In the recent case of BPP Holdings v Revenue & Customs Commissioners [2016] EWCA Civ 121,  the Court of Appeal has confirmed that the First-tier Tribunal (FTT) was correct to debar HMRC from further participation in the appeal proceedings and confirmed that the strict approach to compliance with rules and directions adopted in Mitchell v News Group Newspapers Ltd [2014] 1 WLR 795, is equally appropriate to litigation before the tax tribunals.


The substance of this appeal is the zero rating of printed materials provided to students for educational courses. However, a preliminary issue arose concerning HMRC’s conduct during the course of the litigation before the FTT.

Briefly, during the conduct of the proceedings before the FTT, HMRC failed to meet a number of deadlines set out in directions issued by the FTT. In particular, HMRC delayed service of their Statement of Case and failed to plead the facts on which they relied. Other failures included  late compliance with a direction to carry out a further disclosure exercise and late applications for extensions of time. As a result, BPP Holdings (BPP) applied for a direction preventing HMRC from taking further part in the appeal.

The key question was the proper approach of the tax tribunals in cases where there has been breach of a direction. Before the FTT, BPP was successful and HMRC were prevented from further participation in the proceedings. HMRC successfully appealed to the Upper Tribunal (UT) and BPP appealed to the Court of Appeal.

The critical difference between the decisions in the FTT and UT was the release of the conflicting decisions of the UT in McCarthy & Stone (Developments) Ltd v HMRC [2014] UKUT 196 (TCC) (which the FTT had the benefit of); and Leeds City Council v HMRC [2014] UKUT 350 (TCC), which had been released when the UT was sitting in BPP.

Both of these cases considered whether the stricter approach to compliance with rules and directions made under the Civil Procedure Rules (CPR), as set out in Mitchell and Denton v TH White Ltd [2014] 1 WLR 3296, applied to cases before the tax tribunals. In McCarthy, the UT concluded that the stricter approach applied to cases before the tax tribunals. In Leeds City Council, however, the UT concluded that as the tribunal rules were less strict than the CPR, Mitchell and Denton did not apply to litigation before the tax tribunals.

The Court of Appeal’s decision

The Court of Appeal allowed BPP’s appeal.

The Court of Appeal held that the FTT’s approach had been correct. The FTT had made clear that its consideration was limited to whether the guidance in the authorities was relevant by analogy to the application of the overriding objective in the tribunal rules.

HMRC argued that the approach adopted by the UT in Leeds City Council should be preferred. They appeared to argue that, as a state agency during a time of austerity, the Court should subject it to a lower standard of compliance. This suggestion was roundly rejected by the Court of Appeal who commented that it found HMRC’s approach towards compliance to be “disturbing” and that even a litigant in person is expected to comply with the rules of court and court orders. The Court said that: “A State party should neither expect to nor work on the basis that it has some preferred status.” The Court of Appeal had little difficulty in allowing BPP’s appeal.

In reaching its decision, the Court considered that nothing in the wording of the relevant tribunal rules justified a different approach in the tax tribunals to compliance or the efficient conduct of litigation at a proportionate cost. Nothing in the wording of the tax tribunal rules’ overriding objective was inconsistent with the general legal policy described in Mitchell and Denton. There was no justification for a more relaxed approach to compliance with rules and practice directions in the tax tribunals.


This decision endorses the stricter approach to compliance with rules and directions that was adopted by the UT in McCarthy. Although the tax tribunals are less formal than the higher courts, this does not mean that the tribunal rules and directions can be ignored. Compliance with such rules and directions must be taken seriously.

A copy of the Court of Appeal’s decision is available to view here.