Judgment summary
This is a procedural decision of the First-tier Tribunal (Tax Chamber) dealing with an HMRC application dated 12 March 2026 that four appeals be case managed and heard together under Rule 5(3)(b) of the Tribunal Procedure (First-Tier Tribunal) (Tax Chamber) Rules 2009 (paras 1, 11).
The four appeals were TC/2023/00261 (the pension appeal, brought by Mr Mukarram Sattar), TC/2023/16435 (the income tax appeal, also brought by Mr Sattar), TC/2023/16471 (brought by The Komoto Group Ltd) and TC/2023/16472 (brought by Merino Ltd), the latter two being called the company appeals, which the tribunal had already directed be heard together (paras 2, 3).
Judge Nigel Popplewell rejected the application in respect of the pension appeal, directing that it be case managed and heard separately, but allowed the application in respect of the income tax appeal, directing that it be case managed and heard together with the company appeals (paras 5, 45).
Background
HMRC applied on 12 March 2026 for the four appeals to be case managed and heard together, citing commonality of appellants and witnesses, overlap of evidence, and potential cost and time savings (para 3).
The appellants opposed the application, arguing there was no commonality of appellants or overlapping factual or legal issues, that the pension appeal issues were wholly distinct, and that separate shorter hearings could be listed sooner than one lengthy combined hearing (para 4).
The pension appeal concerned whether a withdrawal of £455,000 from Mr Sattar's SIPP was an unauthorised payment and whether his application to discharge the unauthorised payment surcharge was out of time (para 14(2)).
The income tax appeal concerned extraction of money from the companies which HMRC alleged was taxable on Mr Sattar, and interest derived from his independent investments (para 14(5)).
The company appeals concerned the deductibility of payments made by the companies and whether they were incurred wholly and exclusively in the course of the companies' respective businesses, involving items such as legal fees, purchase of UK property, SDLT, repairs and maintenance, subcontractors, service charges, surveyors fees, and building improvements, and allegations by HMRC of false invoicing (paras 14(6)-(8), 22).
Core dispute
The dispute was whether the tribunal should exercise its case management power under Rule 5(3)(b) to consolidate or hear together the pension appeal, the income tax appeal and the company appeals, applying the factors identified in First Class Communications Ltd v HMRC [2014] UKUT 244 and Manhattan Systems Limited v HMRC [2017] UKFTT 862 (TC), including commonality of appellants, commonality of witnesses, degree of overlap of evidence, risk of prejudice, cost, complexity, length of hearing and listing delay (paras 11-12).
HMRC argued there was commonality of appellants and witnesses across all four appeals, overlap of issues concerning Mr Sattar's behaviour and the extraction of funds from the companies, and that a single hearing would reduce administrative burden, save time and cost, and avoid inconsistent findings on allegations of improper HMRC behaviour and deliberate behaviour (para 13).
The appellants argued the pension appeal was wholly distinct, that findings of deliberate behaviour in the other appeals risked improperly influencing the tribunal's assessment of deliberate behaviour in the pension appeal, that the company appeals would require consideration of UK GAAP and Financial Reporting Standards irrelevant to the individual appeals, and that separate shorter hearings could be listed more quickly with no proven cost saving from joinder (paras 14(3)-(12)).
Court findings
The Tribunal found that the pension appeal was an outlier, a position Mr Carey for HMRC accepted (paras 17, 19). The only common feature was the involvement of Mr Sattar and the fact that Officer Gore had signed the view of the matter letter dated 19 August 2022 relevant to both the pension issue and the income tax assessment (para 18).
The Tribunal considered there was a real danger that, if the pension appeal were joined with the others, the trial judge might be subconsciously influenced by evidence of deliberate behaviour or allegations of false invoicing in the income tax appeal or company appeals when assessing deliberate behaviour in the pension appeal, and that this potential prejudice outweighed the practical considerations favouring joinder (paras 22-23).
By contrast, the Tribunal found significant commonality and overlap between the income tax appeal and the company appeals. Officer Feighan, the discovering officer in the income tax appeal, had also issued the original corporation tax assessments to the companies, later replaced by discovery assessments issued by Officer Gore, who had also investigated Mr Sattar's personal affairs (para 29).
There was commonality of issues concerning the extraction of money or money's worth from the companies as employment income or repayment of loans, Mr Sattar's status as director or shadow director of the companies, and deliberate behaviour attributed to the companies through Mr Sattar acting on their behalf (paras 33-36). The Tribunal found a risk of inconsistent findings of fact if the income tax appeal and company appeals were heard separately, and no substantial saving in cost or complexity from separating them, given the interlinked nature of the extraction issues and the appellants' position that the extractions were repayments of loans (paras 32, 40-41).
Outcome
The Tribunal rejected HMRC's application in respect of the pension appeal, directing that it be case managed and heard separately from the other appeals (paras 27, 45).
The Tribunal allowed HMRC's application in respect of the income tax appeal, directing that it be case managed and heard together with the company appeals, so that the income tax appeal and the two company appeals would proceed as one combined hearing (paras 44-45).
The Tribunal further directed that the parties seek to agree appropriate directions for the further conduct of the appeals within 28 days of release of the decision, failing which either party could apply to the tribunal for directions (para 46). The parties were informed of the right to apply for permission to appeal under Rule 39 within 56 days of the decision being sent (para 47).
Major issues / areas of contention
- Whether the pension appeal (concerning a £455,000 SIPP withdrawal and an unauthorised payment surcharge) should be case managed and heard together with the income tax appeal and company appeals.
- Whether the income tax appeal (concerning extraction of funds from the companies and independent investment interest) should be case managed and heard together with the company appeals.
- Application of the Rule 5(3)(b) case management power and the factors in First Class Communications Ltd v HMRC and Manhattan Systems Limited v HMRC.
- Risk of prejudice to the appellant from cross-contamination of findings on deliberate behaviour and allegations of false invoicing across appeals heard together.
- Commonality of witnesses and officers, including Officer Feighan and Officer Gore, across the appeals.
- Whether Mr Sattar was a director or shadow director of the companies, relevant to both the income tax appeal and the company appeals.
- Risk of inconsistent findings of fact if related appeals were heard by differently constituted tribunals.
- Balancing cost, complexity, hearing length and listing delay considerations against the risk of prejudice in deciding whether to join appeals.