Well, here we go again

The Upper Tribunal has some kind words for an HMRC argument

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  I once used the the words in the question here as the first paragraph of a decision I gave in the FTT (Pandey v HMRC [2017] UKFTT 216.)  In so doing I was paying conscious homage to decisions of the esteemed judge of the Upper Tribunal Nicholas Wikeley in cases involving appeals on Sociual Security matters.  

What I am having a go again against here is the conduct of HMRC in the Tribunals.  It is not this time the conduct of witnesses but of the HMRC lawyers and technical staff.  Justin will no doubt have something to say about the FTT judge who swallowed the HMRC propositions of law (and the FTT decision does seem surprising, especially with the hindsight of knowing what the UT have said).

The case involves an obscure Customs procedure (don't switch off now, please) Inward Processing Relief.  The appellant is a company in the ThyssenKrupp (Krupp as in Big Bertha in WW1) (TK) which under the procedure is required quarterly to give HMRC Bills of Discharge (BoD) which contain hundreds of thousand of data points.   In the returns TK made some errors - the precise number of which is not noted, but is irrelevant as HMRC's proposition was that one single error in a BoD rendered the applicant liable to pay customs duties and import VAT on every single item - in this case about £8m, and that this was the effect of a CJEU decision, Dohler.

In its decision, [2024] UKUT 79 (TCC), what is known in the trade as a "strong" Tribunal - Mrs Justice Bacon - president of the UT(TCC) - and Judge Greg Sinfield - president of the FTT(Tax) and an indirect tax expert allowed the appeal.  The parts that are worth reading and should cause indignation are everything under the heading of "Ground 2" (paras 55-70, esp. 56 and 59) and para 76.        

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the sea otter
By memyself-eye
28th Mar 2024 13:39

Can I switch off now?

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Replying to memyself-eye:
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By richard thomas
28th Mar 2024 15:31

Certainly not!

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Replying to memyself-eye:
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By DJKL
02nd Apr 2024 14:57

There will be a test.

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By Justin Bryant
28th Mar 2024 14:10

I recall reading the FTT decision and thinking it must be wrong as it looked totally bonkers (that such a huge tax liability could result from such a minor looking admin. error/oversight). Thank you for pointing this out and it again shows HMRC's propensity to argue black is white and the poor calibre of FTT judges who are inclined to agree with such rubbish submissions. It's all the more worrying of course when c£8m of tax is at stake and when the taxpayer was represented by counsel before the FTT (more often than not such bloopers only occur for unrepresented taxpayers - when one assumes HMRC are more able and inclined to ride roughshod over the UK tax code and of course counsel will more likely be instructed for such high value cases)!

https://www.bailii.org/uk/cases/UKUT/TCC/2024/79.html

https://www.bailii.org/uk/cases/UKFTT/TC/2022/TC08653.html

Hopefully the taxpayer can get their costs of the FTT hearing too.

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By More unearned luck
28th Mar 2024 18:24

I didn't switch off until the end so I was a bit surprised that after reading HMRC's submissions rightly being described as 'entirely absurd', 'subliminal sleight of hand' and 'boarding on the Kafkaesque' to read that 'all counsel and those instructing them' were thanked 'for the obvious care with which this case was prepared and presented'.

So, its OK to make bonkers submissions as long as they are well prepared and presented?

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Replying to More unearned luck:
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By FactChecker
28th Mar 2024 19:25

To slightly paraphrase part of the defence (in as far as I recall some old P Eye case probably involving James Goldsmith):
"It doesn't matter how well polished it is, and nor should the quality of the velvet cushion on which it is presented matter; a [***] remains a [***]".

EDIT: apparently banned is a word that sounds like an Irishman saying 'third'!

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Replying to More unearned luck:
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By Tax Dragon
29th Mar 2024 06:26

If I may be allowed a little syntactical sleight of hand... Kafkaesque knowingly to submit an incorrect return?

