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HMRC internal manual

Appeals reviews and tribunals guidance

HM Revenue & Customs
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First - tier and Upper Tribunals: Outcome of the tribunal: Groups of related cases: Further Appeals

Rule 5 directions

As a decision on a case which is a lead case under rule 5(3)(b) is not binding on all the related cases, the related cases do not have a right of appeal against that decision. The decision may be persuasive, resulting in settlement of one or more of the related cases. But if they are not persuaded and wish to pursue the matter, they will have to do so by proceeding with their own appeal.

If the lead case decides to appeal the decision of the tribunal further, then it may be appropriate for the stayed cases to continue to be stayed pending the final outcome of the litigation.

Rule 18 directions

A decision on a rule 18 lead case is in principle binding on all the related cases (subject to a successful application under rule 18(4), see ARTG8554). The customer in each related case has a right of appeal against the decision under s 11 TCEA.

Where the tribunal decides in favour of HMRC in a case where there is a rule 18 direction, the lead case, or one or more of the related cases, may decide to appeal against that decision. A customer applying for permission to appeal against the tribunal’s decision must do so within 56 days of the date the decision on the related issues under rule 18 is notified (as opposed to the time when all the subsidiary aspects of particular cases have been finalised).

Where there is a further appeal, this means that there is a point of law that is still under consideration and one which is likely to impact on all of the related/lead cases. In general, therefore, the decision maker should avoid entering into any settlements on related cases unless and until all further appeals have been resolved.

But if the customer in a related case is insistent that they wish to settle, notwithstanding the existence of the further appeal, the terms of the settlement should be based on the lead case decision as it stands at the time of settlement. The decision maker must make sure that the customer understands that, if the lead case decision is subsequently overturned on appeal it will not be possible for them to seek to unravel the earlier settlement and they would remain bound by its terms.

See below for guidance on NIC appeals.

Payment / repayment of tax where there is a further appeal

Once the tribunal has decided the matter, tax must be paid in line with the tribunal’s decision whether or not there is a further appeal, see ARTG8930. Where a rule 18 direction has been given in relation to a number of related cases, the related cases must also pay any tax due in line with the tribunal’s decision, subject to any successful application to the tribunal under rule 18(4), see ARTG8554. HMRC must also repay any tax repayable to the related cases in line with the tribunal’s decisions, subject to any application under rule 18(4).

If the lead case was appointed under rule 5(3)(b), the related cases are not bound by the decision so there is no requirement to amend the tax due in line with the tribunal’s decision where there is a further appeal in the lead case. As each of the related cases is dealt with on its own merits having regard to the decision in the lead case, if the case is settled, any unpaid tax will be payable in line with the settlement of the dispute. If the case is not settled, the appeal will remain open until such time as the litigation in the lead case is concluded.

National Insurance Contributions appeals

If a lead case appeal was finally decided in the customer’s favour, but one or more of the related cases had chosen to settle their appeals while the litigation was still ongoing, they can apply to HMRC for the NICs they had paid to be repaid, in line with the decision on the lead case. See NIM37000 for guidance about refunds of NICs.

If the customer applied to HMRC outside of the normal time limits (six years for Class 1 NICs) for a refund of NICs paid, the decision maker should treat the ongoing litigation, to which the customer was related, as being a reasonable excuse for applying outside of the normal time limits. See NIM37003 for guidance about when the time limits can be extended.

Upper Tribunal / appellate court appeals

The Upper Tribunal and higher courts do not have formal lead case procedures equivalent to Rule 18. But rule 5(3)(b) of the Upper Tribunal rules provides that the Upper Tribunal may consolidate or hear together two or more sets of proceedings or parts of proceedings raising common issues, or treat a case as a lead case. These wide-ranging case management powers enable the Upper Tribunal to take forward lead cases and stay related ones as appropriate.