Waterloo Car Hire (a partnership) v The Commissioners for HMRC

At the commencement of the hearing, Mr Fox submitted that he had spent two days prior to the hearing making an application to the FtT, that had been misdirected. In further amplification of this submission, he stated that he had sent correspondence to the FtT, with a view to relying on case law in support of the Appellant’s case. The case intended to be relied on was the case of HMRC v Tasca Tankers Ltd. [2022] UKUT 00088 (TCC) (‘Tasca’) (Johnson J and Judge Andrew Scott). He added that he had received a reply from the FtT to the effect that the case could not be relied on by the Appellant and that, therefore, he had been unable to prepare the Appellant’s submissions. Mr Fox could not provide any further explanation as to why he could not make any submissions in support of the Appellant’s case, other than that he had not been permitted to rely on Tasca, despite the fact that Directions had been made for both parties to file and serve their Skeleton Arguments as long ago as July 2022 and in light of the lengthy procedural history in this matter.

By a letter, dated 25 April 2023, the Appellant’s representatives had written in the following terms:

The letter was brought to the attention of the panel, attached to an email which stated the following:

Unfortunately, the impression created by the wording of the email (without seeing the Appellant’s representative’s letter dated 25 April 2023) was that the Appellant’s representatives wanted to introduce new evidence that had not been included in the bundle already filed (in accordance with the Directions) for the hearing. The Appellant’s representatives were, therefore, informed that no new evidence that had not been served in accordance with the Directions could be relied on. It later became clear that the Appellant’s representatives were only intending to rely on Tasca. The direction therefore given was that the Appellant’s representatives were not prohibited from relying on Tasca. Unfortunately, this direction was not communicated to the Appellant’s representatives prior to the preliminary hearing on 27 April 2023.

Despite the confusion created by the reference to the representatives’ request as “new evidence”, we were satisfied that both parties had been given ample opportunity to prepare for the hearing (from July 2022) and the delay now being created was no longer sustainable. It is pertinent to note that this matter was first listed for an application to make a late appeal on 20 July 2022. HMRC had earlier made the Strike Out application, on 14 December 2020. The application was granted.

Shortly before the adjourned hearing had been due to take place on 20 July 2022, HMRC filed and served “Additional Submissions”, dated 19 July 2022, in support of the Strike Out application. The Additional Submissions were said by Ms Truelove to have been necessary in light of the limited submissions that had been included in HMRC’s original submissions in support of the Strike Out application, which had largely been devoted to the issue of the late appeal. Ms Truelove had also made an application to admit late evidence, pursuant to rule 5(3)(d) of the Procedure Rules. The late evidence was included in a “Supplementary Bundle” and consisted of the following documents:

Ms Truelove explained that the reason for the late evidence was that she had only stepped in to deal with the matter on 1 June 2022, to cover for a colleague who was unwell, and had previously been under the impression that everything had been done in readiness for the hearing on 20 July 2022.

In opposition to the application to admit late evidence, Mr Fox submitted that Ms Truelove had stepped in to deal with the matter well before 13 July 2022, when the Appellant had filed all of its evidence, including the skeleton argument in support of the application to make a late appeal, and that the Appellant should not suffer as a result of HMRC’s oversight in failing to include the documents referred to at para. 20 above in the bundle.

Having considered the parties’ respective positions, we decided to admit the evidence on the basis that the documents were familiar to both of the parties (having either been sent or received by either one of the parties in the past) given that they were part of the procedural background. Furthermore, the documents are relevant to the issue before us. In relation to the Additional Submissions, we were satisfied that these merely added greater detail to HMRC’s Strike Out application and were not a departure from the Strike Out application. Due to the timing of service of the Additional Submissions and the application to admit late evidence, the hearing on 20 July 2022 was adjourned in order to give the Appellant’s representatives time to consider the Additional Submissions and the late evidence.

The hearing was adjourned with Directions. HMRC were directed to file and serve a revised electronic bundle to include all of the new evidence. The Appellant’s representatives were directed to file an amended skeleton argument addressing the Strike Out application, particularly the doctrine of res judicata. The Appellant’s representatives were given until 5 August 2022 to do this.

In response to the Directions, the Appellant’s representatives (or rather more specifically Ms Denise McConkey (Nominated Partner)) filed a skeleton argument, dated 5 August 2022.

We, therefore, proceeded to hearing the Strike Out application.

In support of HMRC’s Strike Out application, Ms Truelove submitted that the substantive decision under appeal concerns the Assessments (and the two closure notices) based on HMRC’s 2015 decision on the capital allowance treatment of cars. She further submitted that HMRC’s case was that the cars were capital in nature, leading up to the review conclusion. She proceeded to take us through the history of proceedings brought by the Appellant, and the decisions of the FtT (supra).