I know this is a false analogy, but nevertheless it reminded me of your recent recommendation to someone somewhere in Aweb to prepare a return including, and to pay tax* on, a disposal that hadn't happened.

You can never be sure of the consequences with HMRC.

* Would it in fact be tax? I suppose at least it might be a payment on account of [potential] tax... but what if the disposal did not subsequently occur? Would repayment interest accrue?

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Replying to Tax Dragon:
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By richard thomas
29th Mar 2024 10:28

I’m not sure what is “syntactical” about your sleight of hand, or even what the prestidigitation involves, but, in a plodding, literal way I would say that you may have misunderstood what the Tribunal is characterising as Kafkaesque.

The starting point is paragraph [75]:

“At the hearing, Mr Waldegrave [HMRC’s counsel] submitted that the requirement in Article 521(2)(e) for a BoD to specify "the particulars of the declarations entering the import goods under the arrangements" *meant that the BoD was required to contain the same particulars as the relevant customs declarations, even if the customs declarations had contained an error* (such as, in the example above, an incorrect commodity code). He said that the correct details could (potentially) have then been given in explanatory comments in the BoD spreadsheet.”

It is that of submission which the Tribunal then says in [76]:

“The suggestion, in those circumstances, that TK should have knowingly entered inaccurate descriptions of the relevant goods, purely in order to enable reconciliation with a customs declaration which contained the same error, is bordering on the Kafkaesque (a point we made during the course of the hearing).”

It is the combination of the knowingly inaccurate entry of data on a form “purely” in order to avoid a penalty that is bordering on the Kafkaesque. It is a grotesque reversal of the normal state of affairs, that a deliberate inaccuracy in a document on which HMRC are to rely is penalisable if, and only if, it leads to a loss of tax.

Sorry if you intended to convey that, but if you did it went over my head.

But your post did prompt me to climb aboard a train of thought, or rather two trains. One was to wonder how many literary figures have given their names to adjectives in everyday, often clichéd, usage. Apart from Kafkaesque, I can think only of Dickensian and Orwellian – characters from the works do not count, so no Quixotic, Falstaffian or Micawberish.

The other train took me to a different destination: wondering how often legal decisions refer to “Kafkaesque” or “Kafka” (and whether they use the term correctly).

A search on Bailii gives 162 hits. The most authoritative were in speeches of that greatest of judges, Lord Bingham, in, first, the case of R (on the application of Anufrijeva) v. Secretary of State for the Home Department & Anor (House of Lords, 2003):

“14. Mr Drabble's second major submission was that the statutory scheme imposed a public law duty on the Home Secretary to notify the appellant of the asylum decision, that a decision only recorded in an uncommunicated file note could not be other than provisional, since it could be altered at any time before notification was given to the appellant, and that accordingly there was no determination for purposes of regulation 70(3A)(b)(i) until 25 April 2000. This submission drew on the revulsion naturally felt for an official decision, taken privately, recorded in an undisclosed file and not communicated to the person to whom the decision relates. This somewhat Kafkaesque procedure was to some extent mitigated in this case by the fact that the appellant and her solicitors learned of the decision, although indirectly, relatively soon after it was made, that she would have received formal notice of the refusal with reasons two months earlier than she did if she had not cancelled the meeting fixed for 11 January 2000 and that her right of appeal would not have arisen until she had been refused leave to enter even if notice of the asylum decision had been given earlier. This is, however, an unhappy feature of the case and it is reassuring to learn that the practice has been changed.”

His second one was in Roberts v Parole Board, also in HoL.

“My noble and learned friend Lord Carswell commented that a prisoner against whom unfounded allegations have been made is in a Kafkaesque situation. That was an apposite reference to The Trial (1925), the masterpiece of Franz Kafka. A passage in The Trial has a striking resonance for the present case. Joseph K was informed ". . . the legal records of the case, and above all the actual charge-sheets, were inaccessible to the accused and his counsel, consequently one did not know in general, or at least did not know with any precision, what charges to meet in the first plea; accordingly it could be only by pure chance that it contained really relevant matter. . . . In such circumstances the Defence was naturally in a very ticklish and difficult position. Yet that, too, was intentional. For the Defence was not actually countenanced by the Law, but only tolerated, and there were differences of opinion even on that point, whether the Law could be interpreted to admit such tolerance at all. Strictly speaking, therefore, none of the Advocates was recognized by the Court, all who appeared before the Court as Advocates being in reality merely in the position of hole-and-corner Advocates".

