the Taxes Acts and setting it at such amount as, in his opinion, is correct or appropriate.”

“That the First-tier Tribunal has no judicial review function is, in addition, the only conclusion which can be drawn from the structure of the legislation which brought both that Tribunal and this into being. The 2007 Act conferred a judicial review function on this Tribunal, a function it would not have had (since 5 it, too, is a creature of statute without any inherent jurisdiction) had the Act not done so; and it hedged the jurisdiction it did confer with some restrictions. It is perfectly plain, from perusal of the Act itself, that Parliament did not intend to, and did not, confer a judicial review jurisdiction on the First-tier Tribunal, and there is nothing in the more detailed legislation relating to tax appeals, the 10 Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (SI 2009/56), which points to a contrary conclusion.”

“We interpose by way of caution that his conclusion was not necessary for resolution of the appeal, thus what he said is obiter, and that the extent of the First-tier Tribunal’s legitimate expectation jurisdiction, if any, is the central issue in two cases to be heard by this Tribunal later in 2012.”

“53. At first glance, what Sales J said in Oxfam leads to a different conclusion, but on closer analysis we do not think it does. The judge described the basis of the claim at [46]: “Although the agreement of HMRC to the use of the approved method formula by Oxfam did not constitute a binding contract, it clearly did amount to an express assurance by HMRC that Oxfam’s recoverable input tax would be calculated by reference to that formula.” 54. From that sentence it becomes clear that the issue in that case and the issue here are quite different. There, the tribunal was required to decide the amount of input tax which Oxfam could recover, a question which, as Sales J said at [63], comes four-square within the ambit of s 83(1)(c) of VATA. Here, the question is not the amount of a penalty, or even whether one is due as a matter of law—there is no dispute that s 98A was engaged, and that it imposed a liability for five monthly penalties of £100 each—but whether HMRC should be precluded from imposing the penalties prescribed by that section, or from collecting them if imposed. That, in our judgment, is a quite separate question of administration, one which, in accordance with the authorities to which we have already referred, is capable of determination only by way of judicial review and therefore not by the First-tier Tribunal.” “Although the agreement of HMRC to the use of the approved method formula by Oxfam did not constitute a binding contract, it clearly did amount to an express assurance by HMRC that Oxfam’s recoverable input tax would be calculated by reference to that formula.”

“It is clear that the TCEA 2007 does not confer a general supervisory jurisdiction. It is also the case that s 83(1) of the VATA 1994 does not confer a general supervisory jurisdiction, as Sales J recognised (see [2010] STC 686 at [73]); and there is no other provision of the VATA 1994 (or indeed any other legislation) which confers such a jurisdiction in relation to the legitimate expectation on which Mr Noor seeks to rely.”

“It does not follow from the analysis above that the FTT can never take account of or give effect to matters of public law, and in particular legitimate expectation. There are many examples in the authorities of a court or tribunal with no judicial review function giving effect to public law rights. Examples are given by Sales J in Oxfam and we will identify them when addressing his judgment. It would, however, be open to the FTT to consider public law issues only if it was necessary to do so in the context of deciding issues clearly falling within its jurisdiction.”

“19. Secondly, the School’s interpretation of s 84(10) of the VATA would appear to imply that public law arguments could routinely be advanced in appeals to the FTT. … 20. That would be a very surprising result. … 21. Mr Ramsden did not attempt to persuade us that the UT was wrong in Noor. Were, however, his contentions as to the ambit of s 84(10) of the VATA well-founded, it would seem that the FTT had, after all, a wide jurisdiction to rule on public law issues and, in particular, legitimate expectation claims. The jurisdiction would, moreover, have been conferred through a provision introduced in response to the Corbitt decision (viz s 84(10)) (‘by the back door’, as Miss Mitrophanous would say), rather than under s 83, the main appeals section. Further, legitimate expectation (and, seemingly, other public law) arguments could be raised in the FTT without any need to satisfy the requirements as to obtaining permission and time limits that govern applications for judicial review (see CPR 54.4 and 54.5). It is highly improbable that Parliament intended this when it enacted what has now become s 84(10).”