Ms Truelove re-iterated that the Appellant’s appeal was an attempt to re-litigate a matter which was decided in the 2016 appeal. She added that this was an attempt already made by the Appellant in the 2019 appeal, and that res judicata applies. In this respect, the principles of cause of action estoppel, or, in the alternative, issue estoppel or abuse of process apply. If estoppel applies, rule 8(2)(a) of the Procedure Rules applies. If abuse of process applies, the relevant rule, she submitted, was rule 8(3)(c).

In relation to cause of action estoppel, she submitted that the Appellant’s cause of action was the same cause of action as both the 2016 appeal and the 2019 appeal. She added that all three of the appeals (including the 2020 appeal) were against HMRC’s 2015 decision. She further submitted that the Appellant’s failure to make the relevant points that the Appellant now seeks to make in the 2016 appeal is not sufficient to depart from the doctrine of res judicata, and that the only distinction between the 2016 appeal and the 2020 appeal was that the Appellant has sought to raise different capital allowance computations. In this respect, she submitted that during the 2016 appeal, the Appellant was aware of the capital allowances given and failed to exercise reasonable diligence in raising the ground of appeal now sought to be raised in (both the 2016 appeal and the 2019 appeal).

In relation to issue estoppel, Ms Truelove submitted that there was no dispute that the decision relating to the 2016 appeal was final, and that the Appellant hung its argument on the issue of whether the sale of the cars was capital, or revenue, in nature. She repeated that the capital allowance computations were part of the 2016 appeal and the issue has been decided. She concluded the submissions on issue estoppel by saying that the Appellant needs to show that special circumstances exist, and that no such arguments in respect of special circumstances have been made by the Appellant.

In relation to abuse of process, she submitted that the 2020 appeal is the Appellant’s third appeal and that the Appellant has only recently advanced grounds on the capital allowance computations, which, once again, the Appellant had failed to do in the 2019 appeal. In respect of HMRC’s letter, dated 3 June 2020, she submitted that this was not HMRC’s consent to a new appeal. She further submitted that at no point did HMRC say that the appeal would not be opposed. She acknowledged that abuse of process arguments may carry less weight in respect of arguments that were not raised before, but submitted that a dangerous precedent would be set and evidence would be weakened by the lapse of time.

At the conclusion of Ms Truelove’s submissions, Mr Fox made an application for an adjournment. This was after he had made brief submissions on why res judicata did not apply. In further amplification of his submission that res judicata did not apply, Mr Fox submitted that the issue of the capital allowance computations had never been litigated before. He added that Judge Berner had also agreed, in his decision refusing permission to appeal, that there had been no argument before the FtT in relation to the application of the capital allowance legislation.

Mr Fox submitted that the reason for his application for an adjournment was that he had intended to spend the two days prior to the hearing preparing submissions based on Tasca. He added that the decision in Tasca had only been published a few days before the hearing. This is not, however, correct as the decision was released on 18 March 2022. Mr Fox explained that what he meant was that the decision was published on a practitioners’ website a few days before the hearing. Mr Fox further submitted that HMRC had failed to refer to all case law, including Tasca, that was relevant to the Strike Out application and failed to include Tasca in the bundle.

In reply, Ms Truelove submitted that whilst Tasca dealt with rule 8(3)(c) of the Procedure Rules, it did not establish a legal principle, or rule, to be followed and was decided on its own facts. Ms Truelove opposed the application to adjourn on the basis that the adjournment was solely for the purpose of formulating submissions in relation to Tasca, which was not relevant to the doctrine of res judicata. She added that the Appellant could have prepared submissions from 20 July 2022, when the hearing was last adjourned, and that the Appellant’s representatives were merely attempting to drag out the proceedings.

We refused the adjournment application. The reason for refusing the application was that the Appellant’s representatives had from July 2022 to prepare submissions in response to the Strike Out application. Indeed, the Appellant had filed its skeleton argument in response to Directions issued in July 2022. Furthermore, Mr Fox had still not explained why it had not been possible to prepare the Appellant’s case despite the earlier confusion as to whether the Appellant could rely on Tasca, which was decided on its own facts. We nevertheless directed that the Appellant’s representatives file and serve written submissions in reply to the Strike Out application by no later than 15 May 2023, before issuing this Decision.

On 15 May 2023, the Appellant’s representatives filed the following written submissions:

In the written submissions, the Appellant’s representatives continued to take issue with the confusion concerning whether reliance could be placed on Tasca at the hearing on 27 April 2023.

Having considered all of the arguments, we now proceed to give our Decision, with reasons.

Rule 8 of the Procedure Rules provides that:

The Appellant has sought permission to make a late appeal against HMRC’s decision relating to the capital allowance treatment of cars (i.e., the 2015 decision).

