Media & Communications Limited v The Commissioners for HMRC [2025] UKFTT 418 (TC)

[2025] UKFTT 00418 (TC)Case Numbers: TC09484
FIRST-TIER TRIBUNAL
TAX CHAMBER
Date Judgment date: 7 April 2025
Determined on the papers
Appeal reference: TC/2017/06096
TC/2018/00429
TC/2018/03812
Procedure – Strike out application by Respondents– Non-payment of APNs – Late Payment Penalties (LPPs) issued – Settlement between parties – LPPs not included in settlement – Whether a legitimate expectation that LPPs were included in settlement was a reasonable excuse – Whether such public law argument within Tribunal’s jurisdiction – Application allowed
Before
TRIBUNAL JUDGE BROOKS
Between
Media & Communications LimitedAppellantTHE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMSRespondentThe application was determined on 7 April 2025 without a hearing on the basis of the written submissions of the Appellants and RespondentsDECISION

Introduction

[1]This is my decision on the application of the Respondents (“HMRC”), which is opposed by the Appellant, Media and Communications Limited (“MCL”), for these proceedings to be struck out under Rule 8(2) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, on the grounds that the Tribunal does not have jurisdiction in relation to the Appellant’s appeal (the “Application”)

Background

[2]On 10 June 2016, MCL, which had participated in the DOTAS registered Contractor Solutions Scheme, was issued with accelerated payment notices (“APNs”) for 2011-12 and 2012-13 by HMRC. Payment of the APNs was due by 13 September 2016.[3]MCL made representations, pursuant to s 222 of the Finance Act 2014, to challenge the APNs. On 18 December 2018, after consideration of MCL’s representations, the APNs were upheld by HMRC.[4]However, MCL did not pay the APNs and as a result HMRC issued it with a late payment penalty (“LPP”) on 4 April 2017. In the absence of payment of the APNs by MCL, a second LPP was issued on 14 September 2017 and a third LPP on 28 February 2018.[5]MCL appealed to the Tribunal against all three LPPs. These appeals were stayed behind the judicial review (“JR”) proceedings in the High Court in R (on the application of Communigator Ltd & others) v HMRC. Although those JR proceedings were discontinued on 22 December 2021, the parties had, on 6 October 2020, reached a settlement (which did not include the LPPs under appeal) on the basis of an offer that MCL had made on 4 August 2019 and which was accepted by HMRC.[6]On 9 June 2022, as the JR proceedings had been discontinued, HMRC applied to the Tribunal for directions.[7]On 15 June 2022, MCL’s representative wrote to HMRC stating that as the settlement concerned all outstanding taxes, it was believed that MCL’s position was settled. However, HMRC responded on 21 July 2022, acknowledging that although there had been a settlement agreement, that settlement did not include the LPPs under appeal.[8]On 28 October 2022 the Tribunal directed that the appeal was to be stayed behind the proceedings in the joined appeals of Exclusive Promotions Ltd and Mark Fox. The Upper Tribunal (the “UT”) released its decision in Exclusive Promotions Ltd on 9 November 2023. There was no further appeal against the UT’s decision which is therefore final and binding on this Tribunal, the First-tier Tribunal (the “FTT”).[9]On 2 September 2024, following the expiry of the stay, the FTT issued directions. Under direction 2, MCL was to notify the FTT and HMRC, by no later than 30 September 2024 whether the proceedings were to be continued or withdrawn. Any failure to do so would result in the proceedings being automatically struck out (under direction 4). Direction 3 required, MCL, if it intended to proceed, to provide amended grounds of appeal by 14 October 2024.[10]MCL notified its intention to continue with its appeal on 27 September 2024 and, following further directions, provided amended grounds of appeal on 2 January 2025. In essence, MCL contends that it had a legitimate expectation that the LPPs would have been cancelled as a result of the “full and final” settlement it entered into with HMRC on 6 October 2020.

