TPY Limited v The Commissioners for HMRC [2026] UKFTT 843 (TC)

[2026] UKFTT 00843 (TC)Case No TC 09910
FIRST-TIER TRIBUNAL
TAX CHAMBER
Hearing Heard on: 3 June 2026Date Judgment date: 05 June 2026
Application determined on papers
Appeal reference: TC/2024/03948
VAT – appeal against assessments and refusal of input VAT credit – application for a preliminary hearing – application dismissed
Before
TRIBUNAL JUDGE MATTHEW DONMALL
Between
TPY LimitedAppellantTHE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMSRespondentDECISION

Introduction

[1]This is the Appellant’s application for a preliminary hearing on the issue of “the validity of the 3 HMRC letters dated 28 March 2022” (the Application).[2]For the reasons set out below, the Application is dismissed.

Background

[3]The Appellant was registered for VAT with effect from 2 November 2017.[4]The VAT returns at issue were those made by the Appellant for periods 03/18 to 12/20.[5]On 19 March 2021, HMRC sent a six-page letter which explained that with limited exceptions for 06/20 and 09/20, HMRC did not consider that the output supplies in the periods 03/18 to 12/20 met the conditions for zero-rated exports, and so output VAT was due in the total sum of £1,518,038.33. It was accompanied by an attached two-page letter headed “Notice of VAT assessments” setting out total VAT due as £1,518,029 when rounded down.[6]On 28 March 2022, HMRC sent three letters (the March 2022 letters):(1) A two-page letter entitled “About your notice of assessment of VAT”. This stated that a copy of the notice of assessment of VAT was enclosed, as well as a letter that explains why it was made.(2) A two-page letter entitled “Notice of VAT assessments” (the March 2022 Notice). This stated:
“I have made assessments of VAT due under section 73 of the VAT Act 1994”
. This letter is our notice of the assessments and replaces the notice of assessment dated 19 March 2021”. It detailed assessments for periods 03/18 to 06/20. These assessments were made for each period on the basis of either an assessment of output tax under-declared, or of input tax over-claimed, with the larger figure being taken for each period. Under “What happens next” the letter stated:
“These Preferred and Alternative assessment is to protect the revenue due to the 4-year capping rule. This amount will not be chased by Debt management department until we have come to a final conclusion.”
The Appellant’s case in the Application is that this letter was not, in fact, a valid notice of VAT assessment, and that is the issue upon which a preliminary hearing is sought. (3) A four-page letter which was the explanation letter. This stated, under “Preferred Assessment” that HMRC considered that the Appellant had no entitlement to recover the input tax as declared from 03/18 to 12/20, it also maintained under “Alternative assessment” that the output supplies were not zero-rated. The letter also stated: Please note this is not an appealable decision. We have not finalised which type of assessment may be imposed. These Preferred and Alternative assessment is to protect the revenue due to the 4-year capping rule. This amount will not be chased by Debt management department until we have come to a final conclusion. We may request for further information to verify the supply. We will contact you separately about the information we need.[7]On 22 September 2023, HMRC sent a further letter entitled “Notification of Errors VAT periods 03/18 to 12/20”. It stated that “This notification is my intention to now confirm a VAT assessment in response to those errors found in the above VAT period(s) as per the preferred assessment”, making reference to one of the March 2022 letters. The HMRC officer stated that “I have not been able to check all of your business records due to the volume of records held” and invited the Appellant to provide copies of valid VAT invoices by 16 October 2023.[8]On 1 December 2023, HMRC sent a letter entitled “Amendment of VAT assessment” (the December 2023 Amendment): On 28 March 2023 [sic] we sent you an assessment of the VAT we thought you should pay. The total was £1,302,072.00. We’ve reduced our assessment to £1,126,443.00 plus interest and penalty where appropriate. This is because as explained in my letter dated 22 September 2023 that the errors found between VAT periods 12/17 and 12/20 relates to the preferred assessment (copy enclosed) which relates to input tax disallowed.[9]The letter went on to explain that the Appellant could accept an offer of a review of the decision, or appeal to the Tribunal.[10]On 26 February 2024, HMRC issued two further letters, both entitled “Change to amount claimed on VAT return and notice of penalty assessment” (in the substance of the letters, both said that HMRC would be writing separately about a penalty) (the February 2024 Decisions):(1) One related to period 09/20. HMRC refused all but £39,218.33 of the £411,274.69 input tax claimed by the Appellant, a reduction of £372,056.57.(2) One related to 12/20, HMRC disallowing all but £5,000 of £99.225.30 of the input tax claimed by the Appellant, a reduction of £94,225.30.[11]On 27 February 2024, HMRC reduced the assessment in respect of 03/20 by £720.[12]On 23 March 2024, Mr Feng accepted HMRC’s offer of a review of the December 2023 Amendment and the February 2024 Decisions.[13]On 19 June 2024, HMRC issued a 19-page review conclusion letter as regards the December 2023 Amendment for 03/18 to 06/20 (as amended in respect of 03/20) and the February 2024 Decisions for 09/20 and 12/20, upholding those decisions.