HMRC's DOTAS application struck out

In HMRC v Elite Management Consultancy Ltd (in administration) and Adam Bale [2024] UKFTT 00567 (TC),  HMRC's DOTAS application was automatically struck out when it failed to serve its authorities bundle on time in breach of an 'unless' order.

Background

This case concerns an application to the First-tier Tribunal (FTT) by HMRC for an order against the first respondent, Elite Management Consultancy Ltd, that certain arrangements known as the "enhanced umbrella scheme" are, or should be treated as, "notifiable arrangements", within the meaning of section 306(1), Finance Act 2004. HMRC contended that the arrangements were notifiable as a tax avoidance scheme under the disclosure of tax avoidance schemes (DOTAS) regime. 

During the course of the litigation, HMRC had applied to the FTT for an extension of time to comply with direction 12 of the FTT's case management directions, which provided for the service of an authorities bundle and stated that failure to comply with the direction would result in the proceedings being struck out. The respondents had opposed HMRC's application but the FTT had granted an extension of time to 17 June 2024.

HMRC's authorities bundle was served via its Secure Data Exchange Service and an email notification was sent at 7:05pm on 17 June 2024. An email from HMRC at 7:19pm confirmed that the authorities bundle had been uploaded for the respondents to download.

The following day (the day before the hearing was due to start), the second respondent's representative applied to the FTT for HMRC's application to be struck out, for failing to comply with the time limit (as extended) in direction 12 of the case management directions.

FTT decision

The application was granted.

The FTT noted that Rule 12 of the Tribunal Rules applied in relation to the time limit such that the authorities bundle should have been served by 5pm on 17 June 2024. However, it was clear that HMRC's authorities bundle was not served until after 7pm that day.

The FTT therefore concluded that the automatic strike out provisions in Rule 8(1) of the Tribunal Rules were engaged and HMRC's DOTAS application was automatically struck out at 5:01 pm on 17 June 2024.

Comment 

This decision serves as a timely reminder to both taxpayers and HMRC that deadlines stipulated in case management directions must be adhered to and failure to comply with an 'unless' order, issued by the FTT under Rule 8(1) of the Tribunal Rules, will result in the offending party's case being automatically struck out, as happened in this instance. If HMRC wishes to pursue its DOTAS application, it will have to apply to the FTT, under Rule 8(5) of the Tribunal Rules, for its application to be reinstated and persuade the FTT why it should be permitted to pursue its application notwithstanding its failure to comply with an 'unless' order.

The decision can be viewed here.