“… subject to an important limitation which itself has limits as follows. Where a public body brings enforcement action against a person in a court or tribunal (including a court or tribunal whose only jurisdiction is statutory) the promotion of the rule of law and fairness means, in general, that person may defend themselves by challenging the validity of the enforcement decision or some antecedent decision on public law grounds, save where the scope for challenging alleged unlawful conduct has been circumscribed by the relevant statutory scheme, which excludes such a challenge. The question accordingly is whether the statutory scheme in question excludes the ability to raise a public law defence in civil (or criminal) proceedings that are dependent on the validity of an underlying administrative act.”

“In approaching the question of statutory construction the nature and purpose of the statutory regime and the nature of the rights in issue are the starting point for consideration. There is a strong presumption that Parliament will not legislate to prevent individuals affected by legal measures promulgated by public bodies from having a fair opportunity to challenge such measures and vindicate their rights in court proceedings. Further, whether the impugned administrative act is specifically directed at the respondent to enforcement proceedings, who in consequence has had clear and ample opportunity to challenge the legality of that act before being pursued in enforcement proceedings, or is of a general character directed to the public at large where there has been no obvious or reasonable opportunity to challenge the validity of the underlying administrative act, is an important consideration.”

“That is sufficient to dispose of this appeal, but we should say something about the more vexed question of whether the FTT had jurisdiction to consider the legitimate expectation argument.”

“It seems to us that a similar logic must apply here. Although technically the taxpayer is a claimant in the proceedings rather than a defendant, in substance he is defending part of an enforcement action by HMRC. The promotion of the rule of law and fairness means that the taxpayer should be entitled to defend himself by challenging the validity of the enforcement decision or some antecedent decision on public law grounds, unless that entitlement is excluded by the relevant statutory regime. That is a question of construing the relevant statutory language.”

“80. Under the formulation of the ‘best of judgment test’ endorsed in Rahman (No 2), the relevant question is ‘whether the mistake is consistent with an honest and genuine attempt to make a reasoned assessment of the VAT payable, or is of such a nature that it compels the conclusion that no officer seeking to exercise best judgment could have made it.’ It seems to us that issues are likely to arise in the operation of that test which might well be characterised as relating not only to the process of assessment but also to the decision to assess. 81. Assume for example a case in which the taxpayer’s defence is that an assessment was made dishonestly or maliciously in knowing disregard of an undertaking not to assess. HMRC’s argument would be that that defence has no place on an appeal under s 83(1)(p), because it relates to the decision to assess. It is true that it does, but that is not the same as saying that it relates only to that question. On the contrary, it seems to us it might equally well be said to be relevant to the process assessment, because it is difficult to see how an assessment made in knowing disregard of such an undertaking – whether binding in contract or under general principles of public law – could be said to be an assessment made to best judgment. … 82. In such circumstances, it seems to us there are good policy reasons for not adopting a construction of s 83(1)(p) which strictly limits the appellate jurisdiction of the FTT in the manner identified in the Gore decision at [30] (see [65] above), and which therefore excludes consideration of a legitimate expectation argument. We refer again to the comments of Sales J in Oxfam quoted at [39] above. Were one to adopt such a restrictive approach, there would be an obvious risk of duplication, delay and potential injustice given the potential for disputes to arise as to which forum any particular challenge should be brought it.”

“Coming back then to where we started our analysis, the critical question in this case (see Beadle at [44]) is whether the relevant statutory scheme expressly or by implication excludes the ability to raise a public law defence of legitimate expectation (again, see Beadle at [44]). For all the reasons given above, we do not consider that s 83(1)(p) does exclude that ability. On the contrary, on the facts of this case and given the broad subject-matter of s 83(1)(p), we see strong reasons for thinking that it would be artificial and unworkable to exclude a defence based on the public law principle of legitimate expectation from the tribunal’s appellate jurisdiction. We therefore consider that the FTT did have jurisdiction to determine that question in this case.”

