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Key points
- Priority for urgent work and the use of remote hearings if practicable.
- The general stay allowed parties time to make arrangements under the new restrictions.
- New software introduced for remote hearings.
- A successful online hearing involved 22 participants, two days of oral evidence from expert accountancy witnesses and remote cross-examinations.
- Face-to-face meetings are expected to return in the autumn.
- The catalyst for present and future challenges.
There is no denying that the COVID-19 outbreak has placed the tax appeals system under enormous pressure. Many appellants and representatives, as well as HMRC litigators, have been forced to work from home. In the Tax Chamber, many staff and judges have been isolating themselves, caring for others or, in some cases, coping with the virus themselves. We have been forced to adopt new and unfamiliar ways of working and communicating, especially the move to widespread use of audio and video technology, to allow meetings and hearings to take place without all participants being physically present in a hearing room. Under normal circumstances, these changes would have been gradual but this has not been possible due to the need to respond to developments at speed.
Unfortunately, these factors may have resulted in a misleading impression about the Tax Chamber’s activities under lockdown. I am grateful for the opportunity to set the record straight about our response to the crisis and the current state of business in the Tax Chamber. I will also share some of our plans for the future.
Initial impact
To start, it is worth recalling how quickly things have moved. Although the pre-pandemic period now seems a lifetime away, it was only three months ago that Covid-19 started to make its presence felt in the Tax Chamber. On 12 March, the government asked everyone to stay at home if they had one of two key symptoms: a high temperature or a new and continuous cough. As a result of this advice, two of our ten salaried judges immediately went into self-isolation in accordance with NHS 111 advice. Over the following 48 hours, several fee-paid judges also self-isolated for various reasons.
The next day, ominously Friday 13th, I announced the postponement of our annual judges’ conference which had been due to take place the following week. That proved prophetic because, on 16 March, the prime minister announced that people should not have any non-essential contact with others and should refrain from all unnecessary travel. He said that everyone should work from home if possible and avoid pubs, clubs, theatres and other social venues. On 18 March, I issued guidance to salaried and fee-paid judges that they should work remotely from home or elsewhere to the greatest extent possible. At that stage, no hearings were cancelled.
By 19 March, however, it was clear that matters were becoming more serious and the chamber would need to adopt new ways of working in response to the developing situation. The Senior President of Tribunals instituted a four-stage plan to meet the challenges of the Covid-19 pandemic and beyond.
Prioritisation plan
The first phase of the Senior President’s plan was the immediate response. It involved: the prioritisation of urgent work; the use of judges sitting alone for that work if necessary; and the move to remote hearings wherever practicable.
Subsequently, I gave instructions that all face-to-face hearings in the Tax Chamber listed up to the end of August should be cancelled and re-listed as paper determinations or for hearing by telephone or video if practicable. For the time being, all the cases would be dealt with remotely wherever possible and determined by a judge sitting alone. If a case was not suitable for paper determination or hearing by telephone or video then it would be listed for a physical hearing on a date in the future when it would be safe to do so. Birmingham immediately began to put in place arrangements for the distribution of work and papers, conference or video call facilities, and the recording of remote hearings.
By the time of the prime minister’s address to the nation on 23 March, when he announced the lockdown, we had already held our first ever judges’ meetings by Skype for Business and Microsoft Teams. I had also issued a practice statement on the categorisation of cases. This expanded the default paper cases category, provisionally for six months, to include appeals, formerly in the basic category, against penalties of up to £20,000 rather than the previous limit of £2,000.
In his address, the prime minister told people not to travel to and from work unless it was absolutely necessary and they could not work from home. One immediate consequence for the Tax Chamber was that the administrative staff in the Birmingham office was reduced to (not by) about 10% of its usual complement. Most of the technical team worked from home because they have laptops, but the tribunal’s case file system is paper based so the work that could be done online was largely confined to dealing with notices of appeal filed electronically and emails. I am pleased to say that laptops have now been provided to some staff and more are on their way. Further, the number of staff coming into the office has risen although it was, at the time of writing, less than a third because some continue to self-isolate or have caring responsibilities.