[14]On 23 June 2024, the Appellant issued this appeal. The Appellant’s notice of appeal dated 23 June 2024 has the following features:(1) The Appellant’s address was given as 60 Frith Road, Croydon, CR0 1TA (Frith Road);(2) The Appellant’s representative was stated to be Michael Feng of Feng and Co. Mr Feng has remained the Appellant’s representative since.(3) The dispute concerned VAT. Under “What is your dispute about” was inserted £1,126,443.00 as regards “the amount HMRC claim I owe” and “£466,281.66” as the amount “I want HMRC to repay”. Therefore the Notice of Appeal challenges both the demand for payment of VAT in the sum of £1,126,443 for periods 03/18 to 06/20, and the refusal of the input VAT claim for 09/20 and 12/20 of aggregate value £466,281.(4) The Notice confirmed that the Appellant had reviewed the original decision and that it had a review conclusion letter, and that the appeal was brought in time.(5) There was a two-page document entitled grounds of appeal, which referred to “notification of errors VAT periods 03/18 to 12/20” and asserted the Appellant’s case that it does have VAT invoices and sufficient evidence to demonstrate the right to input tax.[15]After a hardship application was determined in the Appellant’s favour, on 8 January 2025 the Tribunal allocated the appeal as a standard case. There was then a stay for ADR.[16]On 4 July 2025, HMRC indicated that the ADR was unsuccessful.[17]On 29 July 2025, the Appellant made an application to amend the grounds of appeal to include contentions that 1) the March 2022 Notice was invalid because it did not offer review of appeal to the tribunal and because it did not appear to HMRC at the time that the returns were incorrect, in reliance on Go City Ltd v HMRC [2024] UKFTT 00745 (TC), and 2) the December 2023 Amendment was out of time in respect of periods 03/18 to 09/19.[18]On 10 October 2025, HMRC served their statement of case. This sought to address the contentions made in the proposed amended grounds of appeal.[19]On 28 October 2025, the Appellant applied to add further grounds of appeal by way of a three-page document, in substance developing a further submission as to why the March 2022 Notice was not an appealable decision and invalid.[20]On 29 October 2025, Mr Feng sent a further email to the Tribunal “Please find enclosed the Appellant’s application for a hearing”, which attached a three-page document that was largely identical to that served as the application to add extra grounds of appeal the previous day, albeit it was entitled “Appellant’s application to a preliminary issue and a case management hearing”.[21]On 12 November 2025, the Tribunal issued a letter made by reference to the correspondence with the parties since 4 July 2025 up to 29 October 2025. The Tribunal directed that the applications to amend the grounds of appeal would be consented to unless there was objection from HMRC. As regards the 29 October 2025 email, the Tribunal clerk stated that the email indicates that they are requesting a preliminary hearing however the attachment appears to be grounds of appeal:
“If I have misunderstood, please inform the Tribunal accordingly.”
The Tribunal also made case management directions for the determination of the appeal which included list of documents, witness statements and listing for a window between May and September 2026 (the November 2025 Directions).[22]As regards the progress of the appeal since the November Directions:(1) On 22 January 2026, HMRC applied for an extension of 14 days for the list of documents to 6 February 2026 to which the Appellant agreed.(2) On 4 February 2026, HMRC applied for a further stay of proceedings for 120 days to allow for a further ADR process.(3) That application has not to date been decided upon by the Tribunal. However, it has been overtaken by events, in that on 14 May 2026, HMRC wrote to the Tribunal to state that the Appellant’s application for ADR was rejected on 21 April 2026.[23]As regards the question of an application for a preliminary hearing:(1) Since 12 November 2025 through to 12 March 2026 there was extensive correspondence from Mr Feng to HMRC, into which the Tribunal was copied, in which Mr Feng (among other things) repeated points of disagreement with HMRC’s statement of case, on the validity of the March 2022 Notice in particular, and in which Mr Feng repeated his view that there must be a preliminary hearing. It is unnecessary for present purposes to itemise these.(2) On 15 March 2026, Mr Feng wrote to the Tribunal directly requesting “a preliminary hearing on the validity of the 3 HMRC letters dated 28 March 2022”, and attaching a 15-page document, copies of the three March 2022 letters, and a letter from Aston Pearl Real Estate stating that MS Peiyen Tuan was residing at Frith Road until 20 October 2020.(3) On 21 April 2026, the Tribunal asked HMRC to provide representations on the Application.(4) On 5 May 2026, HMRC provided its response to the Application (HMRC’s Response).(5) Additionally, there have been further emails from Mr Feng, including on 16 March, 15 April, 27 April, 6 May, 7 May (twice), and 10 May (twice). These largely repeat the Appellant’s representations on the underlying issue of whether the March 2022 Notice was invalid, but the last email included a serious allegation that the HMRC officer “deliberately and deceitful misled the appellant” in the March 2022 letters.