HMRC have applied to strike out the Appellant’s appeal in reliance on the doctrine of res judicata. In the Strike Out application, HMRC submit that (i) the Appellant is bound by the original decision in the 2016 appeal as the 2019 and 2020 appeals relate to the same cause of action as the original matter. On that basis, the appeal should be struck out under rule 8(2)(a) of the Procedure Rules; or (ii) if the FtT does not agree that the 2020 appeal is based on the same cause of action as the 2016 appeal, issue estoppel applies to provide that the appeal must be struck out under Rule 8(2)(a); or (iii) if the FtT does not consider that estoppel applies in relation to the capital allowances computation, the 2020 appeal is an abuse of process, which means it should be struck out under rule 8(3)(c) of the Procedure Rules.

The Appellant submits that (i) the letter dated 3 June 2020 from HMRC stated that it would be in order for the Appellant to proceed directly to the FtT and the 2020 appeal was lodged because there was no possibility of reaching an agreement with HMRC; (ii) capital allowances were not properly argued after the 2016 appeal and, therefore, the Appellant never had the opportunity to proceed on that basis; (iii) the doctrine of res judicata was introduced to prevent the re-litigation of a matter which has already been determined but the entire issue of capital allowances has never been litigated, or considered; and (iv) allowing fuller investigation of the matter is material.

Finality is a fundamental objective of any dispute resolution process. ‘Finality’ has two meanings: (i) whether there is any possibility of an appeal within a single piece of litigation which may overturn a decision; and (ii) whether a decision in one set of proceedings can be re-litigated in later proceedings. Regarding the second sense of finality, there is an important principle that decisions of competent tribunals must be accepted as providing a stable basis for future conduct: Zurich Insurance plc v Hayward [2011] EWCA Civ 641, [2011] CP Rep 39, at [45] (Smith LJ). This is encapsulated by saying that judicial decisions are ‘res judicata’. Res judicata is a substantive rule of law. The full Latin maxim of this doctrine is “res judicata pro vertitate acciputur”, which translates to ‘a matter adjudged is taken as truth’. A judgment binds the parties so they cannot, thereafter, sue a second time if their first claim was defeated, or contest issues in later proceedings that were decided in earlier litigation. If a claim was successful, the rights and obligations of the parties are now defined by the judgment and they cannot revert to their original positions and start again.

The doctrine of res judicata is premised on two principles. An important insight into the principles underlying the doctrine of res judicata can be gathered from the speech of Lord Bridge of Harwich in Thrasyvoulou v Secretary of State for the Environment; Oliver & Ors v Havering London Borough Council [1989] 2 AC 273:

In Virgin Atlantic v Zodiac Seats UK Ltd. [2014] AC 160 (‘Virgin Atlantic’), at [17], the modern formulation of the doctrine of res judicata was encapsulated by Lord Sumption in the following principles:

The purpose of these principles is to limit abusive and duplicative litigation: Virgin Atlantic, at [25]. Each case turns on its own facts.

The constituent elements of res judicata were clearly specified by Lord Clarke JSC in R (on the application of Coke-Wallis) v Institute of Chartered Accountants in England & Wales [2011] 2 AC 146 (‘Coke-Wallis’), where he endorsed the Spencer-Bower & Handley criteria as authoritative:

The doctrine applies where a body is given jurisdiction to determine any issue which establishes the existence of a legal right. It is a fundamental principle which applies to successive proceedings. Hence, res judicata supports the good administration of justice in the interests of the public and the parties by preventing abusive and duplicative litigation. The principle that the parties should not be permitted to re-litigate their disputes after a final decision is one of almost universal application in most legal systems. It is clear from the authorities that the doctrine of res judicata can apply in the context of traditional courts, and tribunals.

The appeal in Coke-Wallis concerned the relevance and application of the principles of autrefois acquit, res judicata and abuse of process, in the context of successive proceedings before a regulatory or disciplinary tribunal. The appellant in that case relied on the principle that nemo debet bis vexari pro una et eadem causa. The question in that case being ‘what is the legal effect of the conclusion that the second complaint raised is the same as the first?’ The substance of the underlying conduct was the same in the case of both complaints. The cause of action merges in the judgment and is extinguished. A second action cannot be brought on that cause of action, not because there is an estoppel, but because there is no longer a cause of action. Lord Clark’s judgment in Coke-Wallis, at [26], referring to Thoday v Thoday [1964] P 181 (‘Thoday v Thoday’), considered that:

Lord Atkin’s words in Workington Harbour & Dock Board v Trade Indemnity Co. Ltd. (No 2) [1938] 2 All ER 101, 43 Com Cas 235, were also considered by the Supreme Court in Coke-Wallis , at [45]. Lord Atkin had described the position concisely at pp 105-106:

Res judicata is, therefore, a broad all-encompassing term as it embraces both ‘cause of action estoppel’ and issue estoppel’, amongst others that fall within its purview. Through the doctrine of estoppel, the power of estoppel branches out into these two rules. The doctrine also covers abuse by a litigant of the court’s process by bringing a second set of proceedings to pursue new claims which ought to have brought in the first set of proceedings.