“30. … [I]n paragraph 44, Simler LJ was considering the situation of persons defending themselves against “enforcement action” brought by a public body such as HMRC. In such enforcement action, whether before a court with inherent jurisdiction or a tribunal whose jurisdiction derives from statute, the taxpayer should “in general” be able to challenge the enforcement decision or some antecedent decision on public law grounds. In paragraph 45, Simler LJ considers the scope of the exception to this proposition implicit in her use of the words “in general” concluding that any such exception could consist either of express words in the relevant statutory provision or “clear and necessary implication when the relevant statutory scheme is construed as a whole and light of its context and purpose”. 31. Paragraphs 44 and 45 of Simler LJ’s judgment in Beadle cannot be read as laying down some general proposition to the effect that the FTT always has jurisdiction to consider public law challenges to HMRC decisions unless express words or “necessary implication” exclude that jurisdiction. Her conclusion was more limited and addressed at the specific situation of persons defending themselves against enforcement action brought by a public body and seeking, in the context of their defence, to make a public law challenge to either the enforcement action itself or some antecedent action.”

“We will not, however, do so. The approach that the Upper Tribunal followed in KSM Henryk Zeman, was predicated on its conclusion that the taxpayer in that case was, in substance, a defendant in enforcement proceedings taken by HMRC. That is not the case here. The Appellants are not seeking to defend themselves against an assessment or penalty that HMRC are seeking to impose. On the contrary, the Appellants are in substance in the position of claimant: seeking to obtain the issue of a Paragraph 14 certificate that HMRC do not wish to issue.”

“We think, however, that it overstates matters to say that there is a strong presumption against the FTT having power, in any statutory appeal, to consider public law arguments to the effect that HMRC have exercised discretion wrongly, with that strong presumption being rebutted only with clear words or necessary implication. Ultimately, the task in each case is to construe the right of appeal conferred by the statute or secondary legislation. Whilst the exercise of construction must acknowledge that the FTT does not have a general supervisory jurisdiction, it does not follow that the FTT does not have jurisdiction to take into account public law matters in exercising the jurisdiction which is conferred upon it by statute. Whether or not the FTT has that jurisdiction is simply a matter of statutory construction.”

“There is a discretion inherent in s.83(1)(p) VATA read together with section 73, which were the statutory provisions considered in Henryk which led it to decide public law arguments could be pursued in the FTT appeal. However, there is no discretion conveyed by subsections 83(1)(b) or (c) VATA which are the mandatory provisions concerning the appeals applicable in this case and in Noor respectively.”

“176. We have to say that we reach our conclusion in relation to this issue with some hesitation. Our own view, in line with the authorities prior to Beadle is that, for the reasons explained in those cases, it would be surprising if Parliament intended to confer on the First-tier Tribunal an ability to routinely consider arguments based on public law grounds in the context of appeals under s 83(1) VATA. 177. Indeed, it appears to us that the underlying assumption in Metropolitan International (a case dealing with s 84(10) VATA rather than s 83(1) VATA) appears to be that the First-tier Tribunal has no jurisdiction to consider arguments based on legitimate expectation in the context of s 83(1)(p) as it would otherwise have been unnecessary for the appellant to rely on s 84(10) VATA, although the Court of Appeal did not say this in clear terms. 178. However, as we have explained, we can find nothing in the statutory scheme which is relevant to this appeal which suggests that Parliament intended to exclude the jurisdiction of the Tribunal to entertain arguments based on public law grounds. We were perhaps hindered in that task by the fact that HMRC did not address the detailed analysis of the relevant legislative provisions in their submissions and it may well be that another Tribunal in the future comes to a different conclusion on this point with the benefit of fuller submissions.”