The Relevant Legal Principles

[24]The Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (the Rules) provide at rule 5 for case management powers, and in particular the Tribunal may by direction “deal with an issue as a preliminary issue”. Rule 2(3) requires the Tribunal to seek to give effect to the overriding objective when it exercises any power under the Rules, that overriding objective being articulated in rule 2(1) and (2) as follows:(1) The overriding objective of these Rules is to enable the Tribunal to deal with cases fairly and justly.(2) Dealing with a case fairly and justly includes— (a) dealing with the case in ways which are proportionate to the importance of the case, the complexity of the issues, the anticipated costs and the resources of the parties; (b) avoiding unnecessary formality and seeking flexibility in the proceedings; (c) ensuring, so far as practicable, that the parties are able to participate fully in the proceedings; (d) using any special expertise of the Tribunal effectively; and (e) avoiding delay, so far as compatible with proper consideration of the issues.[25]The leading case on the principled exercise of the power to hold a hearing on a preliminary issue is the Upper Tribunal decision in Wrottesley v HMRC [2015] UKUT 637 (TCC). Having considered various case law authorities, the UT set out at [28] the following “key principles” to be applied when deciding whether or not to direct a preliminary hearing:
“(1) The matter should be approached on the basis that the power to deal with matters separately at a preliminary hearing should be exercised with caution and used sparingly. (2) The power should only be exercised where there is a ‘succinct, knockout point’ which will dispose of the case or an aspect of the case. In this context an aspect of the case would normally mean a separate issue rather than a point which is a step in the analysis in arriving at a conclusion on a single issue. In addition, if there is a risk that determination of the preliminary issue may prove to be irrelevant then the point is unlikely to be a ‘knockout’ one. (3) An aspect of the requirement that the point must be a succinct one is that it must be capable of being decided after a relatively short hearing (as compared to the rest of the case) and without significant delay. This is unlikely if (a) the issue cannot be entirely divorced from the evidence and submissions relevant to the rest of the case, or (b) if a substantial body of evidence will require to be considered. This point explains why preliminary questions will usually be points of law. The tribunal should be particularly cautious on matters of mixed fact and law. (4) Regard should be had to whether there is any risk that determination of the preliminary issue could hinder the tribunal in arriving at a just result at a subsequent hearing of the remainder of the case. This is clearly more likely if the issues overlap in some way - (3)(a) above. (5) Account should be taken of any potential for overall delay, making allowance for the possibility of a separate appeal on the preliminary issue. (6) The possibility that determination of the preliminary issue may result in there being no need for a further hearing should be considered. (7) Consideration should be given to whether determination of the preliminary issue would significantly cut down the cost and time required for pre-trial preparation or for the trial itself, or whether it could in fact increase costs overall. (8) The tribunal should at all times have in mind the overall objective of the tribunal rules, namely to enable the tribunal to deal with cases fairly and justly.”
[26]In Jelly Vine Productions Ltd v HMRC [2024] UKFTT 562 (TC) (“Jelly Vine”), Judge Brown KC considered an application to direct a preliminary hearing following HMRC’s issuance of determinations for three years. She held at [56] that, in addition to the factors set out in Wrottesley the strength of the possible argument is a factor which could be taken into account, because if the prospects were good and likely to deliver the knockout point, that would weight in favour of the discretion being exercised in favour of a preliminary issues hearing. In other words, the merits of the applicant’s case on the proposed preliminary issue canbe brought into account, but this factor arises in circumstances where the issue is a “knockout point”, i.e. the second principle in Wrottesley still has to be made out.[27]These principles were recently applied by Judge Redston in the case of BGC Services Holdings LLP v HMRC [2026] UKFTT 00558 (TC), and I consider the Application in light of them below.

