Ataf Iqbal Butt v The Commissioners for HMRC
[2024] UKFTT 893 (TC)
CBD Flower Shop Limited v The Commissioners for HMRC
3 February 2023
[2023] UKFTT 107 (TC)
First-tier Tribunal
A company selling CBD products argued with the tax man (HMRC) about whether they should pay less tax. HMRC tried to add a new argument late in the game, but the judge said it was too late and unfair to the company. So, HMRC couldn't use the new argument, and the company didn't get extra money for the hassle.
Key Facts
- •The CBD Flower Shop Limited appealed HMRC's assessment of £430,473.36 for standard-rated VAT on CBD product sales.
- •HMRC applied to amend its statement of case to include an 'illegality' argument based on the Misuse of Drugs Act 1971.
- •The appellant opposed the amendment, arguing it was late and prejudicial.
- •The Tribunal considered whether the amendment had a real prospect of success, the timing of the application, and any prejudice to either party.
Legal Principles
The Tribunal has the power to permit amendments to a statement of case.
Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, rule 5
When considering amendment applications, the Tribunal must balance potential injustice to the applicant if refused versus injustice to the opposing party if permitted, considering the overriding objective of dealing with cases fairly and justly.
Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, rule 2(3); Quah Su-Ling v Goldman Sachs International [2015] EWHC 759 (Comm)
An amendment will be refused if it has no real prospect of success; the test is the same as for summary judgment under CPR Part 24.
Quah Su-Ling v Goldman Sachs International [2015] EWHC 759 (Comm)
Lateness of an amendment application is a relative concept, considering the nature of the amendment, explanation for timing, and consequences.
CIP Properties (AIPT) Ltd v Galliford Try Infrastructure Ltd & Ors [2015] EWHC 1345 (TCC)
Costs are awarded only if a party acted unreasonably.
Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, rule 10(1)(b)
Outcomes
HMRC's application to amend its statement of case was dismissed.
The amendment, while having some merit, was considered late and prejudicial to the appellant due to HMRC's delay in seeking necessary advice. The balance of justice favored dismissing the application.
The appellant's application for costs was dismissed.
While HMRC's delay was noted, the Tribunal did not find their actions unreasonable in bringing the amendment application.
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