Ducks overlooking outside scenery on bridge.

Gardner Shaw – directions subject to a pending appeal should not have been varied

01 April 2019

In Gardner Shaw UK Ltd and others v HMRC [2018] UKUT 419 (TCC), the Upper Tribunal (UT) has held that the First-tier Tribunal (FTT) should not have varied directions which the FTT had previously issued, when they had been the subject of an unsuccessful appeal to the UT and when an appeal to the Court of Appeal was pending.


The circumstances of the underlying substantive appeals are set out in the decision of the UT in HMRC v Smart Price Midlands Limited [2017] UKUT 465 (TCC) and it is not necessary to repeat them here. They concern the introduction of the so-called Alcohol Wholesalers Registration Scheme (AWRS) 15 with effect from 1 April 2016. The underlying appeals by the appellants are against HMRC’s decision, in each case, that they are not fit and proper persons to carry on the controlled activity of wholesale trade in duty-paid alcohol 

Between November 2016 and May 2017, the FTT issued directions in respect of the substantive appeals which included a requirement that HMRC send a list of all documents which were considered by the relevant HMRC officer when reaching his decision. The directions included a provision that any party could apply at any time "for the directions to be amended, suspended or set aside". 

HMRC applied to the FTT to vary the disclosure direction, seeking an order for standard disclosure ie an order that it only disclose those documents on which it intended to rely or that it intended to produce at the substantive appeal hearing. 

HMRC's application was refused. The FTT was of the view that the case was one in which it was exercising a supervisory jurisdiction over decisions made by HMRC, and concluded that a more extensive order for disclosure was necessary for the fair hearing of the substantive appeals. Accordingly, any confidential material considered by the decision-maker should be included in HMRC's list of documents. HMRC could then apply, on a case by case basis, to exclude any confidential material from disclosure. 

HMRC appealed this decision to the UT. The FTT ordered a stay of the substantive appeals until after the UT's decision. 

The UT rejected HMRC's appeal and HMRC applied for permission to appeal to the Court of Appeal. The UT refused permission to appeal and HMRC applied to the Court of Appeal for permission to appeal.  

HMRC also applied to the FTT for a further stay of the substantive appeals but that application was refused by the FTT on the basis that the potential prejudice to the taxpayers in delaying the substantive determination was considerably greater than the potential prejudice to HMRC in having to conduct a disclosure exercise that the Court of Appeal might later decide to be inappropriate. 

HMRC then applied to the FTT to vary the disclosure direction to exclude "sensitive" documents that did not support the taxpayers' cases or were not adverse to HMRC's case. 

FTT decision

HMRC's application was granted.

The appellants objected to the application on the basis that the disclosure direction had already been unsuccessfully appealed to the UT and was subject to a pending appeal to the Court of Appeal. 

HMRC argued that i) the FTT had held the disclosure direction could apply on a case-by-case basis; ii) there was a change in circumstances because there was new evidence of the substantial cost to HMRC in carryout the disclosure exercise; iii) this was the first application to vary the directions; and, iv) the circumstances were such that the variation was in the interests of justice. 

Rule 5(2) of the FTT Rules gives the FTT discretionary power to vary directions. The CPR equivalent is CPR Rule 3.1(7), which was considered in Tibbles v SIG Plc [2012] EWCA Civ 518. Tibbles considered the circumstances in which a court might vary or revoke a previous interim decision giving directions. Where there is no material change of circumstances and no prior misleading of the court, only a "rare" case and something "out of the ordinary" will lead to a rejection of the normal appeal procedure in favour of varying an interim order. 

In the view of the FTT, of all the circumstances described in Tibbles in which it might be appropriate to vary the terms of an interim order, only the residual category of something "rare" and "out of the ordinary" could assist HMRC. 

In allowing HMRC's application, the FTT held that it would be against the interests of justice to require HMRC to carry out the full disclosure exercise previously ordered because: i) the additional documents sought on disclosure would be irrelevant and the taxpayers were adequately protected by HMRC's acceptance that documents that supported their case would be disclosed; ii) the very substantial cost that would be involved, which, since the documents were irrelevant, would inappropriately increase the costs and time incurred of all parties; and, iii) the disclosure exercise would take four months which would be contrary to the taxpayers' interests in having an early resolution of their appeals. 

The taxpayers appealed to the UT.

UT decision

The taxpayers' appeal was allowed. 

In the view of the UT, the fact that the FTT was persuaded that there was a more appropriate and better approach to disclosure, contrary to the decision of the UT, was not capable of being a reason why, exceptionally, the FTT should revisit and change its earlier direction on disclosure.

The fact that there had been an appeal to the UT was a strong reason why the disclosure direction should not be varied by the FTT. The appropriateness of the disclosure direction had already been reviewed by the UT and upheld and an appeal to the Court of Appeal was pending. The interests of justice include upholding finality of court and tribunal decisions and not undermining the appeal process. 

Furthermore, there had been no change in circumstances. HMRC's belated realisation of the cost involved in the disclosure exercise did not amount to something out of the ordinary that would justify revisiting the directions.

Although the taxpayers had an interest in having the substantive appeals determined as soon as possible, a potential delay of four months while disclosure was carried out, as the taxpayers wished it to be, could not amount to circumstances out of the ordinary that justified revisiting the order for disclosure. 


The UT held that there was no basis on which a judge could reasonably conclude that this was one of the rare or out of the ordinary cases where it was appropriate for the FTT itself to vary the terms of the directions previously issued. The application for variation was in reality an attempt by HMRC to have a "second bite of the cherry".

The UT's decision serves as an important reminder that only in  rare and out of the ordinary circumstances will it be appropriate to vary a case management decision which is the subject of a pending appeal. 

A copy of the decision can be viewed here.