HMRC: Contumelious conduct
A judge has condemned HM Revenue & Customs (HMRC) for making the “extraordinary allegation” that a law firm would engage in abusive behaviour over listing a hearing.
Judge Michael Blackwell in the First-tier Tribunal said [1] the decision to deliberately flout directions was “contumelious” and in breach of an unless order, but he decided not to bar HMRC from the case.
The nature of the appeal brought by Ipswich firm Ross Coates Solicitors (RCS) against HMRC was not explained in the ruling; the firm was closed down last month by the Solicitors Regulation Authority.
RCS sought disbar HMRC from the case after it failed to comply with directions by only sending listing information to the court and not the solicitors.
The terms of the order allowed the court to strike out the proceedings or debar HMRC if not complied with but it was not automatic.
HMRC said it took a “deliberate and proportionate case management decision” not to send the information to RCS “in light of the procedural history of this appeal”.
It told the tribunal that “the appeal has been subject to repeated delay, including multiple extension applications and postponements sought by the appellant over several years.
“HMRC’s dates to avoid were provided to the tribunal to assist listing. Providing those dates directly to the appellant at that stage would have risked further delay by enabling the appellant to attempt to avoid listing altogether, contrary to the tribunal’s express intention to progress the appeal without further delay.”
Judge Blackwell described this as a “serious breach”; if HMRC considered the directions open to abuse, it should have applied to vary them. “Deliberately choosing to flout” them was “wholly unreasonable conduct”.
He went on: “Especially when RCS are a regulated profession, indeed officers of the court, it is an extraordinary allegation to say that they would deliberately engage in abusive behaviour without particularising the conduct on which HMRC rely to support the allegation.”
HMRC apologised for the conduct of “their previous litigator” at the hearing, acknowledging that had they been a regulated individual, they could have faced disciplinary sanctions. “However, that apology comes very late, and as such I attach little weight to it.”
But it was nonetheless “hard to characterise” the conduct as significant in the context of the appeal, said Judge Blackwell.
“While HMRC’s conduct in this matter is indeed contumelious, RCS have suffered no real prejudice in the conduct of the litigation. Mr Young suggested there was prejudice to the system as a whole when HMRC act in this way – I accept that, but it goes to the seriousness of the breach, it is not prejudicial to RCS in their ability to present their case.”
Ultimately, the case was listed in the same way as it would have been had HMRC copied RCS in when sending the listing information to the Tribunal.
“In those circumstances – viewing matters in the round – I find it would be disproportionate to bar HMRC,” concluded Judge Blackwell.