From the authorities, these are the three relevant concepts for the present purposes: cause of action estoppel, issue estoppel and abuse of process. We proceed to consider these in turn.

Firstly, where the requirements for cause of action estoppel are met, the earlier decision is an absolute bar to later proceedings and the court has no discretion to hold that res judicata does not apply to the later case: Virgin Atlantic. This was considered and applied by Lord Keith of Kinkel in Arnold v National Westminster Bank plc [1991] 2 AC 93 (‘Arnold v National Westminster Bank’), at p. 104:

As considered and reaffirmed in Virgin Atlantic, at [22] (Lord Sumption):

In Coke-Wallis, Lord Clarke said this, at [50]:

Therefore, cause of action estoppel operates where a party brings a new appeal with an identical cause of action involving the same subject-matter as has been determined in an earlier appeal. Where cause of action estoppel applies, there is also an abuse of process, unless there is a relevant exception.

In Thoday v Thoday, Diplock LJ said this concerning estoppel:

Secondly, issue estoppel operates where a particular issue forming a necessary ingredient in a cause of action has been litigated and decided. In Arnold v National Westminster Bank plc, at p 105, Lord Keith defined issue estoppel in the following manner:

At p 109, he said this:

Issue estoppel is, in principle, binding between the parties in subsequent litigation raising the same issue as the second and third applications. Henderson J in Littlewoods Retail Ltd. & Ors v HMRC [2014] EWHC 868 (Ch) (‘Littlewoods’) said this, at [152]:

The severity of this rule is tempered by a discretion to allow the issue to be re-opened in subsequent proceedings when there are ‘special circumstances’ in which it would cause injustice not to do so: Arnold v National Westminster Bank plc. In Virgin Atlantic, Lord Sumption formulated the ‘special circumstances’ exception at [22(3)], as follows:

It was not until Arnold v National Westminster Bank plc that it was firmly established that an exception for ‘special circumstances’ applies to issue estoppel, but not to cause of action estoppel. Cause of action estoppel and issue estoppel do not depend on the earlier claim being determined by a reasoned decision, but turn on whether there was a competent tribunal and whether a final order has been made.

Thirdly, the principle of abuse of process applies where a party is misusing, or abusing, the process of the court by making a claim in relation to the same subject-matter as has previously been decided. Whilst res judicata is a substantive rule of law, abuse of process is a principle that is used by a court when exercising its procedural powers. An overlap arises in that res judicata is concerned with preventing abuse of process. Abuse of process was first crystallised in Henderson v Henderson (1843) 3 Hare 100, where the following principle was enunciated by Sir James Wigram VC:

The decision in Henderson v Henderson was a conventional application of the rules governing cause of action estoppel. At a certain time, it was thought that a second claim would be an abuse of process if it raised a claim that could have been brought in earlier proceedings. It was firmly established in Johnson v Gore Wood & Co. [2002] 2 AC 1 (‘ Johnson v Gore Wood ’), that this went too far, and that the opposite tendency of looking for an abusive element was too restrictive. Before Johnson v Gore Wood, it had been thought that the court had first to consider whether the second claim was potentially an abuse of process, and then to consider whether there were special circumstances which would justify allowing it to continue. Lord Bingham of Cornhill modified this approach, at [31f] of the decision in Johnson v Gore Wood. Lord Bingham explained the idea behind the rule in Henderson v Henderson, as follows:

Lord Sumption quoted from the words of Lord Bingham, at [24] of the decision in Virgin Atlantic:

In Moorjani & Ors v Durban Estates Ltd. [2019] EWHC 1229, Pepperal J described the approach to be taken in determining whether there has been an abuse of process:

It is important to note that the rule in Henderson v Henderson does not require the court to have determined the issue in previous litigation in order for an abuse to arise.

The modern test is, therefore, to consider whether “in all the circumstances” a party’s conduct is an abuse, rather than to ask whether the conduct is an abuse and, if so, to ask whether the abuse can be excused or justified by special circumstances. A distinction was drawn between the same cause of action and raising entirely new issues. This was the form of abuse of process described by Sir James Wigram VC in Henderson v Henderson, at 114-115. Lord Sumption’s final view in Virgin Atlantic was that there is nothing in the speeches of Lord Bingham or Lord Millett that suggests that because the rule in Henderson v Henderson is concerned with abuse of process, it cannot be part of the doctrine of res judicata.

With those principles in mind, we turn to the circumstances of this appeal.

HMRC firstly argue that the Tribunal must strike out the appeal on the basis of estoppel. In the alternative, HMRC argue that the appeal is an abuse of process. It is submitted on behalf of the Appellant that res judicata does not apply as there is a fundamental issue that has yet to be considered by the FtT. That is the issue concerning the capital allowance computations which, the Appellant submits, has never been argued before having been raised for the first time after the 2016 appeal.

