Judgment summary
Dr John Reynolds appealed against High Income Child Benefit Charge (HICBC) discovery assessments and related penalties for the tax years 2012-13 to 2019-20 (8). After HMRC cancelled the penalties and some assessments, Dr Reynolds withdrew his appeal on 12 September 2024, leaving only the assessments for 2018-19 and 2019-20 in issue (11, 12).
He later applied to reinstate the appeal on 28 November 2024 but did not copy HMRC on that application, and a Tribunal letter of 11 February 2025 informing HMRC of the application was never received by HMRC (15, 19, 20). Judge A allowed the reinstatement application on 8 May 2025 without HMRC's input (21). A second Judge (Judge B) later set aside Judge A's decision after HMRC objected, and directed that the application be decided at a hearing (25).
Tribunal Judge Anne Redston heard the matter to decide two questions: whether she (following Judge B) had jurisdiction to redecide the application, and if so, whether the application to reinstate should be allowed (1-4).
Background
HMRC had issued discovery assessments to Dr Reynolds for HICBC for 2012-13 to 2019-20, together with penalties, relying on the retrospective power in Finance Act 2022, s 97 (8, 9). Dr Reynolds appealed to HMRC on 5 April 2023 and then notified his appeal to the Tribunal, arguing HMRC could not use discovery assessments to collect HICBC (9, 10).
On 12 September 2024, following an HMRC review that cancelled the penalties (totalling £1,308) and the assessments for 2012-13 to 2017-18 (totalling £4,388) on reasonable excuse and time-bar grounds, Dr Reynolds withdrew his appeal, leaving only the 2018-19 and 2019-20 assessments outstanding (11, 12).
The Tribunal acknowledged the withdrawal on 8 November 2024 and told Dr Reynolds he had 28 days to apply for reinstatement (13). He applied on 28 November 2024 but did not copy HMRC, and a subsequent Tribunal letter to HMRC dated 11 February 2025 was never received by HMRC's Clearing House (15-19). As a result, HMRC were unaware of the reinstatement application when Judge A allowed it on 8 May 2025 (20, 21).
Core dispute
Dr Reynolds argued that the Tribunal (in the person of the Judge hearing his renewed application) had no jurisdiction to decide the reinstatement application because it had already been decided by Judge A, and that Judge B had no legal grounds to set aside that decision (3, 27). He submitted that, if the Tribunal did have jurisdiction, TMA s 54 did not apply and the application should be allowed (3, 27).
HMRC, through Ms Halfpenny, agreed with Judge B's setting aside of Judge A's decision and submitted that the reinstatement application should in any event be refused because the conditions in TMA s 54(4) were not met, and that TMA s 54 took priority over Rule 17 read with Rule 5 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (2).
Court findings
The Tribunal found that Judge B was correct to identify a procedural error of law in Judge A's decision, since HMRC had received neither the reinstatement application nor the Tribunal's letter of 11 February 2025 and so had no opportunity to make representations (37, 42). Applying Part 4 of the Tribunal Rules, the Tribunal held that HMRC's Notice was in substance an application for permission to appeal, engaging Rule 40(1) and, because an error of law was identified, Rule 41(1), so that Judge B had power under TCEA s 9(4)(c) to review and set aside Judge A's decision (51). The requirement in TCEA s 9(5)(a) to redecide the matter was treated as satisfied by the Tribunal's redetermination of the application in this decision (52). The Tribunal further found that nothing in Part 4 restricts these powers to the judge who made the original decision, so a different judge may exercise them (40).
On the substantive question, the Tribunal accepted Ms Halfpenny's submission, relying on TMA s 54(4), OWD v HMRC [2018] UKFTT 06675 (TC) and Tuncel v HMRC [2014] UKFTT 171 (TC), that once 30 days have elapsed since a taxpayer's withdrawal notification without HMRC objecting in writing, the parties are deemed to have reached an agreement settling the appeal with the same consequences as a Tribunal determination (63-66). Dr Reynolds had not given notice within 30 days that he wished to repudiate the withdrawal, so TMA s 54(4) applied (66). Because Rule 17(1) and Rule 5 are both expressly subject to any enactment relating to withdrawal of proceedings or setting a time limit, the Tribunal held it had no jurisdiction under those Rules to reinstate the appeal or extend time once TMA s 54(4) applied (67, 68).
Outcome
The Tribunal held that Judge B had jurisdiction to set aside Judge A's decision (or direction) and to direct a hearing of the reinstatement application, and that the Tribunal therefore had jurisdiction to redecide that application (58). On redeciding it, the Tribunal found it had no jurisdiction to reinstate Dr Reynolds' appeal because TMA s 54(4) applied, and refused the application for reinstatement (68, 69).
Major issues / areas of contention
- Whether a different Tribunal Judge (Judge B) had jurisdiction to set aside an earlier Judge's (Judge A's) decision allowing reinstatement of a withdrawn appeal.
- Whether the procedural failure to give HMRC notice of the reinstatement application amounted to an error of law justifying setting aside the decision under Rule 38, Rule 40 and Rule 41 read with TCEA s 9.
- Whether TMA s 54, and in particular s 54(4), takes priority over Rule 17 and Rule 5 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 in relation to withdrawal and reinstatement of appeals.
- Whether the conditions in TMA s 54(4) were met, given that Dr Reynolds had not notified HMRC within 30 days of his withdrawal that he wished to repudiate it.
- Whether the Tribunal had power under Rule 5(3)(a) to extend time for the reinstatement application in light of the time limit and enactment restrictions in Rule 17(1) and Rule 5(1) and (3)(a).