The Application

[11]On 21 January 2025, HMRC made the Application. This was on the grounds that the FTT must strike out these proceedings as it does not have a judicial review jurisdiction to consider public law arguments such as the claim that MCL has a legitimate expectation.[12]MCL, relying on Stenhouse v HMRC [2023] UKFTT 635 (TC) (“Stenhouse”), contends that the FTT does have the jurisdiction to consider whether it had a legitimate expectation that the full and final settlement applied to the LPP.

Discussion and Conclusion

[13]Rule 8(2) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 provides that the FTT “must” strike out the whole or a part of the proceedings if it does not have the jurisdiction to consider them. Therefore, if HMRC are right and the FTT does not have the jurisdiction to consider public law arguments, there is no alternative other than to strike out MCL’s appeal.[14]In HMRC v Hok Ltd [2012] UKUT 363 (TCC), the UT said, at [56]:
“Once it is accepted, as for the reasons we have given it must be, that the First-tier Tribunal has only that jurisdiction which has been conferred on it by statute, and can go no further, it does not matter whether the Tribunal purports to exercise a judicial review function or instead claims to be applying common law principles; neither course is within its jurisdiction. As we explain at paras 36 and 43 above, the Act gave a restricted judicial review function to the Upper Tribunal, but limited the First-tier Tribunal’s jurisdiction to those functions conferred on it by statute. It is impossible to read the legislation in a way which extends its jurisdiction to include—whatever one chooses to call it—a power to override a statute or supervise HMRC’s conduct.”
[15]In Noor v HMRC [2013] UKUT 071 (TCC), a case where the FTT had held that it had jurisdiction to consider legitimate expectation, the UT concluded that the FTT did not have such jurisdiction in relation to a claim for a VAT input tax credit.[16]In Stenhouse, Mr Stenhouse relied on the UT decision in Birkett v HMRC [2017] UKUT 89 (TCC) to argue that HMRC had created a legitimate expectation that they would deal his tax affairs in a particular way and then acted in contravention of that legitimate expectation. However, Judge Sinfield, the President of the Tax Chamber of the FTT said, at [46] that, “ Mr Stenhouse has misunderstood Birkett.” He continued:
“The UT is not saying that the FTT has an independent jurisdiction to consider judicial review claims or public law points. The UT is stating only that the FTT may consider public law points, including legitimate expectations, where the section granting the right of appeal, properly construed, permits. Further, in Birkett, the UT held that the FTT had no jurisdiction to consider a legitimate expectation argument in an appeal brought pursuant to paragraph 47(a) and (b) of Schedule 36 to the Finance Act 2008 which, as in this case, provide a right of appeal against a decision of HMRC that a penalty is payable and against a decision as to the amount of the penalty.”
[17]Stenhouse, like MCL’s case, concerned the penalty provisions contained in schedule 56 to the Finance Act 2009 (which apply to LPPs by virtue of s 226(7) of the Finance Act 2014). Although the appeal in Stenhouse was struck out because the penalties were cancelled or reduced to nil, leaving no appealable decision or statutory jurisdiction for the FTT to construe,

Judge Sinfield observed, at [47], that:

“… Even if that were wrong, I consider that the decision in Birkett, which is binding on me, in relation to materially identical provisions shows conclusively that the FTT does not have jurisdiction to consider public law points such as Mr Stenhouse’s arguments based on legitimate expectations.”
[18]Applying those authorities to the present case, it is clear that the statutory provisions granting the right of appeal against LPPs that are applicable, namely paragraphs 13 – 15 of schedule 56 to the Finance Act 2009, properly construed, do not permit the FTT to consider public law arguments, such as legitimate expectation.[19]In the absence of such jurisdiction, I am bound to apply Rule 8(2) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, and accordingly have no choice other than to strike out these proceedings.[20]Therefore for the reasons above this appeal is STRUCK OUT.

Right to apply for permission to appeal

[21]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: 07th APRIL 2025