Rule 8 of the Procedure Rules is the source of the jurisdiction to strike out an appeal. The Tribunal is obliged to strike out the whole, or part, of any proceedings in respect of which it does not have jurisdiction. Rule 8(2)(a) provides that:

During the 2016 appeal, the Appellant’s grounds of appeal were:

Following the 2016 appeal hearing, Judge Connell decided that the vehicles were fixed assets that were subject to capital allowance legislation. He made the following material findings in the decision, dated 5 September 2016:

The FtT subsequently confirmed HMRC’s amendments to the Appellant’s partnership returns for the tax years 2009-10 to 2012-13 and dismissed the appeal. The Assessments were, accordingly, upheld.

Following applications for permission to appeal, which were refused by the FtT on 23 January 2017 and the UT on 4 April 2017, the Appellant made a renewed application for permission to appeal at an oral hearing before Judge Berner, on 7 July 2017. Judge Berner refused permission to appeal in a decision dated 13 July 2017. At the end of that decision, Judge Berner said this, at [9] to [11]:

That concludes the proceedings in this Tribunal. But, as I discussed with Mr Fox and Mr Gance at the hearing, that does not preclude the Applicant from seeking to agree figures with HMRC in order to take account of the conclusion that the vehicles are capital assets subject to capital allowances. I do not have any information as to the nature of any possible claim by the Applicant in this respect, or any applicable procedure or time limit, and this is not something within the jurisdiction of this Tribunal, but if there are adjustments that should be made, then that is something that may be addressed outside of these proceedings.

As part of the general discussion, I noted that, in principle, the system of capital allowances enables a measure of relief for capital expenditure to be obtained. That involved, in broad terms, writing-down allowances, at fixed rates which may differ from accounting depreciation, but also a system of balancing allowances (and charges) which apply, for example, on the disposal of the asset. The system of balancing allowances enables relief in principle to be obtained by reference to the sale price or the market value of the asset in question on disposal. To the extent that, in the periods in question, and going forward, the applicant disposed of capital assets, in principle it appeared to me that balancing adjustments would fall to be made and would be brought into account in a capital allowances pool. That would require separate tax computations, which will be different from the accounting entries.

None of that is something over which this Tribunal has any jurisdiction, and my high-level comments in the hearing, which I was asked to summarise in this decision, have no particular significance. Any further dispute between the parties would, as I indicated at the hearing, have to be the subject of a separate appeal to the FTT. I would hope, however, that further dispute can be avoided by discussion.”

We find that Judge Berner’s comments, at [10] of his were in relation to the pre-2009 treatment of cars. Schedule 11 of the Finance Act 2009 has changed the way that cars are treated for capital allowance purposes (from 6 April 2009) to a CO2 emissions basis. Therefore, since April 2009, balancing allowances have not been given and relief is given over time, depending on the CO2 emissions.

Ongoing discussions then took place between the Appellant’s representatives and the HMRC tax inspector, Mr De Forges. By a letter dated 23 January 2019, Mr De Forges referred to Judge Berner’s decision of 7 July 2017 and said this:

On 4 March 2019, the Appellant submitted the 2019 appeal to the FtT. The notice of appeal stated that the amount in dispute was £44,250. The grounds for appeal were as follows:

On 24 May 2019, HMRC applied to strike out the 2019 appeal on the grounds that if the Appellant was seeking to appeal the capital allowance computations and HMRC’s application of the legislation, that would constitute a new ground of appeal in a case which had already been determined by the FtT in the 2016 appeal. Further, HMRC contended that it was too late to introduce a new ground of appeal.

During the 2019 appeal hearing before Judge Sinfield, Mr Fox submitted that the Appellant was appealing against the figures in HMRC’s review conclusion letter of 21 December 2015. He further submitted that he understood Judge Berner’s words at [11] of the decision dated 7 July 2017 to mean that the Appellant could go back to the FtT with the appeal. He also referred to a letter, dated 24 August 2017, from Mr De Forges to Mr Gance. The last sentence of the second para. was worded as follows:

Mr De Forges then asked:

Mr Fox submitted that this showed that the capital allowance treatment was still in dispute and had not been agreed with HMRC. He submitted that the calculations could be the subject of another appeal.

In his decision, Judge Sinfield said this, at [11] – [13] and [15]:

Judge Sinfield, therefore, found that the grounds of appeal relating to the 2019 appeal did not address any issues in relation to the capital allowance computations.