Not surprisingly the main culprits accused of being Kafkaesque are departments of state such as the Home Office (in immigration cases like Anufrijeva), the DWP (or whatever name) in relation to social security benefits (where most of the mentions are by Judge Nicholas Wikeley) and HMRC (in relation to benefits especially tax credits). Irish cases are prominent too.

They seem to refer to two different novels by Kafka (whose day job was as a sort of insurance underwriter, something he shared with one other important artistic figure, Charles Ives). Complaints about unfathomable bureaucracy (when not using the overused adjective Byzantine, but that’s another story) probably refer (unconsciously most times, I suspect) to The Castle, while others are almost certainly referring to the opening sentence of The Trial:

"Somebody must have made a false accusation against Joseph K., for he was arrested one morning without having done anything wrong."

There is an obvious suitability in describing many of HMRC’s actions and arguments as Kafkaesque on this basis.

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Replying to richard thomas:
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By FactChecker
29th Mar 2024 12:49

Your more minor train of thought (about literary figures whose names have been incorporated into common adjectives) intrigued me ... and was happily at the level with which my currently befuddled brain can cope.

The key factors if seeking to extend that list seem to me to be:
- whether 'literary figure' is restricted to authors of fiction (else there are many whose names are commonly, and often inaccurately, invoked as in say Darwinian or Freudian);
- whether 'everyday usage' must be applicable across all spheres of society (there are many who would recognise say Chekhovian - and many more who wouldn't);
- or indeed whether it is necessary for the user of an adjective even to be aware that an author's name is the source (Platonic being the first to spring to mind).

Given the state of the weather, I shall now spend a happy afternoon perusing my bookshelves under the guise of further research - although I'll spare you the results.

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Replying to richard thomas:
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By Tax Dragon
29th Mar 2024 14:37

It was a bad link, nothing more, to a point that belonged on another thread. But I'm glad to have inspired, if not quite flights of fancy, at least train journeys of wonder, not simply a plodding response.

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Replying to richard thomas:
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By Justin Bryant
29th Mar 2024 15:56

If you read the comments here you'll see a similar UT case where the FTT were found to have been hoodwinked by HMRC's BS submissions and the Kafka word was also employed there to describe the similarly lamentable state of affairs:

https://www.accountingweb.co.uk/tax/hmrc-policy/hmrcs-postal-delays-get-...

"not the first time HMRC called Kafkaesque

An Upper Tribunal judge made a similar observation here (http://www.bailii.org/uk/cases/UKUT/AAC/2015/198.html - paragraph 8):

"The FTT was erroneously lured into deciding the case on the basis that the claimant had allegedly failed to respond adequately to a letter sent to him by HMRC. This letter had been sent to him not just after the original decision had been made, but after the claimant had lodged his appeal. This is the stuff of Kafka."

I just hope HMRC don't appeal to the CoA claiming that the judge should have said: "This is the stuff of Orwell"."

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Replying to Justin Bryant:
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By richard thomas
29th Mar 2024 16:37

Yes, the UT case is one of the Judge Wikeley cases I mentioned in my post above.

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By DJKL
02nd Apr 2024 15:05

Shakespearian as applied to a sonnet type, but does not have broad application beyond that particular, unless of course used to maybe describe a very rough era which I think is cheating.

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Replying to Tax Dragon:
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By More unearned luck
02nd Apr 2024 14:09

The analogy is indeed false. Based on my initial supposition of the facts in that post the return would/could have become correct. A miracle of the roses. Whereas in this case HMRC's submission was that the taxpayer should make an incorrect return that would always be incorrect.

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