The Upper Tribunal has dismissed an appeal that the First-tier Tribunal made material errors when refusing to reinstate an appeal against a number of discovery assessments. The case had been automatically struck out as a result of the appellant failing to comply with a direction requiring her to file a duly signed witness statement by a specified date (“the unless order”) (Lingajothy t/a Flying Dragon v HMRC  UKUT 63 (TCC)).
The appellant had argued that a variation application including an unsigned witness statement had been filed before the unless order deadline. The FTT had not taken this into consideration, resulting in three errors:
- It had failed to determine the variation application – if this had been considered then the unless order would not have been breached and the appeal struck out, there would thus be no need to apply for reinstatement.
- It had failed to consider the variation application when applying the first test under the Martland principle – this considers whether a delay is serious or significant.
- It had failed to seek submissions from the parties on the variation application (which was on the tribunal’s file but not referred to in either party’s submissions).
However, the UT judged that:
- Although the FTT’s chronology showed the strike out and the variation application occurring on the same day, the fact that they had listed the application as following the strike out showed that they had made a finding of fact that the application had been filed after the 5.00pm deadline and as such was ineffective. “It was not therefore an error of law for the FTT to consider the reinstatement application without first determining the variation application; the Unless Order had taken effect and the appeal had been struck out. The only avenue available to the appellant to continue her appeal was to make an application for reinstatement.”
- In judging whether the delay was serious or significant the FTT wrongly focused on the breach of the unless order (to the exclusion of the underlying breach). Taking the provision of the unsigned statement supplied with the variation application into account would be consistent with the need to analyse the underlying breach, namely the failure to comply with the tribunal’s directions, standard in this type of case, to serve witness statements on the other party before the hearing is listed. That, in the UT’s judgment, represented an error of law. However, it judged that the decision of the FTT should not be set aside as the error was clearly not material, there was other overwhelming evidence to prove that the delay was clearly serious or significant.
- The relevant principle in the third ground was that “If the judge sees material on the tribunal file, which the judge considers relevant, in the sense that the FTT proposes to take account of it when making its decision, and it is clear one or more of the parties has not seen it … then of course the FTT ought to invite submissions from the parties on it.” However, in these circumstances “Applying the above to the facts, it should be noted that the challenge raised under the preceding grounds is that the FTT did not in fact consider the variation application relevant. On that basis it is difficult to see how any separate error arises over and above that alleged in the preceding grounds (which we have dismissed) in the FTT not seeking submissions. We do not consider the fact that the FTT mentioned the application in its decision as significant. The FTT clearly did not rely on it in its reasoning.”
The appellant’s appeal was therefore dismissed.
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Discovery Assessments, by tax barrister Keith Gordon, is a detailed, clearly written guide to the law and practice in this area. Based on the author’s personal involvement in many leading cases, the book contains much practical advice explaining when and how such assessments may be challenged.