The general stay
On the day after the prime minister’s address, I issued a general stay to pause the obligation to comply with directions in all proceedings in the Tax Chamber for 28 days until 21 April. This was intended to give parties affected by the new restrictions on movement time to rearrange their affairs. My assessment was that there was a risk that the system would break down completely if there were a large-scale failure to comply with directions in respect of which we would have to impose sanctions or the tribunal became inundated with applications for extensions of time limits for compliance.
In fact, the stay was only relevant to a minority of cases. At any one time, at least 60% of cases in the chamber are stayed on the application of one, often both, of the parties. Such stays can be for a number of reasons, for example, to allow the parties to take part in alternative dispute resolution (ADR) or to await a decision in another case, such as a judgment of the CJEU, which might make a hearing of their appeal unnecessary. The use of a stay in those cases is in everyone’s interest but if a party wishes to proceed an application can always be made for the stay to be lifted. That, of course, is also true in the case of a general stay.
The consolidation phase
The second phase of the Senior President’s plan was consolidation. This involved communication and collaboration to make the immediate response sustainable, the introduction of new software for remote hearings, and re-commencing both paused work and the use of panels for remote hearings. Birmingham contacted the parties in all standard and complex category cases, if the hearings had been cancelled, and asked about their suitability for paper determination or hearing by telephone or video. There have been some problems in relation to the provision of bundles which have prevented some cases being re-listed. HMRC and appellants were also affected by the lockdown restrictions.
HMRC employees were largely working from home, which meant that, in some of the older cases, they were unable to access any physical files and documents to prepare bundles in either physical or electronic form. Nevertheless, it was possible to re-list cases if electronic papers already existed. Most appellants experienced similar issues although those fortunate enough to be represented by professional advisers were generally able to assist with producing electronic bundles.
With the co-operation of appellants, their representatives and HMRC, between the start of lockdown on 23 March and the end of May, the Tax Chamber determined on papers or held a hearing by telephone or video in just under a third of the cases that were originally scheduled for that period. I am particularly grateful to the firm that also allowed the tribunal to use its video conferencing facilities to enable a video hearing to take place on the first day of lockdown.
The extension
Notwithstanding some early successes, I considered that the 28-day general stay, referred to above, should be extended in relation to standard and complex cases only until the end of June for broadly the same reasons as I made the original direction.
A misunderstanding about the nature of the stay and the number of cases outstanding overall has unfortunately caused some to believe that the Tax Chamber is unable to cope with its current caseload and is falling further behind. That is not correct. The misconception was based on information published by a firm of advisers that the number of appeals in the chamber at the end of December 2019 was 27,277. That information, which had been provided by the chamber, was correct but did not, by itself, show that we are unable to cope.
The number of cases stayed at the request of the parties at any one time considerably reduces the number of active cases. Further, no account has been taken of the number of cases outstanding at the end of the next quarter (March 2020). That figure was 26,869. The reduction in outstanding cases between the two quarters shows that the chamber is able to cope. In fact, we are coping better now than for some time because the outstanding caseload at the end of March was lower than the figure at the end of all of the past six years except 2018. We must wait until the next quarter’s figures are known to see whether the number of outstanding cases has increased because of the current difficulties. I expect that it might, but it is not clear that there will be a significant increase because, as I write, the weekly number of appeals lodged with the chamber is less than half the usual figure. There could be several explanations for this but all of them are no doubt Covid-19 related.
It is important to stress that, contrary to reports, the general stay did not mean that there would be no hearings before 1 July. Only face-to-face hearings were cancelled. Hearings have continued throughout the lockdown period and still continue, and new hearings are being listed as I write. The Tax Chamber continues to liaise with parties to rearrange cancelled face-to-face hearings and to list other cases that were close to being ready to be heard when the country went into lockdown. In consequence, the number of cases heard is expected to rise in the future. That is particularly true of video hearings which, subject to a few technical glitches, have been a great success and welcomed enthusiastically by judges and parties.