“40. It has been suggested (see Queenscourt Ltd v HMRC [2024] UKFTT 460 (TC)) that the Upper Tribunal’s decision on the question of jurisdiction was obiter and not binding. With the greatest respect to our colleagues, we differ from that view. 41. In Zeman, the Upper Tribunal first decided that the taxpayer did not in fact have a legitimate expectation, before considering the question of whether or not the First-tier Tribunal would have had jurisdiction to consider such issues. 42. The fact that the Upper Tribunal decided the question of whether or not the taxpayer had a legitimate expectation at an early stage in its reasoning meant it did not need to consider the jurisdiction question. However, despite not needing to, the UT did in fact go on to consider the jurisdiction point. 43. Therefore, the entire decision of the Upper Tribunal was (i) that the First-tier Tribunal had jurisdiction but (ii) that there was no legitimate expectation. If the Upper Tribunal had decided there was no jurisdiction then the legitimate expectation question would have itself been redundant. The jurisdiction point was therefore a constituent part of the decision made. We do not consider that the fact that the Upper Tribunal could have chosen not to determine the jurisdiction question means that it is open to this Tribunal to treat the jurisdiction question as obiter. 44. We are supported in that view by authorities such as Jacobs v LCC [1950] A.C. 361, (at p369 per Lord Symonds): “there is in my opinion no justification for regarding as obiter dictum a reason given by a judge for his decision, because he has given another reason also. If it were a proper test to ask whether the decision would have been the same apart from the proposition alleged to be obiter, then a case which ex facie decided two things would decide nothing.” 45. In any event, even if the Upper Tribunal’s analysis in the Zeman case were not binding upon us, we consider that it is a correct statement of the law. 46. As such, we conclude this Tribunal does have jurisdiction to consider the Appellant’s legitimate expectation argument.” “there is in my opinion no justification for regarding as obiter dictum a reason given by a judge for his decision, because he has given another reason also. If it were a proper test to ask whether the decision would have been the same apart from the proposition alleged to be obiter, then a case which ex facie decided two things would decide nothing.”

“84. In my judgment, therefore, Merck must persuade us that Newron was decided per incuriam. This court gave consideration to the meaning of that expression in Morelle Ltd v Wakeling [1955] 2 QB 379. The judgment of the court states at 406: “As a general rule the only cases in which decisions should be held to have been given per incuriam are those of decisions given in ignorance or forgetfulness of some inconsistent statutory provision or of some authority binding on the court concerned: so that in such cases some part of the decision or some step in the reasoning on which it is based is found, on that account, to be demonstrably wrong.” 85. They added: “In our judgment, acceptance of the Attorney-General's argument would necessarily involve the proposition that it is open to this court to disregard an earlier decision of its own or of a court of co-ordinate jurisdiction (at least in any case of significance or complexity) whenever it is made to appear that the court had not upon the earlier occasion had the benefit of the best argument that the researches and industry of counsel could provide. Such a proposition would, as it seems to us, open the way to numerous and costly attempts to re-open questions now held to be authoritatively decided.” 86. Plainly there was no authority binding the court in Newron which would have compelled a different decision. The court in Newron was faced with a choice between Neurim and Santen both of which were decisions of the CJEU. Nor, in my judgment, was there an inconsistent statutory provision. The power to depart from retained EU law is not inconsistent with deciding what EU law was. In Miliangos v George Frank (Textiles) Ltd [1975] QB 487, 503 Lord Denning MR pointed out that “a case is not decided per incuriam because counsel have not cited all the relevant authorities or referred to this or that rule of court or statutory provision”

