Automated Summary
Key Facts
Everyday Wholesale Limited (Appellant) appealed HMRC's refusal to repay £278,232 in input VAT, claiming they knew or should have known their transactions were connected with VAT fraud. The Appellant applied for a Tribunal direction requiring HMRC to answer 15 questions, arguing these mirrored 'Fairford Directions' to clarify evidence gaps. The Tribunal refused the application, holding that the questions did not mirror Fairford Directions and would hinder HMRC's ability to present evidence at trial. The case centered on whether the Appellant's cross-examination strategy required pre-hearing confirmation of their understanding of HMRC's evidence.
Tax Type
Value-Added Tax (VAT) repayment dispute
Issues
- The Appellant relied on Glaxo to justify the Questions as a procedural tool for narrowing disputes. The tribunal acknowledged Glaxo's principle of agreeing uncontroversial facts but concluded it did not apply here, as the Questions targeted core issues of HMRC's case (fraudulent tax loss connections) rather than uncontroversial details.
- The tribunal considered whether the Appellant's 15 Questions to HMRC constituted a 'mirror' of the Fairford Directions, which require appellants to pre-identify disputed evidence. The court held that the Questions were not a mirror but instead sought HMRC to confirm the Appellant's understanding of its own evidence, which diverges from the Fairford framework.
- The Appellant argued that HMRC's refusal to answer the Questions undermined the 'cards on the table' principle by creating ambiguity about the evidence. The tribunal rejected this, stating that the Fairford Directions' purpose was efficient case management, not pre-hearing confirmation of the Appellant's interpretation of HMRC's evidence.
Tax Years
- 2016
- 2015
- 2014
Holdings
- The Tribunal dismissed the Appellant's application for directions requiring HMRC to answer 15 questions, determining that the Questions were not a 'mirror' of the Fairford Directions and were instead an attempt to extract concessions from HMRC in advance of the hearing.
- The judge clarified that the purpose of Fairford Directions is to streamline hearings by identifying contested evidence, not to require advance disclosure of a party's substantive position. The Appellant's 'cards on the table' argument was rejected as it sought HMRC's confirmation rather than its own pre-hearing position.
- The Tribunal declined to exercise its discretion under Glaxo to direct HMRC to confirm uncontroversial facts, as the Questions addressed core disputed issues in the MTIC appeal (fraudulent tax loss connections) rather than peripheral or uncontroversial matters.
Remedies
- By 16 February 2021, the parties must comply with Direction 9 of Judge Fairpo's directions (as amended by Judge Vos), which requires specifying witnesses for cross-examination.
- The Tribunal dismissed the Appellant's application seeking a direction that HMRC be required to respond to 15 questions, ruling that the questions were not a valid 'mirror' of the Fairford Directions.
- By 23 February 2021, the Appellant is required to inform HMRC whether the only disputed witnesses are Officer Bycroft and Officer Jennison, or to specify which passages in other witnesses' statements are disputed. If not specified, those statements will be accepted as evidence.
Tax Issue Category
Input Vs. Output Vat
Legal Principles
The tribunal applied the procedural principles established in Fairford and Elbrook, emphasizing that case management directions aim to streamline hearings by identifying contested evidence and witnesses, not to compel advance disclosure of substantive positions. The 'cards on the table' approach was referenced to ensure transparency in evidence but did not require parties to confirm mutual understanding of each other's positions. The decision distinguished Glaxo's context of uncontroversial facts from the core dispute over transaction chains in this case, rejecting the Appellant's analogy.
Disputed Tax Amount
278232.00
Precedent Name
- HMRC v Fairford Group plc
- Booth v HMRC
- Elbrook Cash and Carry Ltd v HMRC
- Glaxo Wellcome UK Ltd v Sandoz Ltd
Cited Statute
- HMRC v Fairford Group plc
- Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009
- Civil Procedure Rules
- Glaxo Wellcome UK Ltd v Sandoz Ltd
- Elbrook Cash and Carry Ltd v HMRC
Judge Name
Anne Redston
Passage Text
- It is true that if two parties to a hearing can agree a statement of facts, that may... narrow the issues and streamline the final hearing. But as Chief Master Marsh says in Glaxo, this is the position for uncontroversial facts, not those central to the dispute between the parties... I decline to exercise my discretion to make such an order in this case.
- I do not accept Mr Thornton's submission that the Application mirrored the Fairford Directions. Those directions require an appellant to review HMRC's evidence and set out what it does and does not accept. By the Application, the Appellant is asking HMRC to review their own evidence, and say whether or not Mr Thornton has correctly understood that evidence. This is entirely different in nature from the Fairford Directions.
- Once the parties have set out their evidence 'face up' on the table, it is for their representatives to assess that evidence and explain how it supports the case they are making. It is enough...that the appellant identify the respects in which the relevant witness statements are disputed... There is no necessity for an appellant to go further than that.