When the First-tier Tribunal (FTT) receives a notice of appeal, application notice or notice of reference, the FTT must give a direction allocating the case to one of four case categories.
The four categorisations for tax cases in the Tax Chamber at the FTT are:
- default paper cases (which will usually be disposed of without a hearing);
- basic cases (which will usually be disposed of after a hearing with minimal exchange of documents before the hearing);
- standard cases (which will usually be subject to more detailed case management and be disposed of after a hearing); and
- complex cases (to which special rules apply in relation to costs awards and eligibility for transfer to the Upper Tribunal).
On 12 May 2022, the Chamber President made a Practice Direction that replaces all previous Practice Directions and Practice Statements on categorisation of cases in the Tax Chamber, with effect from 1 June 2022. It replaces the previous Practice Statement dated 23 March 2020.
This changes the allocation of cases to the default paper and complex categories, as set out below. However, the Practice Direction also confirms that basic case hearings will be held by video, if possible.
Default paper cases
From 1 June 2022, this category will apply to:
- appeals against penalties amounting in aggregate to not more than £500 for late filing of returns, statements, accounts or documents and late submission of notices of being chargeable to tax; or
- appeals against penalties amounting in aggregate to not more than £500 for late payment of any tax or duty.
During the pandemic, the monetary limit for penalties was increased to £20,000. Prior to the pandemic, the limit was £2,000. The new £500 limit is therefore reduced from the pre-pandemic level.
The new Practice Direction also allows for a party to make a written request for a hearing (conducted by video if possible) rather than being dealt with as a paper case.
The Practice Direction clarifies several points in relation to the categorisation of a case as complex. Complex cases are cases that:
- will require voluminous or complex evidence or a lengthy hearing;
- involve a complex or important principle or issue; or
- involve a large financial sum.
The Practice Direction makes clear that a case will be allocated to this category if it meets one or more of these criteria. For the first time, the Practice Direction defines ‘lengthy’ as a hearing that is expected to last more than five days. A ‘large’ financial sum is defined as the amount in dispute being:
- £750,000 or more of direct taxes; and
- £2m or more of indirect taxes and duties.
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