As part of his monthly column for Tax Journal, Victor Cramer asks if tax disputes conducted by a single taxpayer can affect an entire sector or supply chain. What rights do those indirectly affected have if they disagree with the outcome?

The case of Re: W (A Child) [2016] EWCA Civ 1140 suggests that non-parties may have rights of appeal. The issue re-emerged in the European Court of Human Rights in SW v the United Kingdom (application 87/18) in June this year.

In Re: W (A Child), two professional witnesses gave evidence in the High Court. The judge made substantial criticism of both and proposed naming them. The parties did not appeal, but the witnesses sought to challenge the criticism in the judgment. The issue went to the Court of Appeal, which found three procedural gateways that gave the witnesses sufficient standing to appeal.

  1. Procedural gateway: The court concluded that Civil Procedure Rule (CPR) 52, which governs appeals, read together with s 31K of the Matrimonial Proceedings Act 1984, permits appeals by non-parties. CPR 52 was considered by Lord Justice Dyson in MA Holdings Ltd v George Wimpey UK Ltd and another [2008] EWCA Civ 12, who said (at para 9): ‘It would be surprising if … a person affected by a decision could not in any circumstances seek permission to appeal unless he was a party to the proceedings below.
    Such a rule could work real injustice, particularly in a case where a person who was not party to the proceedings at first instance, but who has a real interest in their outcome, wishes to appeal, the losing party does not wish to appeal and an appeal would have real prospects of success.’ The court held that the language of CPR 52 and s 31K together did not preclude non-party appeals.
  2. Status gateway: The right of appeal accrues to a party. ‘Party’ is surprisingly undefined, giving the court leeway. As the witnesses had made representations on the draft judgment, Lord Justice Macfarlane considered they were ‘intervenors’. Absent a clear definition of ‘party’, intervenors were ‘parties’ for the purposes of appealing.
  3. The Human Rights Act (HRA) gateway: The court did not need to decide the HRA points but nevertheless made obiter comments. Enter Marleasing (Case C-106/89), which says that once a breach of the European Convention on Human Rights is established, there is an obligation to read a remedy into the procedural rules. The breach complained of in Re: W was of article 8 (right to ‘private and family life’).


However, the tax tribunal is a creature of different statute and procedural rules. Does the Court of Appeal’s analysis read across to tax disputes?

  1. Procedural gateway? Sections 11 and 14 of the Tribunals Courts and Enforcement Act 2007 are similar in scope and language to s 31K. Rule 39 of the First-tier Tribunal (FTT) rules (SI 2009/273) and rule 44 of the Upper Tribunal rules (SI 2008/2698) follow similar wording to CPR Part 52. The Court of Appeal’s procedural analysis therefore seems to hold, although s 11(8) creates a power (as yet unused) to define who is a party. This may affect the analysis for appeals to the Upper Tribunal.
  2. Status gateway? Rule 1 of the FTT rules defines ‘party’, but rule 39 refers to ‘a person seeking permission to appeal’ rather than a party. There is certainly scope to argue the point under rule 39.
  3. Human rights gateway? Human rights arguments in tax are better suited to procedural than to substantive issues. Once a breach is established, conforming construction is required. Articles 6 (private life) and 13 (effective remedy) and article 1, Protocol 1 (peaceful enjoyment of possessions) are the most likely candidates.

To conclude, appealing a third-party decision will, occasionally, be the best or only option. It would be surprising if taxpayers could not do so where unfairness would result.

Tax is full of surprises.


The article in the Tax Journal can be found here.



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