Judgment summary
This is a decision of the Upper Tribunal (Tax and Chancery Chamber), given by Judge Thomas Scott, following an oral hearing to reconsider an earlier refusal of permission to appeal on the papers.
The underlying dispute concerned a landfill tax assessment and wrongdoing penalty issued to Scott Brothers Limited. The company withdrew its appeal partway through the FTT hearing and later applied to reinstate it. The FTT refused reinstatement, and the FTT and then the Upper Tribunal refused permission to appeal that refusal. This decision records the outcome of the oral renewal of that permission application.
Background
By an assessment dated 6 May 2022, HMRC assessed the appellant to landfill tax of £425,092, together with a wrongdoing penalty of £148,782.20 (6). The appellant appealed against these assessments on 12 August 2022 (6).
The appeal was listed for a four-day hearing between 2 and 5 December 2024 before Judge Popplewell and Mr Farooq (6). On the first day (the Monday), the appellant's expert witness, Mr Luke Prazsky (LP), gave the majority of the evidence (6). On the second morning (the Tuesday), following negotiations, the company orally withdrew its appeal at around lunchtime, confirmed in writing by the tribunal the following day; the tribunal's letter explained that the company had 28 days to apply to reinstate the appeal (6).
The company applied to reinstate the appeal by email dated 20 December 2024, stating it 'had to withdraw the appeal in challenging personal circumstances' and now wished 'to take up the offer in the letter to reinstate the Appeal' (6). The FTT's decision on the reinstatement application was released on 12 September 2025 (1). The FTT refused permission to appeal that decision on 12 December 2025 (2). Judge Thomas Scott refused permission on the papers on 10 February 2026 (2). Following the Applicant's request, an oral hearing to reconsider was held at the Rolls Building, London on 29 June 2026, attended by both parties, with the Applicant represented by Alistair Webster KC (3).
Core dispute
The issue was whether the FTT erred in law in refusing to reinstate the appellant's withdrawn appeal, on the ground that its decision was irrational, in that no reasonable tribunal, properly directing itself, could have reached it (10).
The Applicant argued, among other points, that the FTT's underlying jurisdictional duty was to decide the tax properly payable, that the appeal involved a substantial sum and was of great financial and reputational importance, that the FTT had found each side had a reasonable prospect of success such that the case was 'ripe for a judicial determination', and that no taxpayer should be compelled to pay tax not in fact due (11).
The Applicant further argued that the evidential prejudice to HMRC identified by the FTT, described in the FTT PTA Decision as 'profound', was overstated and unsustainable, rendering the FTT's decision perverse (11).
Court findings
The Upper Tribunal applied the principle, drawn from Paul Ward v Gagandeep Rai [2026] EWCA Civ 816 and Broughton v KopFootball (Cayman) Ltd [2012] EWCA Civ 1743, that appellate bodies should not interfere with case management decisions merely because they might have decided differently, but only where the decision-maker misdirected itself in law, failed to take account of relevant factors, took account of irrelevant factors, or reached a decision outside the range reasonably open to it (13).
On the question of prejudice to HMRC, the Upper Tribunal held that the FTT's conclusion, that allowing the expert witness LP to review and supplement his evidence after the appeal had been withdrawn would cause profound and uncompensable prejudice to HMRC, was rational and properly reasoned given the FTT's findings on the centrality of LP's evidence to the appeal (16, 19-25). The Upper Tribunal rejected the argument that this risk was merely an ordinary part of litigation, noting the unusual sequence of withdrawal after critical evidence had been heard followed by an attempt to secure a retrial (23).
The Upper Tribunal also noted the FTT's unchallenged findings of fact concerning the reasons for withdrawal, including 'glaring inconsistencies' in the evidence of Mr Borthwick, the company's managing director, and the FTT's conclusion that the withdrawal was more likely linked to the weakness of the case following LP's evidence than solely to concerns about future HMRC litigation (20).
On prejudice to the taxpayer and the merits, the Upper Tribunal found that the FTT had properly directed itself by reference to Pierhead Purchasing Limited v HMRC [2014] UKUT 0321 and had applied that guidance in a manner reasonably open to it, concluding that both parties had respectable technical arguments and reasonable prospects of success, rather than that the appellant's case was strong (27-32). The Upper Tribunal held that complaints as to the weight given to particular factors do not identify an arguable error of law in an exercise of case management discretion (33).
Outcome
The Upper Tribunal held that the Application did not identify any arguable error of law in the FTT's Decision, describing the FTT's decision as meticulous and not arguably irrational or perverse (34). Following reconsideration, permission to appeal was refused (34).
Major issues / areas of contention
- Whether the FTT erred in law by refusing to reinstate an appeal withdrawn mid-hearing.
- Whether the FTT's finding that HMRC would suffer profound and uncompensable evidential prejudice from reinstatement was irrational or perverse.
- Whether the FTT gave adequate weight to the financial and reputational importance of the appeal to the taxpayer.
- Whether the FTT correctly assessed the merits of the underlying appeal so far as they could conveniently and proportionately be ascertained.
- The scope of appellate interference with a First-tier Tribunal's exercise of case management discretion.