In the case of HMRC v Healthspan [2026] UKUT 194 (TCC), in a procedural matter, the UT has judged that the FTT erred in its decision as to whether expert evidence was admissible when deciding the VAT treatment of food supplements.
PROCEDURE – whether test of whether evidence “reasonably required to resolve proceedings” by analogy with CPR 35 correct starting point for deciding whether permission to adduce expert evidence should be given under Rule 15 FTT Rules – yes – FTT Decision set aside and remade so as to confine scope of expert evidence
The substantive case required consideration of the meaning of ““food of a kind used for human consumption”. HMRC argued for a test based on the view that an ordinary person would take and Healthspan arguing for a definition based on a nutritional purpose or the nutritional content of the products. The FTT was not required to determine which test was correct but only whether expert evidence should be permitted in principle. The FTT concluded that it should be permitted. HMRC appealed on two grounds, which the UT summarised as:
“Ground 1 is that the FTT erred in principle as to the test to be applied for the admission of expert evidence.
Ground 2 is that the FTT erred in law by failing to address HMRC’s case and give adequate reasons for the Decision.”
Considering the matter, the UT concluded in respect of the the first ground that:
“In our judgment the FTT did not apply the approach we have described. Its reasoning focused on whether it was in the interests of justice and fairness to allow the application, whether the Tribunal would derive assistance if Healthspan’s interpretation were correct, and whether there was ‘no material detriment’ to HMRC because HMRC could challenge admissibility later and could, if it wished, seek its own expert evidence. That reasoning did not address the overall question whether expert evidence was reasonably required to resolve the appeal, viewed in the context of the proceedings as a whole. … The error was material. The grant of permission for expert evidence is a discretionary case management decision, but it is a decision which can have significant consequences for cost, scope and the conduct of the substantive appeal. Had the FTT applied the correct approach, which included the discipline of asking whether the proposed evidence was reasonably required and proportionate by reference to the pleaded issues, and had it taken proper account of the prejudice to HMRC in terms of cost and burden, it at least could have reached a different outcome.”
With regards to the second ground. the UT concluded that:
“we accept that the FTT’s reasons were inadequate in certain respects that mattered. This is not a complaint that the FTT failed to rehearse every submission; it recorded the parties’ submissions in careful detail. The difficulty is that the reasons at [16] did not address the core points in contention. That said, Ground 2 adds little to the result, because the misdirection identified under Ground 1 is sufficient to set aside the FTT Decision.”
Remaking the decision, the UT concluded that:
“For the reasons above, we remake the decision by granting Healthspan permission to adduce expert evidence only in relation to the nutritional profile of the products, in the limited sense described above. Permission is refused in relation to ‘the scientific understanding of food’ and ‘the extent to which the claim products fit with the modern diet’.
The appeal is allowed. The FTT Decision is set aside. We remake it by granting permission only on the topic of the nutritional profile limb as we have defined it above, and refusing permission on the other limbs.”
https://caselaw.nationalarchives.gov.uk/ukut/tcc/2026/194
Related content from Claritax Books
In Tax Appeals – Law and Practice at the FTT, tax barrister Keith Gordon analyses some 500 precedents to show how the FTT rules are applied in practice, and how taxpayers may use the tribunal system for appealing against tax decisions.
