Judgment summary
This is a decision of the Upper Tribunal (Tax and Chancery Chamber) on an application by John Smith for permission to appeal against a First-tier Tribunal decision released on 6 May 2026 (TC/2015/06427). The FTT had dismissed most of the Applicant's appeals against discovery assessments, VAT assessments and penalties, having found that he remained the beneficial owner of income from an accountancy business after a purported sale in March 2003, and that his behaviour was deliberate, dishonest and fraudulent (paras 1, 476, 568-570).
The Applicant sought permission to appeal on 21 grounds and made numerous supplementary submissions and applications to adduce new evidence after lodging the Application. Judge Zaman admitted one set of new evidence (the Loan Documents) but refused to admit bank statements for account 6645 (paras 9-48).
Having considered every ground, including the cumulative grounds of procedural unfairness and bias, the Tribunal held that none disclosed an arguable error of law and that all grounds would be bound to fail. Permission was refused on all grounds and each was certified as totally without merit under Rule 22(4A) of the Tribunal Procedure (Upper Tribunal) Rules 2008, meaning the Applicant could not request reconsideration at a hearing (paras 11-12, 428-429).
Background
The FTT Decision followed a hearing of evidence in December 2025 and a further hearing for closing submissions in March 2026. The FTT found that the Applicant, a chartered accountant, had purportedly sold his business in March 2003 but continued in operational and strategic control of it, remaining beneficially entitled to its income (FTT[476]).
HMRC had opened enquiries in 2008, and issued discovery and VAT assessments on 17 April 2015 covering tax years 1994/95 to 2013/14, based on information gathered by Officer Harris, including bank statements, invoices and third-party information notices. The FTT concluded the assessments were validly made to best judgment, that the Applicant's conduct was deliberate and dishonest, and dismissed most of his appeals, though it allowed his appeal against penalties for failure to comply with notices to file (paras 1, 653-654).
The Applicant applied to the FTT for permission to appeal on 20 grounds on 17 June 2026, with supplementary submissions on 13 July 2026. The FTT refused permission on all grounds in a decision released on 23 July 2026 (the FTT PTA Decision) (para 1). The Applicant then applied to the Upper Tribunal on 22 August 2026, and sent numerous further submissions, witness statements, and applications to adduce new evidence up to 24 September 2026 (paras 2-5, 22).
Core dispute
The dispute was whether any of the 21 grounds of appeal raised an arguable error of law in the FTT Decision, such that permission to appeal should be granted.
The grounds covered wide-ranging challenges, including: the adequacy of the FTT's reasoning on beneficial ownership and operational control of the business after March 2003; the validity of the discovery and VAT assessments, including the 'discovery' made by Officer Harris and time limits; the treatment of the sale agreement and contemporaneous correspondence; refusal to admit late evidence (the Barclays letter and bank statements); procedural fairness in the conduct of hearings, including the late provision of the hearing bundle, the Applicant's ill health, and restrictions on closing submissions; the FTT's approach to witness credibility, including a 'corroboration requirement' applied to the Applicant's evidence as against the treatment of Officer Harris's and a process server's evidence; findings of deliberate behaviour, dishonesty and fraud; quantum calculations including an arithmetical error; and allegations of actual or apparent bias on the part of the FTT judge.
A preliminary issue also arose as to whether new evidence (the Loan Documents and bank statements for account 6645) should be admitted for the purpose of considering the application.
Court findings
The Tribunal applied the Ladd v Marshall criteria, tempered by the overriding objective, and decided to admit the Loan Documents (relevant to credibility) but refused to admit the account 6645 bank statements, finding they could have been obtained with reasonable diligence earlier and that admitting them at such a late stage would be unfair to HMRC (paras 27-48).
On the substantive grounds, the Tribunal held that appellate tribunals should not interfere with findings of fact, their evaluation, or case management decisions unless the FTT applied wrong principles or reached a conclusion no reasonable tribunal could reach (paras 52-57). Applying this approach, the Tribunal found that the FTT had adequately explained its findings on beneficial ownership (Ground 1), had not erred in its treatment of the discovery assessments or Officer Harris's evidence (Ground 2), had properly considered the sale agreement (Ground 3), and that there was no inconsistency in its treatment of bank account evidence (Ground 4).
The Tribunal rejected challenges concerning the conduct of hearings, the hearing bundle, the Applicant's ill health, the burden of proof, the use of a flat expense allowance, the treatment of dishonesty and deliberate conduct, credibility findings including the 'corroboration requirement', quantum (including an acknowledged but immaterial arithmetical typo), the treatment of expert evidence, and all allegations of actual or apparent bias (Grounds 5 to 21). In each case the Tribunal concluded that no arguable error of law was disclosed.
Outcome
Permission to appeal was refused on all 21 grounds. The Tribunal further found that every ground would be bound to fail and certified each ground as totally without merit under Rule 22(4A) of the Tribunal Procedure (Upper Tribunal) Rules 2008. As a result, the Applicant could not request that the decision be reconsidered at a hearing (paras 11-12, 428-429).
Major issues / areas of contention
- Whether the FTT adequately reasoned its finding that the Applicant remained beneficial owner of business income after a purported March 2003 sale
- Whether discovery assessments made by Officer Harris were valid, including the subjective and objective tests for discovery and the effect of an earlier officer (Officer Dyce) having the same information
- Whether the VAT assessments were made within the one-year time limit
- Whether the FTT erred in refusing to admit late evidence, including a Barclays letter on the opening date of a bank account and bank statements for account 6645
- Whether late provision of a 3,540-page hearing bundle and the Applicant's ill health caused procedural unfairness
- Whether the conduct and timing of the March 2026 submissions hearing, including an early start time and restricted reply time, was procedurally unfair
- Whether the FTT applied an unfair 'corroboration requirement' to the Applicant's evidence while treating HMRC's untested witness evidence more favourably
- Whether the FTT properly distinguished and reasoned its findings of deliberate behaviour, dishonesty and fraud
- Whether an arithmetical error in the FTT's quantum table was material
- Whether the FTT mischaracterised expert evidence from Dr Young
- Whether cumulative procedural defects amounted to unfairness even if no single defect was determinative
- Whether the FTT judge displayed actual or apparent bias