“I have always understood that the doctrine of per incuriam only applies where another division of this court has reached a decision in the absence of knowledge of a decision binding upon it or a statute, and that in either case it has to be shown that, had the court had this material, it must have reached a contrary decision. That is per incuriam. I do not understand the doctrine to extend to a case where, if different arguments had been placed before it or if different material had been placed before it, it might have reached a different conclusion. That appears to me to be the position at which we have arrived today.” (Original emphasis)”” “As a general rule the only cases in which decisions should be held to have been given per incuriam are those of decisions given in ignorance or forgetfulness of some inconsistent statutory provision or of some authority binding on the court concerned: so that in such cases some part of the decision or some step in the reasoning on which it is based is found, on that account, to be demonstrably wrong.” “In our judgment, acceptance of the Attorney-General's argument would necessarily involve the proposition that it is open to this court to disregard an earlier decision of its own or of a court of co-ordinate jurisdiction (at least in any case of significance or complexity) whenever it is made to appear that the court had not upon the earlier occasion had the benefit of the best argument that the researches and industry of counsel could provide. Such a proposition would, as it seems to us, open the way to numerous and costly attempts to re-open questions now held to be authoritatively decided.” “I have always understood that the doctrine of per incuriam only applies where another division of this court has reached a decision in the absence of knowledge of a decision binding upon it or a statute, and that in either case it has to be shown that, had the court had this material, it must have reached a contrary decision. That is per incuriam. I do not understand the doctrine to extend to a case where, if different arguments had been placed before it or if different material had been placed before it, it might have reached a different conclusion. That appears to me to be the position at which we have arrived today.” (Original emphasis)””

“On one view, that is precisely what he did. Support for that view is found at [42] where he expressed his conclusion dismissing the appeal and at [44] where he refers to the dismissal of the appeal. Had he seen the issue of legitimate expectation as simply a further ground of appeal (which is what it would have to be in order to fall within the jurisdiction of the VAT Tribunal and within his jurisdiction as a judge of the Chancery Division on an appeal) he could not have dismissed the appeal at that stage but could have done so only after he had rejected that further ground of appeal.”

“49. The description given by Cross and Harris is helpful in drawing attention to the fact that the ratio of a case must be a proposition of law, capable of extrapolation to other cases, and not a finding of fact, and in focusing attention on the reasoning which justifies the judge’s conclusion. But the reference to “a necessary step” in reaching that conclusion - like other descriptions of the ratio as a rule or ruling which is “necessary” to the court’s decision - is ambiguous. The word “necessary” is capable of bearing a range of meanings. On one view, it might be taken to suggest that a proposition of law cannot constitute a ratio unless it can be said that, had the court not endorsed that proposition, the court would have reached a different result. Yet such a test does not work. For example, it quite often happens that a judge gives rulings on two (or more) separate points of law, either of which would by itself be sufficient to justify the judge’s conclusion. It is generally accepted that in such cases each ruling can have the status of ratio although it is manifest that the judge would still have reached the same conclusion even if that ruling were reversed. … 50 Even where a judge gives only one reason for a decision, there is generally no warrant for supposing that the ruling contained in the judgment was treated by the judge as a necessary step in reaching his or her conclusion in the sense that the judge would have reached a different conclusion if he or she had not thought it appropriate to express the ruling as broadly, or as narrowly, as it was in fact expressed. As Professor Neil Duxbury has observed in his insightful book The Nature and Authority of Precedent (2008), p 78: “No doubt judges will sometimes expressly or impliedly treat particular rulings as necessary to particular conclusions; but it is just as likely that they will sometimes treat particular rulings as their preferred means by which to reach particular conclusions. Necessity tests, however formulated, provide only inadequate conceptions of the ratio decidendi.” 51 It therefore seems to me that, when the ratio decidendi is described as a ruling or reason which is treated as “necessary” for the decision, this cannot mean logically or causally necessary. Rather, such statements must, I think, be understood more broadly as indicating that the ratio is (or is regarded by the judge as being) part of the best or preferred justification for the conclusion reached: it is necessary in the sense that the justification for that conclusion would be, if not altogether lacking, then at any rate weaker if a different rule were adopted.” “No doubt judges will sometimes expressly or impliedly treat particular rulings as necessary to particular conclusions; but it is just as likely that they will sometimes treat particular rulings as their preferred means by which to reach particular conclusions. Necessity tests, however formulated, provide only inadequate conceptions of the ratio decidendi.”

“Notwithstanding the conclusion we have expressed on the jurisdiction issue, in light of our conclusion on the legitimate expectation issue, we dismiss the appeal.”

“Therefore, contrary to the position at the time of the Corbitt decision, it is no longer possible to conclude that the value added tax tribunal may never exercise supervisory jurisdiction in an appeal against the decision of the commissioners.”