In the 2020 appeal (the appeal before us), the Appellant’s grounds of appeal are that:

Prior to lodging the 2020 appeal, there were further exchanges of correspondence between the parties. By a letter dated 15 October 2019, the Appellant’s representatives said this:

In considering whether the 2020 appeal arises out of the same, or substantially the same, facts, we have looked at all of the circumstances of the case. In the event that a new claim is being made in the 2020 appeal, we have considered whether there are any special circumstances that apply. We are satisfied that:

The definition of a cause of action was given by Brett J in Cook v Gill (1873) LR 8 CP 107:

The term cause of action was also described in Letang v Cooper [1965] 1 QB 232, at 242 (‘Letang v Cooper’) per Diplock LJ. In Paragon Finance v DB Thackerar & Co (A Firm) [1999] 1 All ER 400, Chadwick J cited the definition offered by Diplock LJ in Letang v Cooper, which was approved in Steamship Mutual Underwriting Assn Ltd. and Anor v Trollope & Colls (1986) 6 Con LR:

HMRC’s Assessments (and 2015 decision) followed an amendment to the Appellant’s 2012 partnership tax return. The Appellant appealed against the Assessments in the 2016 appeal. In this respect, s. 31 TMA provides that:

An appeal may be brought against—

Section 50(6) TMA, in turn, provides that:

If, on an appeal notified to the tribunal, the tribunal decides—

that, …, the appellant is overcharged by a self-assessment;

that, ..., any amounts contained in a partnership statement are excessive; or

The burden of proof rests on the Appellant to show that the Assessments are incorrect. Therefore, unless the Appellant can produce evidence to show that, on the balance of probabilities, it has been overcharged by the Assessments, the Assessments ‘shall stand as good’.

The FtT in 2016 confirmed the Assessments and permission to appeal against that decision was refused by both the FtT and the UT (Judge Berner). Following the 2016 appeal, the Assessments were confirmed. The Appellant’s 2020 notice of appeal clearly suggests that the Appellant seeks to appeal against the Assessments by way of different capital allowance computations. This is so as no new decision has ever been made by HMRC following the 2016 appeal. I shall return to this point later.

We find that whilst the Appellant never submitted the capital allowance computations now sought to be relied on during the 2016 appeal, we are satisfied that subject matter (factual situation) and the underlying right of appeal in the appeal before us is the same as that which was in play during 2016 appeal and the 2019 appeal (in relation to the subject matter and factual situation). We find that on a proper analysis of the facts, the issue of capital allowance computations is not a new matter. Our reasons for so finding are that prior to, and during, the 2016 appeal HMRC had based their capital allowance figures on information provided by the Appellant. Indeed, Judge Connell said this in his decision:

Paragraph 36 of Judge Connell’s decision was taken directly from HMRC’s letter dated 30 June 2015. In that letter, the Appellant’s representatives were given 30 days to either agree to HMRC’s proposals, or provide alternative documentary evidence. By a further letter, dated 5 August 2015 (‘the 2015 decision’), HMRC informed the Appellant of the decision to proceed on the basis described in the letter dated 30 June 2015. HMRC’s 2015 decision was followed by statutory review, the conclusion of which was issued on 21 December 2015. We are satisfied that HMRC’s Assessments included calculations of what the capital allowance computations should be, as notified to the Appellant. We are further satisfied that the amount of the Assessments had to be decided as part of the decision in the 2016 appeal. In confirming the Assessments, the FtT was upholding those calculations. That decision was reached by a tribunal of competent jurisdiction.

It is trite law that an appeal lies against a decision. We find, however, that there has been no further decision giving a further right of appeal against the Assessments which were confirmed by the FtT in 2016. Indeed, the Appellant’s own representatives appreciated that there was no new decision which would trigger a further right of appeal. The letter, dated 12 September 2018, from the Appellant’s representatives to HMRC included the following statement:

This was the same position in the Appellant’s representatives’ letter, dated 2 June 2020, to HMRC:

By way of reply, HMRC said this in the letter, dated 3 June 2020, to the Appellant’s representatives:

Therefore, no new decision was made following the Appellant’s representatives’ discussions with HMRC after the 2016 appeal against the 2015 decision.

In refusing permission to appeal against Judge Connell’s decision, Judge Berner commented that the Appellant was not precluded from seeking to agree capital allowance figures with HMRC. He added that he did not have any information as to the nature of such a claim, or any applicable procedure or time-limit. Materially, whilst Judge Berner’s comments were also that the Appellant may seek to agree proper capital allowance figures with HMRC, he unequivocally stated that this was not within the jurisdiction of the FtT (i.e., that adjustments may be addressed outside of the tribunal proceedings).

Having considered all of the information before us, we find that the capital allowance computations now sought to be relied on by the Appellant were invited by HMRC because of what was said by Judge Berner at the end of his decision. It is submitted on behalf of the Appellant that HMRC invited a further appeal to the FtT. We do not agree with this. We have found that Judge Berner made clear that further discussions between the Appellant and HMRC were not within the jurisdiction of the FtT. Indeed, HMRC’s letter of 19 August 2019 made clear that:

Contrary to the assertion made on behalf of the Appellant that Judge Sinfield’s decision, at [15], “…effectively provided a ‘green light’ so as to enable the process to recommence”, we are satisfied that all that Judge Sinfield was saying there was that no arguments had been raised before Judge Connell as to the final calculation of the capital allowances and that an abuse of process argument may carry less weight when the matter was not in issue at the hearing. We do not agree that Judge Sinfield’s decision provided a ‘green light’ for the process to continue an appeal to the Tribunal.

