Background
Scott Brothers Limited received an HMRC assessment for landfill tax of £425,092 plus a penalty of £148,782.20 in May 2022. The company appealed. A four-day hearing was scheduled for December 2–5, 2024. On the first day, the appellant’s expert witness, Luke Prazsky, gave extensive evidence regarding whether certain material constituted “waste” under tax law. On the morning of the second day, after negotiations between the parties, the company orally withdrew its appeal. The tribunal notified the parties that reinstatement could be sought within 28 days. On 20 December 2024, the company applied to reinstate, citing “challenging personal circumstances” but indicating it had now obtained fresh legal advice.
The First-tier Tribunal (FTT) refused reinstatement, finding that although the appellant had an arguable case with equivocal merits, procedural fairness favored dismissal. The FTT concluded that allowing the expert witness to reconsider and revise his testimony in light of cross-examination notes would materially prejudice HMRC and constitute an unfair trial process. The company then applied to the Upper Tribunal for permission to appeal the FTT’s reinstatement decision.
The Court’s Holding
Judge Scott refused permission to appeal, holding that the FTT committed no arguable error of law and that its decision was “meticulous” and not perverse. The Upper Tribunal applied the stringent standard for reviewing discretionary case management decisions: an appellant must show the lower court misdirected itself on law, failed to consider relevant factors, considered irrelevant factors, or reached a decision “plainly wrong” in the sense of falling outside “the generous ambit where reasonable decision makers may disagree.” The FTT had not crossed this threshold.
On the appellant’s first complaint—that the FTT underweighted the significance of the case and its arguable merits—Judge Scott held there is no legal principle requiring particular weight to be afforded to the financial importance or magnitude of an appeal when assessing reinstatement. The FTT found the merits to be equivocal (“both parties have respectable technical arguments and reasonable prospects of success”), not overwhelmingly strong; accordingly, heightened weight on this factor was not required. On the second complaint—that the FTT overstated prejudice to HMRC—Judge Scott upheld the FTT’s reasoning. Because the expert’s evidence was “fundamental and crucial” to the appeal’s core claim and the withdrawal occurred mid-hearing after this evidence was adduced, allowing the witness to review and supplement his testimony using cross-examination notes posed a serious and material risk of rehearsed or artificially improved evidence. This prejudice cannot be adequately remedied by costs awards and is not merely “an ordinary part of litigation” but a special danger arising from mid-hearing withdrawal.
Key Takeaways
- Appeals from discretionary case management decisions receive highly deferential review; an appellant must show the decision was plainly wrong, not merely that the appellate court would have decided differently.
- When a party withdraws an appeal mid-hearing after central evidence has been adduced, the risk of unfair revision or rehearsal of that evidence constitutes serious procedural prejudice justifying refusal of reinstatement.
- The financial importance or reputational significance of an appeal does not automatically outweigh procedural fairness concerns, particularly where the merits are equivocal rather than overwhelmingly strong.
- Reinstatement applications require a balancing exercise considering: reasons for withdrawal, prejudice to both parties, loss to the appellant, legal certainty, and merits. No single factor is determinative.
Why It Matters
This decision clarifies the narrow grounds for challenging a tribunal’s refusal to reinstate a withdrawn appeal and reinforces the principle that procedural integrity can take priority over substantive merits when reinstatement would create unfair trial risks. The ruling is significant for tax practitioners because it establishes that mid-hearing withdrawals, once reversed, cannot be used to improve or supplement key evidence without triggering serious prejudice concerns. The judgment also reaffirms that appellate courts must respect discretionary decisions by first-instance tribunals and will not intervene based merely on disagreement with the weight assigned to particular factors.
For HMRC and taxpayers, the decision illustrates that reinstatement is not a automatic “second bite of the cherry” but depends on a careful calibration of fairness between the parties and the integrity of the trial process. The ruling may deter tactical appeals followed by strategic withdrawals designed to gather intelligence before reinstatement, since courts will closely scrutinize the true reasons for withdrawal and the procedural risks of reversal.