Tribunal Upholds Jurisdiction in Learna Limited v HMRC Appeal Despite Withdrawal of Decision

Citation: [2023] UKFTT 972 (TC)
Judgment on

Introduction

In the matter of Learna Limited v The Commissioners for HM Revenue and Customs, the First-tier Tribunal (Tax Chamber) faced the question of whether an appeal should be struck out due to a lack of jurisdiction following the withdrawal and cancellation by HMRC of the decision under appeal. Tribunal Judge Aleksander was tasked with deciding if the original jurisdiction of the Tribunal continued despite the withdrawal of HMRC’s decision, analyzing the relevance of precedent cases to the circumstances at hand.

Key Facts

Learna Limited appealed a decision by HMRC which found them not to be an eligible body for VAT purposes. Subsequently, HMRC withdrew its decision and proposed the appeal be struck out, suggesting there was no longer an appealable decision. Opposing this, Learna Limited argued that the Tribunal retained jurisdiction to decide the appeal and referenced the case of Rasam Gayatri Silks [2010] UKFTT 50 (TC) to support their position. HMRC countered with the argument upheld in LS & RS v HMRC [2017] UKUT 257 (ACC), asserting the Tribunal’s lack of jurisdiction following their withdrawal of the decision.

The Tribunal discussed three key legal principles:

  1. The Tribunal’s jurisdiction over an appeal and the impact of HMRC’s withdrawal of a decision post-appeal.
  2. Rule 17 and Rule 8(2)(a) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 as they relate to the withdrawal of an appealed decision.
  3. The application of previous case law, specifically Rasam Gayatri Silks and LS & RS v HMRC, and whether they inform the current situation.

Judge Aleksander considered the core argument that once an appeal is validly made, the Tribunal continually maintains jurisdiction over the proceedings despite the subsequent withdrawal of the decision under appeal. He referred to the Rasam Gayatri Silks case to support this notion, emphasizing that the withdrawal of the decision by HMRC does not necessitate the appellant’s withdrawal of the appeal or termination of the proceedings.

For further insight, the case of LS & RS v HMRC was examined. This case outlined the concept that a statutory tribunal must not exceed its jurisdiction, a constitutional principle that underpins the distribution of judicial powers. However, Judge Aleksander distinguished that case from the current situation, noting that HMRC had not replaced the decision in question with a new ruling, merely retracted it.

Outcomes

The Tribunal refused HMRC’s application to strike out the appeal on the basis of Rule 8(2)(a), maintaining that the Tribunal retains jurisdiction over the appeal as the withdrawal of the decision did not erase the Tribunal’s authority. Furthermore, it was decided that Rule 8(3)(c) was not applicable, thus averting any conclusion that the appellant’s case lacked reasonable prospects of success. The Tribunal therefore dismissed the argument that the withdrawal of HMRC’s decision invariably deprived the Tribunal of jurisdiction.

Conclusion

This case reaffirms that an appellant’s right to appeal remains viable even when the original decision is withdrawn by HMRC. Through careful analysis and differentiation between the cases of Rasam Gayatri Silks and LS & RS v HMRC, Judge Aleksander provided clarity on the Tribunal’s jurisdiction, signifying that it does not vanish upon the withdrawal of the decision under appeal. The Tribunal’s function is to render justice based on the circumstances at the time of appeal, and the rights of both parties, including the ability to achieve resolution via consent or a Tribunal hearing, should be preserved.

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