Background
Josoemag Services Limited claimed support payments for employees under the Coronavirus Job Retention Scheme. After investigating the claims, HMRC concluded that amounts had been overpaid and issued income-tax assessments under Schedule 16 to the Finance Act 2020. The First-tier Tribunal dismissed the company’s appeal on the substantive calculation issues and stated that it lacked jurisdiction to consider complaints involving fairness or legitimate expectation.
The company obtained permission to appeal on one ground: that the First-tier Tribunal had wrongly concluded that it could not determine whether the assessments were invalid because the company legitimately expected that HMRC would not issue them. The asserted expectation rested on an alleged December 2020 telephone call in which an HMRC officer reportedly said that he had found no compliance issues and that the company should not anticipate further developments. HMRC contended that reliance on this call as the basis of a legitimate-expectation claim was a new point not advanced before the First-tier Tribunal.
The Court’s Holding
The Upper Tribunal dismissed the appeal because the legitimate-expectation argument based on the telephone call was a new point and permission to rely on it should be refused. Although the call had been mentioned in an internal-review request, witness evidence, and the First-tier Tribunal hearing, the company had not given HMRC fair warning that it relied on the call as creating a legitimate expectation that no assessments would be issued. The argument was absent from the amended grounds of appeal and was not identified when the First-tier Tribunal judge carefully clarified the company’s case.
Allowing the new argument would materially prejudice HMRC because resolving it would require further factual evidence, including possible testimony from the HMRC officer and cross-examination of the company’s director. The company’s unrepresented status and the First-tier Tribunal’s potentially inquisitorial role did not outweigh procedural fairness and finality. The First-tier Tribunal also had not been required to formulate the unarticulated argument on the company’s behalf.
The jurisdiction issue was therefore academic, but the Upper Tribunal stated that it would in any event have held that the First-tier Tribunal lacked jurisdiction to determine this legitimate-expectation claim. Construing Schedule 16 to the Finance Act 2020, the Taxes Management Act 1970, and the Tribunals, Courts and Enforcement Act 2007, it concluded that the statutory appeal concerned whether the taxpayer was overcharged, not whether an assessment should be nullified on public-law grounds. Such a claim could instead be pursued through judicial review.
Key Takeaways
- Permission to appeal on an arguable ground does not automatically permit an appellant to rely on a point that was not advanced below.
- Mentioning an underlying fact is not enough to preserve a legal argument when the opposing party lacked fair warning of the issue and an opportunity to address it with evidence.
- The Upper Tribunal’s stated view was that the First-tier Tribunal’s statutory jurisdiction over these CJRS tax assessments did not extend to nullifying them on legitimate-expectation grounds.
Why It Matters
The decision emphasizes that taxpayers must clearly identify public-law arguments and their factual foundations during the First-tier Tribunal proceedings. Even an unrepresented appellant cannot ordinarily introduce on appeal a fact-dependent legitimate-expectation case that might have changed the evidence and conduct of the original hearing.
It also provides significant, though formally non-dispositive, guidance on the limits of the First-tier Tribunal’s jurisdiction over CJRS assessments. The Upper Tribunal considered the statutory appeal mechanism focused on the amount of tax charged, leaving a challenge based on HMRC’s alleged promise or abuse of power to judicial-review proceedings.