Ensuring Fair Tribunal Proceedings: The Adewale v HMRC Decision and the Limits on Strike Out Applications

Introduction

The case of Adewale v. Revenue and Customs ([2017] UKFTT 103 (TC)) serves as a pivotal point in understanding the boundaries and proper application of strike out provisions within the First-tier Tribunal (Tax Chamber). This commentary delves into the background of the case, the legal issues at stake, the parties involved, and the broader implications for future tax-related appeals.

Summary of the Judgment

In January 2017, Mr. Sunday Adewale appealed two assessments made by Her Majesty's Revenue and Customs (HMRC): an excise duty assessment under the Customs and Excise Management Act 1979 (CEMA) and a penalty under Schedule 41 Finance Act 2008. HMRC sought to strike out these appeals on grounds of either lack of jurisdiction or the appellant having no reasonable prospect of success. The First-tier Tribunal (Tax Chamber) ultimately dismissed HMRC's strike out application, holding that HMRC's attempt was unreasonable and procedurally flawed. Furthermore, the Tribunal ordered HMRC to bear the costs incurred by Mr. Adewale due to their improper conduct.

Analysis

Precedents Cited

The judgment extensively references several key cases that have shaped the Tribunal's approach to strike out applications:

HMRC v Jones and Jones [2011] EWCA Civ 824: Established the principle that the Tribunal cannot re-examine factual determinations made by the Magistrates Court regarding the legality of seizures.
HMRC v Race [2014] UKUT 331 (TCC): Reinforced the limitations on the Tribunal's jurisdiction to overturn deeming provisions without judicial oversight.
Staniszewski v HMRC [2016] UKFTT 128 (TC): Clarified that the Tribunal does not have jurisdiction to reconsider consumption and proportionality points related to duty assessments.
Hill v HMRC [2017] UKFTT 18 (TC): Explored alternative arguments appellants might use beyond deeming provisions, emphasizing the Tribunal's role in considering the merits of an appeal.
Garland v HMRC [2016] UKFTT 573 (TC): Highlighted the importance of allowing unrepresented appellants an opportunity to present their cases fully without premature strike outs.
Jacobson v HMRC [2016] UKFTT 570 (TC): Addressed the application of penalties at airports, advocating for contextual considerations based on the specific channels and their implications.
NT-ADA Ltd v HMRC [2016] UKFTT 642 (TC): Discussed the validity of assessments when procedural requirements for notifications are not strictly adhered to.

These precedents collectively underscore the Tribunal's inclination towards ensuring fair hearings and meticulously assessing the jurisdiction before considering strike out applications.

Legal Reasoning

The Tribunal's legal reasoning in dismissing HMRC's strike out application hinges on a twofold analysis:

Jurisdiction and Procedural Compliance: The Tribunal examined whether HMRC properly invoked Rule 8 of the Tribunal Procedure (FTT) Rules 2009, which governs striking out proceedings. Specifically, HMRC's reliance on Rule 8(2)(a) (lack of jurisdiction) and Rule 8(3)(c) (no reasonable prospect of success) was scrutinized.
Merit of the Appellant's Case: Even though HMRC argued the appeals lacked merit, the Tribunal considered potential arguments Mr. Adewale might raise, highlighting that dismissing the appeals without a substantive hearing could deny Mr. Adewale his right to have his case fairly evaluated.

Additionally, the Tribunal identified procedural deficiencies in HMRC's application, such as the incomplete citation of relevant authorities (e.g., omission of the Jacobson case), which undermined the legitimacy of the strike out request. The Tribunal emphasized that legal representatives, especially when opposing unrepresented appellants, have a duty to present a comprehensive and balanced submission.

Impact

The decision in Adewale v HMRC has significant implications for future tax appeals and HMRC's approach to strike out applications:

Enhanced Scrutiny of Strike Out Applications: Tribunals will likely exercise greater diligence in evaluating the merits of strike out requests, ensuring that HMRC cannot dismiss appeals solely on procedural grounds without substantive justification.
Obligation to Present Comprehensive Evidence: HMRC and other parties must ensure that all relevant authorities and precedents are cited in their submissions to prevent procedural oversights from undermining their cases.
Protection of Appellant Rights: The judgment reinforces the principle that appellants, including those representing themselves, should be granted a fair opportunity to have their cases heard on their merits, discouraging the premature dismissal of appeals.
Cost Implications for HMRC: The order for HMRC to bear the appellant's costs serves as a deterrent against frivolous or improperly grounded strike out applications, promoting more judicious use of such procedural mechanisms.

Collectively, these impacts foster a more equitable tribunal environment, ensuring that procedural tools like strike outs are employed appropriately and justly.

Complex Concepts Simplified

The judgment involves several legal concepts and terminologies that may be intricate for those unfamiliar with legal proceedings. Here, we break down some of these complexities for clearer understanding:

Strike Out Application: A procedural request by a party (in this case, HMRC) to dismiss the entirety or part of the opposing party's (Mr. Adewale's) case without a full hearing, typically on grounds such as lack of jurisdiction or insufficient merit.
Rule 8 of the Tribunal Procedure (FTT) Rules 2009: Governs the conditions and procedures under which proceedings can be struck out. It distinguishes between mandatory strike outs (e.g., lack of jurisdiction) and discretionary ones (e.g., no reasonable prospect of success).
Deemed Condemnation: A statutory provision where goods are automatically considered forfeited if the owner does not contest their legality within a specified timeframe, thereby limiting the grounds on which an appeal can be made.
Reasonable Prospect of Success: A standard used to assess whether an appellant has a credible chance of prevailing in their appeal. If not, the tribunal may strike out the case to conserve resources.
Unrepresented Appellant: An individual who does not have legal representation during tribunal proceedings, thereby relying on their own understanding and presentation of the case.
Costs Order: A directive from the tribunal requiring one party (HMRC) to pay the legal costs incurred by the other party (Mr. Adewale), typically due to unreasonable or improper conduct during the proceedings.

Understanding these concepts is crucial for comprehending the dynamics of tribunal proceedings and the balance between procedural efficiency and fair adjudication.

Conclusion

The Adewale v HMRC judgment underscores the Tribunal's commitment to ensuring fair and just proceedings, particularly when dealing with strike out applications. By dismissing HMRC's attempt to strike out the appeals and ordering HMRC to cover the appellant's costs, the Tribunal highlighted the necessity for procedural propriety and the equitable treatment of appellants, irrespective of their representation status. This decision not only clarifies the application of Rule 8 but also reinforces the importance of comprehensive and balanced legal submissions by parties seeking to strike out an appeal. Moving forward, HMRC and similar entities must exercise greater diligence and fairness in their tribunal engagements, fostering a judicial environment that upholds the principles of justice and accessibility.