“In [57], the FTT gave no reasons for disagreeing with decision of the FTT in Brandbros, a case in which Mr Cannon had appeared for the taxpayer and deployed the same argument based on scintilla temporis, but where the panel reached the opposite conclusion to the FTT in this case. Of course, the decision of one FTT is strictly not binding on another FTT as a matter of precedent, but the principle of judicial comity, or horizontal stare decisis, requires that a FTT should follow the decision of a previous tribunal of co-ordinate jurisdiction unless ‘convinced’ or ‘satisfied’ (there is no practical difference between the two) that the earlier decision was wrong (see Gilchrist v HMRC [2014] UKUT 169 (TCC) at [91] to [94]). There are good reasons for this practice: it promotes consistency in judicial decisions and predictability of outcomes thereby avoiding re-litigation of identical legal issues, and it builds public confidence in the appeals process by ensuring that similar cases are treated similarly over time. If a later FTT considers that a previous decision of the FTT on materially identical facts and/or law was wrong, then it should set out why. It need not do so at great length but simply stating, as the FTT did in this case, that other decisions not on the same point are preferred leaves the reader in the dark. We consider that, where a FTT decides not to follow the decision of another FTT on the same or a materially similar point, it should explain why it has taken a contrary view.”

“There is no statute or common law rule by which one court is bound to abide by the decision of another court of co-ordinate jurisdiction. Where, however, a judge of first instance after consideration has come to a definite decision on a matter arising out of a complicated and difficult enactment, the opinion has been expressed that a second judge of first instance of co-ordinate jurisdiction should follow that decision; and the modern practice is that a judge of first instance will as a matter of judicial comity usually follow the decision of another judge of first instance unless he is convinced that that judgment was wrong. Where there are conflicting decisions of courts of co-ordinate jurisdiction, the later decision is to be preferred if reached after full consideration of earlier decisions.”

“[I]t should only be in rare cases that we should reconsider questions of construction of statutes or other documents. In very many cases it cannot be said positively that one construction is right and the other wrong. Construction so often depends on weighing one consideration against another. Much may depend on one's approach. If more attention is paid to meticulous examination of the language used in the statute the result may be different from that reached by paying more attention to the apparent object of the statute so as to adopt that meaning of the words under consideration which best accord with it.”