Submissions of the parties

[28]The submissions of the Appellant in the grounds for the Application of 15 March 2026 are brief, and can be set out in full: The test is exclusively an objective one: how would the document or documents said to record an assessment be understood by the reasonable reader? The Appellant contends that as a reasonable reader, reading together the three letters of 28 March 2022 she did not understand them as notifying to her when she moved out of 60 Frith Road in October 2022, and no determination by Officer Hirani of the amount of VAT assessed as being due and moreover, as being due now. The Appellant also contends that on an objective analysis, they did not record an assessment of the VAT due The Appellant submits that it must follows that the 28 March 2022 purported notice of vat assessments is not a notice of vat assessments.

(l) (P)(i) VATA 1994 an assessment

[29]In short, these submissions address the substance of the proposed preliminary issue, but not the reasons why there should be a hearing of that issue as a preliminary matter. The same is true as regards the reliance of the Appellant on the cases of Aria Technology Ltd v HMRC [2020] EWCA Civ 182 and Courts PLC v HMRC [2004] EWCA Civ 1527, as these cases are cited in support of the Appellant’s contentions on as to why the March 2022 Notice was not a valid assessment.[30]As regards reasons why the Application for a preliminary hearing should succeed, following HMRC’s Response, Mr Feng on 6 May 2026 wrote: Further to yesterday response. I hope the tribunal will direct a preliminary hearing asap because 1. The respondents relied upon Wrottesley not to agree to a preliminary hearing. The circumstances of that case to TPY ltd are different. That case is a direct tax matter. TPY ltd is an indirect tax matter. 2. In aria technology HMRC issued 2 letters that constituted a vat assessment. The requested preliminary hearing is to decide on 3 letters March 2022. No more than a morning hearing or an afternoon hearing. If the preliminary hearing is in the appellant’s favour there is no March 2022 for the amendment of December 2023. As such it disposes the vat assessment. The appeal comes to an end 3. No witnesses are required because the tribunal judges the respondents and the appellant representative would reading objectively the 3 HMRC letters at the hearing to determine whether they constitute a vat assessment applying aria technology court of appeal 4. The respondents have been unfair to the appellant 5. The respondents have not worked the vat assessment within HMRC charter[31]The main points that the Appellant is making in support of the Application seem therefore to be that a determination on the preliminary hearing would be dispositive of the VAT assessments and the appeal would come to an end; it would be a half-day hearing that would not require witnesses. As regards point 1, Wrottesley does set out the relevant principles to the Application; as for points 4 and 5, these are substantive complaints, rather than going to why a preliminary hearing should be ordered.[32]For their part, HMRC make the following points:(1) The starting position should be caution, given that the dangers of what might at first sight seem to be a shortcut ultimately resulting in delay and increased costs.(2) Even if the March 2022 Notice was invalid, that would not dispose of assessments in respect of 12/19 to 06/20 which would be in time by virtue of the decision of 1 December 2023.(3) The March 2022 Notice issue does not address the February 2024 decisions denying input tax credit in respect of 09/20 and 12/20.(4) Witness evidence would be required on whether the March 2022 Notice was notified to the Appellant.(5) There would be delay and cost incurred by having a preliminary hearing so the parties would have to prepare for and attend two hearings.(6) Various points are made on the substantive merits of HMRC’s case on the validity of the March 2022 Notice, including that other correspondence was also sent to Frith Road.

