Eden Consulting Services - Tribunal has no jurisdiction to consider HMRC's duty to act fairly in administering its statutory powers

In Eden Consulting Services (Richmond) Ltd v HMRC [2016] UKFTT 656 (TC), the First-tier Tribunal (FTT) determined, as a preliminary issue, that it did not have jurisdiction to consider HMRC's alleged conduct, behaviour and abuse of its powers in determining an appeal against unauthorised payment charges and that such issues are properly for judicial review proceedings and/or the HMRC Adjudicator.

Background

Eden Consulting Services (Richmond) Limited (the Appellant) was the sponsoring employer of a pension scheme. It appealed against HMRC's decision to assess two unauthorised payment charges under sections 208 and 209, Finance Act 2004. The alleged charges arose from two loans made by an approved occupational pension scheme to the Appellant in 2007 and 2009.

The Appellant argued that the charges did not arise under the legislation and also made several complaints regarding HMRC's abuse of its powers, inappropriate behaviour and unfair conduct.

The FTT considered, as a preliminary issue, whether it had jurisdiction to consider the Appellant's complaints regarding HMRC's conduct.

In summary, the Appellant's complaints were that:

• HMRC failed to provide a copy of its notes from an initial meeting with the Appellant;
• HMRC ignored the Appellant's request for a further meeting prior to HMRC issuing the assessments;
• HMRC ignored the Appellant's representative resulting in him being unable to properly assist and/or advise the Appellant. Examples included HMRC not copying the Appellant's  representative into emails and/or not returning his telephone calls;
• When a meeting was finally arranged, HMRC "brushed over" why they had ignored the Appellant's requests for a meeting prior to HMRC issuing the assessments; and
• HMRC failed to provide copies of all documents in relation to a pension scheme as agreed at the CMC and was therefore withholding documents that may undermine its case or advance the case of the Appellant.

The Appellant argued that as the cases of Hok Limited v HMRC [2011] TC 1286, Rowland v HMRC [2006] STC (SCD) 548 and Pacific Computers Limited v HMRC [2015] UKFTT 0026 (TC) all concerned similar issues which were determined by the FTT and it was out of time to seek a remedy by means of judicial review proceedings, its complaints should be determined by the FTT.  

FTT's decision

The FTT confirmed that although it has no general 'supervisory' jurisdiction to consider a taxpayer's claims based on public law concepts such as fairness or inappropriate conduct by HMRC, it does not necessarily mean that public law rights can never be within the jurisdiction of the FTT. As stated in Simon Newell v HMRC [2015] UKFTT 0535 at [97]:

"While … the absence of a supervisory jurisdiction does not preclude public law rights being considered or given effect to [the passage at [31] of HMRC v Abdul-Noor [2013] UKUT 71 (TCC)] makes it clear that whether that can happen or not depends on the statutory construction of the provision conferring jurisdiction".

In the present case, the assessments were issued pursuant to section 29(1), Taxes Management Act 1970 (TMA) and the jurisdiction of the FTT is set out in section 50(6), TMA. The FTT commented that as a matter of construction, the relevant provisions do not confer on it any public law rights of the type sought by the Appellant. Although section 29(1) does provide that HMRC "may" make an assessment, and in determining the amount to be assessed the legislation refers to HMRC's opinion, Hok makes clear that the FTT does not have jurisdiction over the duty of a public body, such as HMRC, to act fairly in administering its statutory powers and therefore matters relating to its conduct fall outside the jurisdiction of the FTT. The FTT commented that none of the allegations made by the Appellant in relation to HMRC's conduct related to the statutory requirements governing the raising of the assessments, or the HMRC review process under sections 49A-49I, TMA. Further, the FTT confirmed  that the provision of documents relevant to an appeal is a matter properly dealt with by case management directions issued by the FTT, with the potential sanctions for failure to comply in a timely fashion as set out in the Tribunal Rules, rather than being dealt with as a preliminary issue.

The FTT concluded that the arguments raised by the Appellant regarding HMRC's alleged abuse of its powers, inappropriate behaviour and unfair conduct, fell outside its jurisdiction and are properly for judicial review proceedings and/or the HMRC Adjudicator.

The Appellant's arguments were therefore struck out by the FTT pursuant to Rule 8(2)(a) of the Tribunal Rules. The FTT directed that the remainder of the Appellant's appeal, relating to whether the unauthorised payments charges properly arise under Finance Act 2004, should proceed. 

Comment

Judicial review is the main way the courts supervise bodies exercising public functions, such as HMRC, to ensure that they have acted lawfully and fairly. It is often a difficult decision for a taxpayer to decide whether he should pursue an appeal before the FTT or seek to commence judicial review proceedings in the High Court. In some cases, as appears to have been the case here, a taxpayer will have an issue that falls within the jurisdiction of the FTT, such as his liability to tax and another issue which should be determined by way of judicial review, such as whether HMRC has abused its powers. In such circumstances, the taxpayer may wish to make a 'protective' application for judicial review at the outset as the claim form must be filed with the court 'promptly' and 'in any event within 3 months after the grounds to make the claim first arose'. If appropriate, the judicial review proceedings could then be stayed pending the outcome of the appeal proceedings before the FTT.