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Minstrell Recruitment – HMRC not required to disclose the names of its officers involved in a Gross Payment Status revocation decision

19 January 2022

In Minstrell Recruitment Ltd v HMRC [2021] UKFTT 0344 (TC), the First-tier Tribunal (FTT) held that HMRC need not disclose the names of the HMRC officers involved in making a gross payment status (GPS) revocation decision where that decision had been successfully appealed, for the purpose of determining whether HMRC had acted unreasonably in the conduct of that litigation.


GPS (granted under Chapter 3, Part 3, Finance Act 2004 (FA 2004)), allows the holder to pay certain sub-contractors gross without having to deduct income tax from such payments. HMRC may revoke GPS status where compliance failures occur and such revocation may be actioned immediately under section 66(3), FA 2004, if HMRC has reasonable grounds to suspect that the holder has been fraudulent or knowingly failed to comply with certain requirements.

Revocation of GPS status can adversely impact a business and the immediate revocation of GPS status can have serious commercial implications for a business. 

Minstrell Recruitment Ltd (Minstrell) had GPS. Due to certain concerns, its GPS was revoked by HMRC with immediate effect. Minstrell sought a review of HMRC's decision and the review confirmed HMRC's position. Minstrell subsequently appealed the decision to the FTT, which HMRC did not contest (after further information came to light). Minstrell's appeal was allowed.

Minstrell then made an application to the FTT for an order requiring  HMRC to pay its costs of the appeal proceedings. 

As part of this process, Minstrell stated that the knowledge of the names of the HMRC officers involved in the revocation decision should be revealed so that the FTT could hear evidence relevant to its costs application. As the case had not been allocated to the Complex case track, and wasted expenses were not in issue, the FTT was only able to award costs if HMRC (or its representatives) had acted unreasonably in defending or conducting the proceedings before the FTT.

Minstrell argued that HMRC unreasonably resisted its meretricious appeal by failing to identify, or take into account, that HMRC’s revocation of GPS under section 66(3) had no evidential basis or was  unreasonable and carried out without proper authorisation. Minstrell also alleged that HMRC relied on the testimony of an unreliable informant and that only when the names of the officers who made the decision were known could directions be made enabling pertinent evidence to be heard which would assist the FTT in determining whether HMRC's conduct was unreasonable.

FTT decision

The application was dismissed.

In dismissing the application, the FTT said that the focus of the FTT's enquiry should be on the conduct of the appeal not the quality of HMRC's original decision to revoke GPS, unless HMRC's prior behaviour explained, coloured or influenced the conduct of the appeal. In the view of the FTT, it would be disproportionate to compel evidence from those involved in making or reviewing the decision to revoke Minstrell's GPS status, or to seek their names.

Instead, the FTT directed that HMRC's witness evidence should explain its policies, practices, instructions or comments from officers that affected or influenced its conduct of the litigation and explain what those providing any such witness statements knew of the reliance on an informant and the effect any reliance had on the conduct of the litigation.


This decision confirms that the FTT will not be easily persuaded to consider the circumstances surrounding HMRCs decision making process prior to the lodging of an appeal, when considering the issue of costs and whether HMRC's conduct of that litigation was unreasonable. 

However, such conduct will be considered by the FTT in appropriate circumstances. As the FTT made clear, the behaviour of a party prior to the commencement of proceedings may be relevant when considering whether litigation has been conducted in a reasonable manner:

"if another person, before or after proceedings commenced had sought to influence a litigator’s conduct or if there were policies or practices in existence prior to the start of proceedings which affected the litigators’ conduct of the appeal, those influences, policies and practices could possibly be relevant to the assessment of the reasonableness of the conduct of the appeal."

It is clear, therefore, that in certain circumstances HMRC's decision making processes may be scrutinised by the FTT when determining whether HMRC's conduct of litigation was unreasonable.  

The decision can be reviewed here.

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