Discussion

[33]For the following reasons, I refuse the Application.[34]The main reason for refusing is that I do not accept the Appellant’s contention that if it was determined that the three March 2022 letters were invalid, that would dispose of the appeal. But there would remain two significant disputes still under appeal. First, the assessments for 12/19 to 06/20. That is because even were there to have been no valid March 2022 assessment, the 1 December 2023 decision would become in substance a primary assessment under s.73(1) VATA 1994, and assessments for periods 12/19 to 06/20 would remain in time – as the Appellant impliedly conceded in the amended grounds of July 2025. Second, that part of the appeal which is against February 2024 Decisions refusing input tax credit to some £466,281 would also remain for determination. This being the case, there would still need to be a substantive hearing, and the preliminary hearing would delay that substantive hearing, and likely lead to additional costs than would be the case if there was just a single hearing. I make these points in view of the Wrottesley principles 2, 5, 6 and 7 and in the light of overall caution as advised in principle 1.[35]Additionally, I am in any case not convinced that the preliminary hearing would be a short one as per Wrottesley principle 3. The proposed preliminary issue is the validity of the three March 2022 letters. While Mr Feng contended that no witnesses are required, HMRC do not agree and say that they would want to bring witness evidence. There is also Mr Feng’s contention of 10 May 2026 that the HMRC officer deliberately and deceitfully misled the Appellant. If that allegation is to be pursued, it needs to be properly made by way of an amendment to the grounds of appeal, and in that event HMRC would again be entitled to seek to call witness evidence in response. Given this, the proposed preliminary issue would appear to involve questions of mixed fact and law, and in Wrottesley the Upper Tribunal emphasised that the Tribunal should be particularly cautious about directing a preliminary hearing on such matters.[36]Standing back, therefore, in my judgment the overriding objective will be best advanced by the progression of this appeal to a single final hearing as soon as possible.[37]For the avoidance of doubt, as I do not consider that the proposed preliminary issue would be a knockout point for the appeal as a whole, I do not address the merits of the Appellant’s contentions as to the validity of the March 2022 letters.

Conclusions

[38]For these reasons, I dismiss the Application.[39]I make two further points. First, this appeal now needs to progress to a final substantive hearing without further delay. Given the procedural history since the Tribunal issued the November 2025 Directions, it is necessary to give new directions for the completion of the relevant steps. An updated set of directions accompanies this decision. Second, the Tribunal has not been assisted by the volume of correspondence sent by Mr Feng as noted at paragraph 23 above. The parties, and their representatives, are under a duty to help the Tribunal. Sending numerous emails which (for example) re-state the arguments made in an application is generally not helpful or productive. It takes up the time and resources of the Tribunal and is liable to cause delay. It also risks diluting the coherence of the points that are being made.

Right to apply for permission to appeal

[40]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: 05 June 2026