We find that the fact that the Appellant chose to focus its arguments on the capital allowance treatment of the cars, and not the amount of the Assessments, does not displace the cause of action at play during the 2016 appeal. The Appellant is, essentially, asking the FtT to, once again, exercise its power under s. 50(6) TMA to reduce the amount of tax due under the Assessments by relying on new capital allowance computations. We hold that the Appellant cannot appeal to the FtT against a matter which, by virtue of being dismissed in the 2016 appeal, has already been determined by the FtT. The FtT has no jurisdiction to entertain such an appeal and must strike it out under rule 8(2)(a) of the Procedure Rules.

Cause of action estoppel applies to every point which properly belonged to the cause of action when reasonable diligence is exercised. We find that the Appellant has not provided any explanation as to why the capital allowance computations were not relied on before, apart from saying that discussions concerning the capital allowance computations only commenced after the 2016 appeal. We have found that Judge Berner made clear that any ongoing discussions were not within the jurisdiction of the FtT. We have further found that HMRC invited new figures from the Appellant because of Judge Berner’s comments and not because HMRC were considering whether to issue a new decision. While the capital allowance computations that the Appellant now seeks to rely on relate, peripherally, to the 2015 decision, the capital allowances nevertheless relate to the outcome of the 2015 decision and that is the only decision that has been made by HMRC in the circumstances of this appeal. We find that the facts of this appeal have remained the same.

While the point was left open in Shiner & Anor v R & C Commrs [2018] EWCA Civ 31; [2018] BTC 8 (‘Shiner’), the weight of the authorities suggests that issue estoppel has a much smaller part to play in the context of tax appeals. However, it may be abusive for a party to contest a point which has been decided against them in later proceedings and, in that context, the court will make a broad merits-based evaluation.

Further and alternatively, the appeal may be struck out as an abuse of process. In Hunter v Chief Constable of the West Midlands Police [1982] AC 529, Lord Diplock said this:

As confirmed in Shiner, rule 8(3)(c) may be used to strike out an appeal due to the appeal being an abuse of process. The court said this, at [19]:

Cases that amount to an abuse of process can, therefore, properly be struck out in accordance with the tribunal’s inherent powers of case management, without reference to rule 8. However, rule 8(3)(c) is drafted sufficiently widely to permit strike outs under rule 8 as well, when a case amounts to an abuse of process. In Shiner, the Court of Appeal held that it had been correct for the FtT to strike out part of the taxpayers’ appeals on the basis that it would have been an abuse of process to allow the taxpayers a second attempt to challenge issues which had already been the subject of a failed judicial review. Even if it were otherwise permissible, there were no special circumstances which justified the re-opening of the point in issue.

Rule 8(3)(c) is a discretionary power to strike out. In this respect, we have had regard to the overriding objective under the Procedure Rules.

In considering whether to strike out the appeal as an abuse of process, we have asked the crucial question of whether, in all the circumstances, the Appellant is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before: Henderson; Laing v Taylor Walton [2008] PNLR 11. We are conscious of the fact that to say that because a matter could have been raised in earlier proceedings renders the raising of it in later proceedings necessarily abusive is too restrictive:  Johnson v Gore Wood & Co , at [30]-[34]. In the appeal before us, the private interest at hand is that of a party not being vexed twice for the same reason and the public interest is that of not having the same issues repeatedly litigated:  Michael Wilson & Partners Ltd v Sinclair  [2017] 1 WLR 2646;  Hunter ;  Arthur J S Hall & Co v Simons  [2002] 1 AC 615.

In these circumstances, the test enunciated by Lord Bingham in Johnson v Gore Wood is relevant:

Where a point was not raised in a set of proceedings, but could have been raised, it may be an abuse of process for the party to raise it in later proceedings. When decided whether that is the case, we have made a broad merits-based judgment.

In Spring Capital v HMRC [2015] UKFTT 8 (TC) (‘Spring Capital’), Judge Mosedale noted that the fact that issue estoppel does not apply to tax cases appears to be no bar to a court concluding that the re-opening a decided issue is an abuse of process, and that cases such as Littlewoods make it clear that the operation of the doctrine of abuse of process appears similar to issue estoppel, except that there is flexibility where there are special circumstances. In Spring Capital, the taxpayer had appealed against the daily penalties assessed by HMRC under Schedule 36 of the Finance Act 2008 for failing to comply with an information notice. The taxpayer had previously lost an appeal in the FtT against a fixed penalty of £300 for non-compliance with the information notice. The FtT did not allow the taxpayer to argue in the daily penalty that part of the information notice was invalid because the taxpayer could, and should, have argued these matters in the original £300 penalty appeal. The FtT found there to be no special circumstances to enable the taxpayer to have a second bite of the cherry.

