First-tier Tribunal (Tax)

[2010] UKFTT 160 (TC)

TC00465

Appeal number: TC/2009/13698

COMPLEX CASE – application to categorise as complex under rule 23 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 – not complex

FIRST-TIER TRIBUNAL

TAX

                               CAPITAL AIR SERVICES LIMITED              Appellant

                                                                      - and -

                                 THE COMMISSIONERS FOR HER MAJESTY’S

                                                   REVENUE AND CUSTOMS               Respondents

                        TRIBUNAL: JOHN F AVERY JONES CBE (TRIBUNAL JUDGE)                                                                                                     

Sitting in public at 45 Bedford Square, London WC1 on 6 April 2010

Mario Angiolini, counsel, instructed by Norton Rose, for the Appellant

James Rivett, counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2010

DECISION

1.       This is an application by the Appellant to categorise the appeal as a complex case.  The appeal concerns the liability to register the Appellant for VAT in respect of its purchasing and chartering of a helicopter.  The Appellant was represented by Mr Mario Angiolini, and the Respondent (“HMRC”) by Mr James Rivett.

2.       Rule 23 of The Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 provides:

“23.—(1) When the Tribunal receives a notice of appeal, application notice or notice of reference, the Tribunal must give a direction allocating the case to one of the categories set out in paragraph (2).

(2) The categories referred to in paragraph (1) are—

(a) Default Paper cases, which will usually be disposed of without a hearing;

(b) Basic cases, which will usually be disposed of after a hearing, with minimal exchange of documents before the hearing;

(c) Standard cases, which will usually be subject to more detailed case management and be disposed of after a hearing; and

(d) Complex cases, in respect of which see paragraphs (4) and (5) below.

(3) The Tribunal may give a further direction re-allocating a case to a different category at any time, either on the application of a party or on its own initiative.

(4) The Tribunal may allocate a case as a Complex case under paragraph (1) or (3) only if the Tribunal considers that the case—

(a) will require lengthy or complex evidence or a lengthy hearing;

(b) involves a complex or important principle or issue; or

(c) involves a large financial sum.

(5) If a case is allocated as a Complex case—

(a) rule 10(1)(c) (costs in Complex cases) applies to the case; and

(b) rule 28 (transfer of Complex cases to the Upper Tribunal) applies to the case.”

3.       Mr Angiolini submits that there are complex facts involved in that the purchase of a helicopter involved a novation, a bare trust and an agency agreement for chartering.  There is an issue of law whether domestic law, particularly Customs and Excise Commissioners v Lord Fisher [1981] STC 238 is out of line with recent European authorities.  The money involved is input tax of £550,000 plus output tax on a turnover of £120,000 per annum on a continuing basis.  He suggests that this is a two-day case extending to three if HMRC argue Halifax, which they have reserved the right to do depending on the evidence.  He makes the application because of the costs regime and is not asking for it to start in the Upper Tribunal.

4.       Mr Rivett contends that there is nothing particularly complex about the facts, there is nothing unusual in needing to compare domestic and European authorities, the amount of money is not particularly large, nor is the suggested hearing particularly long.  He cautions against opening the floodgates.

5.       The context of rule 23 is that cases must be categorised into one of default paper, basic, standard, or complex.  It can be categorised as complex only if it satisfies one of the criteria listed in rule 23(4), all of which have a flavour of being something exceptional.  The “only if” suggests that a restrictive interpretation should be applied.  As stated in rule 23(5) categorisation as complex means that costs can be awarded in the same way as normal civil litigation, and with the consent of both parties and both Chamber Presidents the appeal might start in the Upper Tribunal.  These give a clear impression of the type of case falling within the complex category.  It must be sufficiently out of the ordinary to merit costs, when no costs apply to the majority of cases, thus harmonising the previous costs regimes for indirect and direct tax appeals in favour of the direct tax rule of extremely limited costs; and it must be of sufficient weight to start in the Upper Tribunal unlike the majority of appeals.  It must be the type of case that one could approach the Presidents of both the Tax Chamber of the First-tier and the Tax and Chancery Chamber of the Upper Tribunal making a case that it ought to be treated exceptionally and start in the Upper Tribunal and be heard by a more limited category of judges, perhaps including a High Court Judge.  All these show that it needs to fall well outside the ordinary run of cases.

6.       In the application of the rule to this appeal I agree with Mr Rivett.  I regard this case as being in the top half of standard cases in its complexity, whether of fact or law, the amount of tax involved, and the likely length of the hearing, but nothing out of the ordinary to merit its being categorised as complex.  I accept that the facts are slightly complex but not so as to involve “lengthy or complex evidence.”  There is nothing unusual in the law involving both domestic and European authorities, even if Halifax is raised that is no longer new ground.  A two or even three day case is not a “lengthy hearing.”  The amount of money involved in not out of line with many other cases in the First-tier Tribunal.  It is not a case that I would consider approaching the President of the Tax and Chancery Chamber of the Upper Tribunal on the basis that this appeal was out of the ordinary and merited starting in the Upper Tribunal (although this is not requested by the Appellant, but it is a test of whether the case is complex).

7.       Accordingly I decline to categorise the appeal as complex and categorise it as standard.  I announced this decision at the end of the hearing and the parties asked me to set out my reasons in a written decision to give guidance for the benefit of other applicants.

JOHN F AVERY JONES

TRIBUNAL JUDGE

RELEASE DATE: 13 April 2010