“(1) A legitimate expectation arises in circumstances where: (a) the claimant has an expectation of being treated in a particular way favourable to the claimant by the defendant public authority; (b) the authority has caused the claimant to have that expectation by words or conduct; (c) the claimant's expectation is legitimate; and (d) it would be an unjust exercise of power for the authority to frustrate the claimant's expectation. See R (on the application of GSTS Pathology LLP) and others v. HMRC [2013] STC 2017 (“GSTS”) at [72]-[73]. (2) Whether HMRC have created an expectation is to be objectively assessed and does not depend upon their intention: see R v. Barking and Dagenham LBC ex parte Lloyd [2001] LGR 86 at [31]-[35] and R (oao Vacation Rentals (UK) Limited) v. HMRC [2019] STC 251 at [60]-[62]. (3) For a legitimate expectation to arise in relation to an HMRC non-statutory clearance: (a) the communication from HMRC should be clear, unambiguous and devoid of relevant qualification: see R v. IRC ex parte MFK Underwriting Agents Limited [1990] 1 WLR 1545 at p.1569G. (b) the taxpayer must show that he has put all his cards face up on the table by giving full details of the specific transaction on which a ruling is sought. The taxpayer is to treat HMRC with complete frankness and make full disclosure of all the material facts known to him. The situation calls for utmost faith on the part of the taxpayer: see MFK at p.1569E, p.1575B. (c) full disclosure will not have been made where statements made in the clearance request are materially inaccurate or misleading. It does not follow that full disclosure has been made because sufficient information was disclosed to enable inference to be drawn therefrom. Where a piece of information essential to the deliberations required of HMRC by the taxpayer was not furnished to them there is no unfairness in revoking a clearance: see R v. IRC (ex parte Matrix Securities Limited) [1994] 1 WLR 334 at p.342B, p.352B, p.354B & H and p.356A & G. (d) the requirement for full disclosure will be especially difficult to satisfy if there has been a purely oral exchange with a tax official. Full disclosure requires the taxpayer to disclose the perceived problem which the taxpayer wishes to have addressed: see Corkteck Ltd v HMRC [2009] STC 1681, at [30]-[31]. (4) Where a clear and unambiguous undertaking has been made in a Clearance Letter it must be shown that it would nonetheless be fair to allow HMRC to depart from it: see In the matter of an application by Geraldine Finucane for Judicial Review for Judicial Review (Northern Ireland) [2019] 3 All ER 191 at [62]. (5) In a tax context it is for the taxpayer to demonstrate a high degree of unfairness in order to override the public interest in HMRC collecting taxes in accordance with the law: see R (oao Aozora GMAC Investment Ltd) v. HMRC [2020] 1 All ER 803 at [52]. (6) Where the taxpayer has a legitimate expectation as to a particular tax treatment, they also have a legitimate expectation that it will not be withdrawn retrospectively and that any withdrawal will be managed fairly. Reasonable notice of any withdrawal should be given so as to allow the taxpayer time to make any necessary adjustments to its affairs: see R (on the application of Cameron v Ors) v HMRC [2012] STC 1691 at [71] and GSTS at [96]-[101]. (7) Where the taxpayer has a legitimate expectation from a Clearance Letter it is unfair for HMRC to depart from it retrospectively in circumstances where the Claimant has relied upon it in carrying on its business and has no mechanism for recovering the VAT now retrospectively demanded: see GSTS at [99] and in contrast to R (oao Dixons Retail plc) v. HMRC [2018] EWHC 2556 (Admin) at [67]. (8) It is unreasonable and/or an abuse of power for HMRC to depart from a long-standing treatment of a taxpayer that HMRC has either agreed or implicitly accepted: see R v. IRC ex parte Unilever [1996] STC 681 at p.690-692.” (a) the claimant has an expectation of being treated in a particular way favourable to the claimant by the defendant public authority; (b) the authority has caused the claimant to have that expectation by words or conduct; (c) the claimant's expectation is legitimate; and (d) it would be an unjust exercise of power for the authority to frustrate the claimant's expectation. See R (on the application of GSTS Pathology LLP) and others v. HMRC [2013] STC 2017 (“GSTS”) at [72]-[73]. (2) Whether HMRC have created an expectation is to be objectively assessed and does not depend upon their intention: see R v. Barking and Dagenham LBC ex parte Lloyd [2001] LGR 86 at [31]-[35] and R (oao Vacation Rentals (UK) Limited) v. HMRC [2019] STC 251 at [60]-[62]. (3) For a legitimate expectation to arise in relation to an HMRC non-statutory clearance: (a) the communication from HMRC should be clear, unambiguous and devoid of relevant qualification: see R v. IRC ex parte MFK Underwriting Agents Limited [1990] 1 WLR 1545 at p.1569G. (b) the taxpayer must show that he has put all his cards face up on the table by giving full details of the specific transaction on which a ruling is sought. The taxpayer is to treat HMRC with complete frankness and make full disclosure of all the material facts known to him. The situation calls for utmost faith on the part of the taxpayer: see MFK at p.1569E, p.1575B. (c) full disclosure will not have been made where statements made in the clearance request are materially inaccurate or misleading. It does not follow that full disclosure has been made because sufficient information was disclosed to enable inference to be drawn therefrom. Where a piece of information essential to the deliberations required of HMRC by the taxpayer was not furnished to them there is no unfairness in revoking a clearance: see R v. IRC (ex parte Matrix Securities Limited) [1994] 1 WLR 334 at p.342B, p.352B, p.354B & H and p.356A & G. (d) the requirement for full disclosure will be especially difficult to satisfy if there has been a purely oral exchange with a tax official. Full disclosure requires the taxpayer to disclose the perceived problem which the taxpayer wishes to have addressed: see Corkteck Ltd v HMRC [2009] STC 1681, at [30]-[31]. (4) Where a clear and unambiguous undertaking has been made in a Clearance Letter it must be shown that it would nonetheless be fair to allow HMRC to depart from it: see In the matter of an application by Geraldine Finucane for Judicial Review for Judicial Review (Northern Ireland) [2019] 3 All ER 191 at [62]. (5) In a tax context it is for the taxpayer to demonstrate a high degree of unfairness in order to override the public interest in HMRC collecting taxes in accordance with the law: see R (oao Aozora GMAC Investment Ltd) v. HMRC [2020] 1 All ER 803 at [52]. (6) Where the taxpayer has a legitimate expectation as to a particular tax treatment, they also have a legitimate expectation that it will not be withdrawn retrospectively and that any withdrawal will be managed fairly. Reasonable notice of any withdrawal should be given so as to allow the taxpayer time to make any necessary adjustments to its affairs: see R (on the application of Cameron v Ors) v HMRC [2012] STC 1691 at [71] and GSTS at [96]-[101]. (7) Where the taxpayer has a legitimate expectation from a Clearance Letter it is unfair for HMRC to depart from it retrospectively in circumstances where the Claimant has relied upon it in carrying on its business and has no mechanism for recovering the VAT now retrospectively demanded: see GSTS at [99] and in contrast to R (oao Dixons Retail plc) v. HMRC [2018] EWHC 2556 (Admin) at [67]. (8) It is unreasonable and/or an abuse of power for HMRC to depart from a long-standing treatment of a taxpayer that HMRC has either agreed or implicitly accepted: see R v. IRC ex parte Unilever [1996] STC 681 at p.690-692.”

