Burden of proof at Tribunal

The upper tier tribunal issued an interesting procedural decision which addresses the question of where the ‘burden of proof’ lies in a tax appeal. It is not sufficient to answer; ‘HMRC’ or ‘the taxpayer!’ The correct approach is often more nuanced.

The appeal, by Kingston Maurward College, to the upper tier against the FTT decision relied in part on an argument that HMRC’s Statement of Case was inadequate.

Whilst in most tax appeals the burden of proof lies with the taxpayer, Rule 25(2) of the FTT rules provides that a HMRC Statement of Case must ‘state the legislative provision’ and ‘set out the respondent’s position.’ The extent to which HMRC must do this was argued in the previous case of Allpay Limited [2018] UKFTT 273. In Allpay, HMRC had sought to evade its own obligations, claiming that it did not have to prove anything as the burden of proof lay with the appellant taxpayer.

More generally; ‘it is not procedurally fair for the party without the burden of proof to do no more than say the other party must prove every part of their case. Both parties should set out the key parts of their legal and factual case in advance.’ See Fairford Group Ltd [2014] UKUT 329.

HMRC’s Statement of Cases are not consistently good. A taxpayer can apply for HMRC, for example, to explain a key disputed part in more detail; or explain why a particular quoted case is relevant.

When making an appeal, the taxpayer must be clear as to where the ‘burden of proof’ lies and prepare its case accordingly.

By the date of the hearing, both parties’ cases must have been clearly and comprehensively presented to each other. The Tribunal does not like either party to ‘ambush’ the other.

Link to Kingston Maurward College decision: www.bailii.org/uk/cases/UKUT/TCC/2023/69.html