Judgment summary
TPY Limited appealed against VAT assessments and a refusal of input VAT credit covering periods 03/18 to 12/20. The Appellant applied for a preliminary hearing on the discrete issue of the validity of three HMRC letters dated 28 March 2022, arguing that if those letters were found invalid the underlying assessments would fall away and the appeal would end (paras 1, 28-31).
Tribunal Judge Matthew Donmall applied the principles in Wrottesley v HMRC [2015] UKUT 637 (TCC) and related authorities, and dismissed the application, finding that the proposed preliminary issue would not dispose of the appeal and was unlikely to be short or purely a point of law (paras 33-38).
Background
The Appellant was registered for VAT with effect from 2 November 2017 (para 3). The dispute concerned VAT returns for periods 03/18 to 12/20 (para 4).
On 19 March 2021, HMRC sent a letter stating that output supplies did not meet zero-rating conditions, with total VAT due of £1,518,038.33, accompanied by a notice of assessment (para 5).
On 28 March 2022, HMRC sent three letters (the March 2022 letters), including a 'Notice of VAT assessments' (the March 2022 Notice) purporting to replace the 19 March 2021 notice and detailing assessments for periods 03/18 to 06/20 on a preferred/alternative basis to protect the revenue under the four-year capping rule (para 6).
On 22 September 2023, HMRC sent a 'Notification of Errors' letter, followed on 1 December 2023 by an 'Amendment of VAT assessment' letter reducing the assessment from £1,302,072.00 to £1,126,443.00 plus interest and penalty where appropriate (paras 7-8).
On 26 February 2024, HMRC issued two 'Change to amount claimed on VAT return and notice of penalty assessment' letters, refusing most of the input tax claimed for periods 09/20 and 12/20, reducing claims by £372,056.57 and £94,225.30 respectively (para 10). A further reduction of £720 was made for period 03/20 on 27 February 2024 (para 11).
Following a review requested on 23 March 2024, HMRC issued a review conclusion letter on 19 June 2024 upholding the December 2023 Amendment and the February 2024 Decisions (paras 12-13). The Appellant issued its appeal on 23 June 2024, challenging both the £1,126,443 VAT demand for 03/18 to 06/20 and the refusal of input VAT of £466,281 for 09/20 and 12/20 (para 14).
The appeal was allocated as a standard case on 8 January 2025, followed by a stay for ADR which HMRC reported unsuccessful on 4 July 2025 (paras 15-16). The Appellant then sought to amend its grounds of appeal to challenge the validity of the March 2022 Notice, relying on Go City Ltd v HMRC [2024] UKFTT 00745 (TC), and to argue the December 2023 Amendment was out of time for periods 03/18 to 09/19 (para 17). On 15 March 2026, the Appellant's representative, Mr Feng, formally applied to the Tribunal for a preliminary hearing on the validity of the three March 2022 letters (para 23(2)).
Core dispute
The Appellant applied for a preliminary hearing to determine whether the three HMRC letters of 28 March 2022, and in particular the March 2022 Notice, constituted a valid notice of VAT assessment under section 73 of the VAT Act 1994 (paras 1, 28).
The Appellant contended that, viewed objectively by a reasonable reader, the March 2022 letters did not record a determination of the VAT due and so were not a notice of assessment capable of appeal under section 83(1)(p)(i) VATA 1994, relying on Aria Technology Ltd v HMRC [2020] EWCA Civ 182 and Courts PLC v HMRC [2004] EWCA Civ 1527 (paras 28-29). The Appellant argued a preliminary hearing would be short, require no witnesses, and, if decided in its favour, would dispose of the VAT assessment and end the appeal (para 30).
HMRC opposed the application, arguing that the Tribunal should exercise caution, that even if the March 2022 Notice were invalid this would not dispose of assessments for 12/19 to 06/20 (which would remain in time via the 1 December 2023 decision) nor the February 2024 decisions on input tax for 09/20 and 12/20, that witness evidence would be needed on notification of the March 2022 Notice, and that a preliminary hearing would cause delay and increased cost (para 32).
Court findings
The Tribunal applied the 'key principles' set out in Wrottesley v HMRC [2015] UKUT 637 (TCC) at [28], as supplemented by Jelly Vine Productions Ltd v HMRC [2024] UKFTT 562 (TC) and applied in BGC Services Holdings LLP v HMRC [2026] UKFTT 00558 (TC) (paras 25-27).
The Tribunal found that, even if the March 2022 letters were held invalid, this would not dispose of the appeal because the 1 December 2023 decision would in substance become a primary assessment under section 73(1) VATA 1994, leaving assessments for periods 12/19 to 06/20 in time, and because the February 2024 Decisions refusing input tax of £466,281 for periods 09/20 and 12/20 would remain for determination regardless (para 34).
The Tribunal was also not satisfied that the preliminary hearing would be short, noting that HMRC wished to call witness evidence, and that a fresh allegation by Mr Feng that an HMRC officer had 'deliberately and deceitfully' misled the Appellant, if pursued, would itself require a properly pleaded amendment and further witness evidence (para 35).
The Tribunal concluded that the proposed preliminary issue was not a 'knockout point' and involved questions of mixed fact and law, on which caution was required, and that the overriding objective was best served by progressing the appeal to a single final hearing (paras 36-37). The Tribunal expressly declined to address the merits of the Appellant's contentions on the validity of the March 2022 letters (para 37).
Outcome
The Application for a preliminary hearing was dismissed (paras 2, 38).
The Tribunal directed that the appeal proceed to a final substantive hearing without further delay, with an updated set of directions accompanying the decision (para 39). The Tribunal also noted that it had not been assisted by the volume of correspondence sent by the Appellant's representative and reminded the parties of their duty to help the Tribunal (para 39).
Any party dissatisfied with the decision has the right to apply for permission to appeal under Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, with the application to be received within 56 days of the decision being sent (para 40).
Major issues / areas of contention
- Whether the three HMRC letters dated 28 March 2022, and in particular the March 2022 Notice, constituted a valid notice of VAT assessment under section 73 VATA 1994.
- Whether the Tribunal should exercise its case management power under rule 5 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 to direct a preliminary hearing on that issue.
- Whether determination of that issue would be a 'succinct, knockout point' disposing of the appeal, applying the principles in Wrottesley v HMRC [2015] UKUT 637 (TCC).
- Whether the proposed preliminary hearing could be conducted briefly and without witness evidence, or would instead involve mixed questions of fact and law.
- Whether a preliminary hearing would cause delay and increased costs compared with progressing directly to a single final hearing.