Judgment summary
The Tribunal considered HMRC's application to strike out Mr Salami's appeal against an assessment that withdrew £3,000 of Enterprise Investment Scheme (EIS) relief he had claimed on a £10,000 investment (paras 1, 5, 8).
HMRC applied to strike out the appeal under rule 8(2)(a) FTT Rules, on the basis that the Tribunal lacked jurisdiction to determine the appeal on the grounds advanced, and in the alternative under rule 8(3)(c), on the basis that the case had no reasonable prospect of success (para 1).
Judge Brooks found that the Assessment was validly made under s 235 ITA following a notice to the Company under s 234(3)(b) ITA, and that Mr Salami's five grounds of appeal all concerned the fairness and procedural conduct of HMRC rather than the statutory facts giving rise to liability (paras 13-14, 22).
Following the Upper Tribunal's reasoning in HMRC v HOK Ltd [2012] UKUT 363 (TC), the Tribunal held it had no judicial review jurisdiction and could not consider complaints about HMRC's fairness or conduct, which remained matters for judicial review in the High Court (paras 17-19, 22).
The Tribunal therefore held it was bound by rule 8(2)(a) FTT Rules to strike out the appeal, and found it unnecessary to consider HMRC's alternative ground under rule 8(3)(c) (paras 23-24).
Background
On 1 November 2020, Mr Salami invested £10,000 in Films 4 U EIS1 Limited (the "Company") and claimed £3,000 EIS income tax relief for 2020-21 (para 5).
From 2021, communications with the Company ceased despite his efforts, and he was unable to monitor whether it maintained its EIS qualifying status. He only became aware of any problem when he received the Assessment, by which time his £10,000 investment had been lost (para 5).
On 14 January 2025, HMRC issued a notice to the Company under s 234(3)(b) Income Tax Act 2007, stating that the shares issued by the Company were no longer eligible shares for EIS purposes (the "Notice") (para 6). The Company did not appeal the Notice, and it became final (para 7).
On 15 January 2025, the day after the Notice was issued, HMRC issued Mr Salami with an assessment under s 235 ITA withdrawing the £3,000 EIS relief he had claimed (the "Assessment") (para 8). The Assessment explained that the Company had failed to meet EIS requirements for the whole of the relevant period (para 9). The Assessment was upheld on review on 14 July 2025 (para 10).
On 12 August 2025, Mr Salami appealed to the Tribunal on five grounds, concerning inadequate consideration of proportionality and discretion, procedural unfairness and breach of natural justice, prejudice from HMRC's failure to monitor the Company and the timing of the Assessment, disproportionate response to the Company's misconduct, and legitimate expectation arising from HMRC's advance assurance process and Government promotion of EIS schemes (para 11).
Core dispute
HMRC applied to strike out the appeal on two grounds: first, under rule 8(2)(a) FTT Rules, that the Tribunal did not have jurisdiction to determine the appeal on the grounds advanced; and second, under rule 8(3)(c) FTT Rules, that the case had no reasonable prospect of succeeding (para 1).
Mr Salami opposed the application, arguing that s 31 TMA gave the Tribunal jurisdiction to hear an appeal against an assessment, which included the Assessment made against him (para 21).
The central question was whether the Tribunal had jurisdiction to consider grounds of appeal that concerned the fairness and procedural conduct of HMRC, rather than the statutory facts giving rise to the tax liability, in an appeal against the withdrawal of EIS relief under s 235 ITA (paras 12, 21).
Court findings
The Tribunal found that the Assessment was made under s 235 ITA, which required HMRC to withdraw EIS relief by assessment where relief had been obtained but subsequently found not to be due under Chapter 6 ITA, including under s 234(1) and s 234(3)(b) ITA, the conditions of which were accepted to have been satisfied (paras 13-14).
The right of appeal against the Assessment arose under s 31(1)(d) TMA, with the Tribunal's jurisdiction in such appeals governed by s 50(8) TMA (paras 15-16).
Applying the Upper Tribunal's decision in HMRC v HOK Ltd [2012] UKUT 363 (TC), the Tribunal held that it has only the jurisdiction conferred on it by statute and has no judicial review jurisdiction to supervise HMRC's conduct or apply common law fairness principles to override a statute (paras 17-19).
The Tribunal accepted that while it could consider an appeal against an assessment generally, the specific grounds advanced by Mr Salami all concerned the conduct of HMRC and the procedural fairness of the Assessment, and therefore did not fall within its jurisdiction (paras 21-22).
The Tribunal expressed sympathy for Mr Salami's situation, noting he had lost his £10,000 investment and faced a further £3,000 tax assessment, but found it had no choice but to strike out the appeal under rule 8(2)(a) FTT Rules (paras 22-23).
Outcome
The appeal was struck out under rule 8(2)(a) FTT Rules on the basis that the Tribunal did not have jurisdiction in relation to the grounds of appeal advanced (paras 23-24).
The Tribunal found it unnecessary to consider HMRC's alternative ground for striking out the appeal under rule 8(3)(c) FTT Rules, namely that there were no reasonable prospects of success (para 24).
The parties were notified of a right to apply for permission to appeal under Rule 39 of the FTT Rules within 56 days of the decision being sent (para 25).
Major issues / areas of contention
- Whether the First-tier Tribunal has jurisdiction to consider grounds of appeal concerning the conduct of HMRC and the procedural fairness of an assessment.
- Whether HMRC's decision to issue an assessment under s 235 ITA the day after issuing a notice under s 234(3)(b) ITA, without allowing time for a possible appeal by the Company, was within the Tribunal's remit to review.
- Whether the Tribunal could consider arguments of proportionality, discretion, legitimate expectation, and procedural unfairness in relation to HMRC's withdrawal of EIS relief.
- Whether rule 8(2)(a) FTT Rules required the Tribunal to strike out the appeal where it lacked jurisdiction over the grounds advanced.
- Whether HMRC's alternative ground under rule 8(3)(c) FTT Rules, that the appeal had no reasonable prospect of success, needed to be considered.