Hickey & Co Solicitors acts for businesses and individuals in tax appeals against HMRC. This article explains how documents are exchanged once an appeal reaches the First-tier Tribunal.
Disclosure in a tax appeal: the short answer
In standard and complex appeals, each party lists and discloses the documents they intend to rely on for the purposes of the appeal, within the time specified in the Tribunal’s directions, after HMRC provides its statement of case (its formal account of why the decision in HMRC’s view is right on the law and facts). Disclosure in the tribunal system is narrower than High Court disclosure (which tends to be made on the basis of Standard Disclosure (CPR 31.6, e.g. disclosure of adverse documents). Under the Tribunal’s rules either party can apply for specific disclosure of documents (e.g. a search for documents meeting a specific category / description), tied to the issues each side has pleaded; however, an application for specific disclosure needs to be carefully considered as to whether it is required and relevant to the issues in dispute).
Specific disclosure
Rules 5 and 16 of the Tribunal’s procedural rules allow it to order a party, or another person, to produce documents which are relevant to the issues in the appeal. Relevance is judged against the issues as pleaded, not the dispute in some general sense (HMRC v IAC Associates [2013] EWHC 4382 (Ch); HMRC v Smart Price Midlands [2019] 1 WLR 5070). In heavy litigation, wider orders may be justified (HMRC v Ingenious Games LLP [2014] STC 1416). For example, in Tower Bridge GP Ltd v HMRC [2016] UKFTT 54, the taxpayer obtained policy advice that HMRC’s reviewing officer had relied on.
What counts as a document
Anything relating to information including emails, WhatsApp and other messages, voice notes, electronic diaries, spreadsheets, drafts and handwritten notes.
Privilege
Confidential communications between a client and lawyers for the purpose of legal advice attract legal advice privilege, whether or not litigation is in contemplation (Three Rivers District Council v Bank of England (No 6) [2004] 3 WLR 1274). Material prepared for the appeal may attract litigation privilege. Quasi legal advice from non-lawyers, including accountants giving tax advice, does not attract legal advice privilege (R (Prudential plc) v Special Commissioner of Income Tax).
What to do in identifying evidence to support an appeal
- Stop any routine destruction of documents, including automated deletion.
- Identify all issues relevant to the success of the appeal, and the categories of documents.
which might assist in bringing the appeal. - Identify and collect documents from everyone involved.
- Consider obtaining witness statements of key facts from those involved (the clients, their
advisers, employees etc) - Build a chronological index and a master file.
- Identify privileged material before anything is released.
Frequently asked questions
Is my accountant’s advice privileged?
Generally not. Legal advice privilege protects confidential communications with lawyers for the purpose of legal advice. Quasi legal advice from non-lawyers, including tax advice from accountants, does not attract it (R (Prudential plc) v Special Commissioner of Income Tax). Litigation privilege may protect some material prepared for the appeal. Check before anything is released.
Can I ask HMRC to disclose its documents?
Yes. Either party can apply to the tribunal for specific disclosure. The request must be focused on documents relevant to the issues as pleaded. In Tower Bridge GP Ltd v HMRC [2016] UKFTT 54, for example, the taxpayer obtained HMRC policy advice that its reviewing officer had relied on in reaching his decision.
Do WhatsApp messages count as documents?
Yes. A document is anything on which information is recorded, including messages, emails, voice notes and electronic diaries. Preserve them now and stop any routine deletion. Casual messages written years ago may be relevant evidence.
Julian Hickey’s disclosure work
Julian’s recent cases include Newcastle United Football Club Ltd v HMRC [2024] UKFTT 223 on specific disclosure; Kevin McCabe v HMRC [2020] STC 2148, a disclosure application concerning HMRC documents from a mutual agreement procedure under a double tax treaty; and Mitchell & Bell v HMRC [2023] 2 WLR 1201, in the Court of Appeal, on the disclosure of confidential documents and to what extent they can be relied on in a tax appeal.