“No doubt a statement formally published by the Revenue to the world might safely be regarded as binding, subject to its terms, in any case falling clearly within them. But where the approach to the Revenue is of a less formal nature a more detailed inquiry is, in my view, necessary. If it is to be successfully said that as a result of such an approach the Revenue has agreed to forego, or has represented that it will forego, tax which might arguably be payable on a proper construction of the relevant legislation it would, in my judgment, be ordinarily necessary for the taxpayer to show that certain conditions had been fulfilled. I say 'ordinarily' to allow for the exceptional case where different rules might be appropriate, but the necessity in my view exists here. First, it is necessary that the taxpayer should have put all his cards face upwards on the table. This means that he must give full details of the specific transaction on which he seeks the Revenue's ruling, unless it is the same as an earlier transaction on which a ruling has already been given. It means that he must indicate to the Revenue the ruling sought. It is one thing to ask an official of the Revenue whether he shares the taxpayer's view of a legislative provision, quite another to ask whether the Revenue will forego any claim to tax on any other basis. It means that the taxpayer must make plain that a fully considered ruling is sought. It means, I think, that the taxpayer should indicate the use he intends to make of any ruling given. This is not because the Revenue would wish to favour one class of taxpayers at the expense of another but because knowledge that a ruling is to be publicised in a large and important market could affect the person by whom and the level at which a problem is considered and, indeed, whether it is appropriate to give a ruling at all. Secondly, it is necessary that the ruling or statement relied on should be clear, unambiguous and devoid of relevant qualification.”

“Therefore, in order to determine whether the inaccuracy in the NSC Request was ‘material’, the Court must consider on the ordinary standard of balance of probabilities, had the NSC Request not been inaccurate, whether there is a real possibility that consideration of the matter as corrected would have made a difference to the decision.”

“Any agreement that a particular sign does not meet the criteria covered by Note 3B e) does not mean that all products within that area would be considered to qualify for zero rating. It simply means that products sold above ambient temperature in that area will not inevitably be considered to be standard rated,. …Clearly, there are a number of other circumstances which need to be considered as part of establishing the VAT liability of each individual product line … , So, even if it is accepted that general signage does not indicate a supply whilst hot, if any food lines are provided above the ambient temperature … and they fall to be treated under any one, or more, of the other criteria within note 3B, the products should be standard rated.”