BPP Holdings Ltd v HMRC [2017] UKSC 55

HMRC ignored a tribunal direction, and was barred from defending the appeal. The Supreme Court upheld the bar. BPP establishes that HMRC is a litigant like any other and that tribunal practice on compliance should not be markedly more relaxed than the civil courts, the proposition on which the whole modern law of tribunal deadlines rests.

Why This Case Matters

BPP is the answer to a question advisers are asked constantly: what happens when HMRC ignores a tribunal direction? The short answer is that HMRC is a litigant like any other, and the First-tier Tribunal has the power to bar it from the proceedings altogether, with the practical consequence that the taxpayer wins.

Its wider significance is structural. BPP establishes that the tribunals’ approach to compliance should not be markedly more relaxed than that of the civil courts. That proposition is the constitutional foundation on which Martland v HMRC built the late appeal test, and the Court of Appeal relied on it again in 2026 when restoring the Martland guidance in Medpro.

The Facts

The underlying tax dispute

The BPP group supplies education and training to law and accountancy students. The group restructured so that one company supplied the education and a separate company supplied books to the students. On BPP’s analysis there were two supplies: a standard-rated supply of education and a zero-rated supply of books. HMRC considered there was a single standard-rated supply of education.

The procedural failure

The substantive VAT question never got decided, because of what happened in the procedural skirmishing.

BPP requested further and better particulars of HMRC’s statement of case, wanting to know precisely why HMRC said there was a single supply. The First-tier Tribunal directed HMRC to provide them by 31 January 2014. HMRC’s response was inadequate. It did not answer the questions the direction required it to answer.

Matters did not improve. HMRC then supplied a defective disclosure statement and list of documents around eight days late, and did not apply for an extension of time in that connection until some four weeks after that.

BPP applied to bar HMRC from further participation. Judge Mosedale in the FTT granted the application, making a debarring direction under rule 8 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.

Procedural History

• First-tier Tribunal (Judge Mosedale): HMRC barred from taking further part in the proceedings.
• Upper Tribunal (Judge Bishopp): allowed HMRC’s appeal and set the barring order aside, holding that the FTT had adopted too strict an approach.
• Court of Appeal [2016] EWCA Civ 121 (Ryder LJ): restored the FTT’s barring order.
• Supreme Court [2017] UKSC 55: dismissed HMRC’s appeal. The barring order stood.

The Rules Engaged

• Rule 2 of the FTT (Tax Chamber) Rules 2009, the overriding objective of dealing with cases fairly and justly, which includes avoiding delay and dealing with cases proportionately.
• Rule 5: the tribunal’s general case management powers, including power to extend time.
• Rule 8: striking out and barring. Rule 8(3)(a) permits striking out for failure to comply with a direction that warned of that consequence; rule 8(7) applies the equivalent power to a respondent, by barring them from taking further part in the proceedings.
• The effect of a bar: under rule 8(8) the tribunal need not consider any response or other submission from a barred respondent, and may summarily determine any issue against them.

The Issue

Whether the Upper Tribunal had been entitled to interfere with the FTT’s barring order, and, underlying that, whether the tribunals should apply the same rigour to compliance as the civil courts had adopted following the Jackson reforms and the decisions in Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537 and Denton v TH White Ltd [2014] EWCA Civ 906.

The Ratio Decidendi

1. Deference to the first-instance case management decision

Lord Neuberger emphasised that decisions on compliance and sanctions are quintessentially matters for the judge who is managing the case. The Upper Tribunal had substituted its own view rather than identifying an error of principle. That is not the appellate function. The point has obvious practical force: a party who loses a case management application at the FTT faces a very steep climb on appeal, whichever side they are on.

2. HMRC enjoys no privileged position

The Court rejected any suggestion that HMRC, as a public body with resource constraints and a large caseload, should be treated more indulgently than a private litigant. HMRC is subject to the rules and directions in the same way as any other party. Where it fails to comply, the tribunal may impose the same sanctions.

3. Tribunal practice should not be markedly more relaxed than the courts

The central proposition of general application. Lord Neuberger held that the tribunals should pay close regard to the approach of the civil courts to compliance with rules, directions and orders. A markedly more relaxed tribunal culture would be indefensible in principle and would encourage precisely the delay and inefficiency the overriding objective exists to prevent.

Obiter Dicta and Qualifications

• The Mitchell and Denton jurisprudence is not to be imported “unthinkingly”. This is the qualification that is most often overlooked when the case is cited. Lord Neuberger held that while the tribunals should pay close regard to the civil courts’ approach, judgment is required, weighing the relevant differences between the two systems, in particular the tribunals’ more informal procedure, the frequency of unrepresented parties, and the absence of a general costs-shifting regime in most cases.
• Observations on the consequences of a bar. The Court’s remarks on how a tribunal should proceed once a party is barred, and on whether the barred party may still be heard on some matters, are guidance rather than decision.
• The relationship between rule 8 and the relief from sanctions machinery. The Court did not need to decide how far the three-stage Denton structure maps onto an application to lift a bar under the FTT Rules. That question was left for later cases, and was addressed in the tribunals rather than at appellate level.
• The unresolved substantive issue. The single supply question that started the litigation was never determined. That is itself instructive about what procedural default costs.

How BPP Has Been Used Since

• Martland v HMRC [2018] UKUT 178 (TCC). The Upper Tribunal relied on BPP when constructing the three-stage late appeal test and when directing that particular importance be given to the efficient conduct of litigation and to statutory time limits.
• HMRC v Medpro Healthcare Ltd [2026] EWCA Civ 14. When the Court of Appeal restored the Martland guidance after the Upper Tribunal had displaced it, one of its three stated reasons was that the Supreme Court in BPP Holdings had specifically approved the giving of guidance on compliance with time limits.
• Against HMRC. The case is regularly deployed by appellants where HMRC misses directions on statements of case, lists of documents or witness statements. It is worth remembering that the remedy is available, and that a well-timed application concentrates HMRC’s attention.

Practitioner Application

Where HMRC has failed to comply

• Build the record. A barring application succeeds on a documented history of default, not a single missed date. Chase in writing, record each failure, and put HMRC on notice that an application will follow.
• Ask for an “unless” direction first. A direction that expressly warns of striking out or barring under rule 8(3)(a) makes the subsequent application far stronger, because the sanction is then the specified consequence of the breach.
• Identify the prejudice. Explain what the default has actually cost: the inability to prepare, the wasted hearing, the delay to a client who is paying interest on a postponed liability.
• Be realistic about the outcome. Barring is a serious sanction. Tribunals more often give a further opportunity with a costs order or an unless direction. That is still a useful result: it changes HMRC’s behaviour.

Where your client has failed to comply

• Apply immediately, and before the deadline where possible. A prospective application for an extension is treated very differently from a retrospective application for relief.
• Explain rather than minimise. The tribunal will want to know why the default occurred and what has been done since. BPP cuts both ways, and the same standard applies to the taxpayer.
• Do not assume tribunal informality will save you. The proposition that tribunal practice should not be markedly more relaxed than the courts is the ratio, not an aside.
• Rely on the qualification where it helps. Where the client is unrepresented or the default is minor and quickly cured, the direction that the civil courts’ approach is not to be imported unthinkingly is a legitimate and underused argument.

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