Even taking into consideration that the capital allowance computations were not argued by the Appellant in the 2016 appeal, we have found that the Assessments (and the computations relied on by HMRC) had to be decided as part of the decision in the 2016 appeal. Therefore, the amount of the Assessments was necessarily common to the 2016 appeal and the appeal before us. In this respect, the amount of the Assessments was a condition which had to be fulfilled in order for the Assessments to be confirmed in the 2016 appeal. The capital allowance computations would go to fulfilling that condition and the issue formed a necessary ingredient of the cause of action. The Appellant has not provided any explanation as to why the capital allowance computations were not available during the 2016 appeal. We are satisfied that the Appellant cannot seek to rely on the sole argument that the capital allowance computations were the subject of ongoing discussions with HMRC after 2017 as providing a basis for lodging a further appeal.

We find that the decision of the FtT in 2016 was a judicial decision and that decision was pronounced on 5 September 2016. We are further satisfied that the FtT had jurisdiction over the parties and the subject-matter of the appeal by virtue of the right of appeal under TMA. The decision was final in the sense that it was un-appealed or, rather, challenges to the decision were unsuccessful on 23 January 2017, 4 April 2017 and 13 July 2017. That the Appellant is now appealing on different evidence does not detract from the fact that the Appellant did not seek to challenge the evidence produced by HMRC in raising the Assessments. We find that during the 2016 appeal, the Appellant was primarily focusing its arguments on the status of the cars, to the detriment of the amount of the Assessments. That, we find, does not give the Appellant the right to a “second-bite at the cherry”.

We are satisfied that the Appellant has merely taken on a new focus in the appeal before us. That the Appellant was required to bring forward its whole case in 2016 when exercising the right of appeal against the 2015 decision is an argument that has considerable force. The new point properly belonged to the litigation in 2016. We find that it would have been a relatively simple and straightforward task for the Appellant to submit all of the evidence now sought to be relied on during the 2016 appeal. We are fortified in our view by the arguments raised in the Appellant’s skeleton argument as follows:

We find that the description (label) of the 2020 grounds of appeal by the Appellant is distracting from the contents of the bottle. We find that if a party were permitted to rely on evidence, the unavailability of which at the time of the original decision has not been substantiated, this would open the floodgates in litigation. Even if a better analysis is now being pleaded, the case of Ladd v Marshall [1954] 1 WLR 1489 held that the applicant must show that the evidence could not with reasonable diligence have been obtained. The standard required is reasonable diligence. This has not been shown by the Appellant before us.

It is trite law that litigation should not drag on forever. This matter has now been ongoing since 2013 and we have found that no reasons have been put forward for the failure on the part of the Appellant to bring forward its whole case in 2016, having appealed pursuant to s. 31 TMA. We have undertaken a broad merits-based judgment, taking into account the public and private interests involved, as well as a balanced appraisal of all of the facts of the case, taking care not to conduct a mini-trial of the issues.

Lastly, but by no means least, the Appellant’s representatives have relied on Tasca. We find that the Appellant’s representatives have not, however, said how Tasca applies to the Appellant’s case, apart from the reference to rule 8(3)(c) in Tasca. It is correct that HMRC should consider the range of tribunal decisions which have a bearing on the application (including those which are unfavourable to HMRC) and not present a single decision which would seem to support them: Hill v HMRC [2017] UKFTT 277 (TC). However, whilst the Appellant’s case is that Tasca is relevant, it is trite law that each case is decided on its own facts.

The strike out application in Tasca was based on rule 8(3)(c) of the Procedure Rules. The question before the UT was whether the judge was wrong, as a matter of law, in the decision which he made and, if so, whether that error vitiated the decision such that it should be set aside. Tasca was an MTIC appeal which concerned the refusal of the FtT to strike out Tasca’s appeal against HMRC’s decision to deny input tax on the basis that Tasca knew, or should have known, that the relevant transactions were connected with the fraudulent evasion of tax.

The UT identified a critical gap in the judge’s reasoning in declining to strike out the appeal, at [75], where the judge had failed to apply the relevant legal tests and had failed to engage with the case. The only similarity between Tasca and the appeal before us is rule 8(3)(c).

We have considered the relevant tests in deciding whether this appeal should be struck out. Having considered the oral and written submissions, together with the relevant legal principles, we are satisfied that the appeal must be struck out under rule 8(2)(a) of the Procedure Rules. In this respect, we are satisfied that statute has created a specific jurisdiction for the determination of any issue which establishes the existence of a legal right. Further, and alternatively, we are satisfied that the appeal is otherwise an abuse of process.

This document contains full findings of fact and reasons for the preliminary decision. Any party dissatisfied with this preliminary decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to "Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)" which accompanies and forms part of this decision notice.