UK Upper Tribunal Rules on FtT Jurisdiction in Tax Avoidance Scheme Case

Citation: [2023] UKUT 296 (TCC)
Judgment on


The case “Phillip Brian Higgs & Ors v The Commissioners for HMRC” centers around the First-tier Tribunal’s (FtT) jurisdiction, specifically in the context of a marketed tax avoidance scheme. The judgment from the UK Upper Tribunal (Tax and Chancery Chamber) examines whether the FtT possesses the jurisdiction to determine entitlement to PAYE credits under the Income Tax (PAYE) Regulations 2003 when considering sums that end users were liable to deduct under PAYE.

Key Facts

The appellants in this case were involved in a tax avoidance scheme marketed by Edge Consulting Ltd (ECL). They received remuneration through a minimum wage payment from an offshore company and purported discretionary loans from an Employee Benefit Trust based in the Isle of Man. HMRC challenged the schemes, and assessments were made without allowing for PAYE credits which appellants believe they were entitled to based on tax that should have been deducted by intermediaries. The FtT ruled it did not have the jurisdiction to consider whether such PAYE credits were due.

This case invokes the principle noted in Whitney v Commissioners of Inland Revenue, which distinguishes between the three aspects of tax: liability, assessment, and collection. A fundamental issue in this case was the delineation between the assessment stage, where the taxpayer’s liability is determined, and the collection stage, under the PAYE regulations, which deal with how liability is collected.

The FtT’s jurisdiction derives from statutory law, specifically from s3 of the Tribunals, Courts and Enforcement Act 2007. Consequently, its authority to hear cases is confined to the boundaries provided by statute, and it does not have an inherent jurisdiction akin to that of the High Court.

Hoey v HMRC is a critical case that significantly influenced the decision in this matter. In Hoey, the Court of Appeal determined that the FtT lacked jurisdiction to consider entitlement to PAYE Credits under Regulations 185 and 188 of the Income Tax (PAYE) Regulations 2003, thereby affecting this case directly. This principle reinforces the notion that the PAYE regulations are concerned with the collection of taxes, not with the liability or assessment stages.

Moreover, the judgment cites section 684(7A)(b) of the Income Tax (Earnings and Pensions) Act 2003, indicating HMRC’s discretion to determine that deducting tax is “unnecessary or not appropriate”, which contributed to the appellants not receiving PAYE credits.


The Upper Tribunal dismissed the appeal, bound by the doctrine of precedent established by the Court of Appeal in Hoey. It affirmed the FtT’s lack of jurisdiction to consider whether taxpayers were entitled to PAYE credits under the specific regulations, thereby reinforcing the separation of powers in tax law between assessment and collection and the bounds of tribunals to interpret statutory legislation.


The Upper Tribunal’s decision in “Phillip Brian Higgs & Ors v The Commissioners for HMRC” reiterates the limitations of the FtT’s jurisdiction solely within the framework of statutory law. It underscores the separation between the stages of tax - liability, assessment, and collection - and highlights the PAYE Regulations as a mechanism for collection, not assessment. This judgment has cemented the Court of Appeal’s ruling in Hoey as a binding precedent in future cases where taxpayers seek to challenge HMRC determinations related to tax avoidance schemes and potential PAYE credits within the FtT’s jurisdiction.

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