Video platforms
The Tax Chamber is particularly fortunate in having its own bespoke tax video platform (TVP) for video hearings. It is currently limited to eight participants but the capacity of TVP is expected to increase in the next few weeks. For the moment, when there are more than eight persons who wish to participate or observe, we use the Kinly Cloud video platform (CVP). We have multiple licences for both platforms, so there is no difficulty in holding several video hearings simultaneously. For completeness, I should also state that we have also used the BT MeetMe service successfully for hearings by telephone.
As well as the difficulties that some parties are experiencing in producing electronic bundles, the other impediment to listing a video hearing is that, even if an electronic bundle can be produced, it has become clear that it is highly desirable, if not essential, that each party, representative and witness, as well as the tribunal, should have two screens or devices so that one can be used to see other participants by video and the other for viewing the documents.
Those difficulties are not, however, insuperable and we have held many video hearings, often involving witnesses and lengthy cross-examination, successfully. In mid-May, one of the Tax Chamber judges sitting alone heard a high-value and complex appeal, with a considerable amount of documentary evidence, and leading and junior counsel on both sides. The hearing took place over four days and was by CVP because there were up to 22 participants.
The hearing included two days of oral evidence from the parties’ expert accountancy witnesses who were both cross-examined remotely. All the documents were provided electronically. The judge reported that the hearing was a success, the experience of seeing witnesses give oral evidence on a screen was just as good as hearing them give evidence face to face and the electronic bundles were easy to use, allowing everyone to find documents quickly without having to grapple with what would have been about 20 lever arch files. In the judge’s view, complex appeals of that kind can be heard as fairly and justly by the CVP as if they were face to face.
Hearing lists
To further the principle of open justice, we now publish weekly hearing lists on the Tax Chamber website so that everyone can see what appeals will be heard. This will continue after the lockdown restrictions have ended. Persons wishing to observe digital hearings can contact the tribunal so that we can assist them to do so.
Even after the lockdown ends, we intend to continue to offer video hearings in all cases if there are advantages for the parties in dealing with the case in that way – such as reduced travel costs or when this allows an appeal to be heard more quickly than listing it as a physical hearing in a remote venue. I also anticipate that there will be many hearings which are partly by video in that all or some of the witnesses will give evidence by video while the representatives and tribunal panel are physically present (and socially distanced) in the hearing room.
In fact, the Tax Chamber is actively contemplating using the TVP in cases that are now categorised and dealt with as default paper cases because, even when an appellant does not request one, a hearing may be a fairer and more just way of dealing with such an appeal. Of course, there will also be many cases that cannot be dealt with fairly and justly by video or telephone and those will continue to be listed as face-to-face hearings when it is safe to do so and with appropriate measures to safeguard those taking part and tribunal staff.
Emerging from lockdown
Phase 3 of the Senior President’s plan concerns the emergence from lockdown. The position for the rest of the year remains uncertain. We are proceeding on the assumption that some elements of social distancing will be maintained for the foreseeable future, and into 2021, but also that restrictions on travel and attendance at work, meetings and group events will be eased or lifted to some extent from July onwards.
The exact timescale remains unknown but currently we assume that some socially distanced face-to-face hearings will be possible from the beginning of September and we have already begun to list some new face-to-face hearings in the autumn.
These listings will need to be kept under review. For example, it may be possible to re-commence such hearings earlier, say during July or August. Alternatively, face-to-face hearings in the autumn may have to be converted to video hearings if there is a second wave of Covid-19 infections. We are already dual listing some cases as face to face or video. The latter take longer and this has an impact on dates but, with flexibility on all sides, it should be possible to prepare for a future outbreak so that we respond more quickly and effectively than was possible three months ago.
A new balance
Finally, we will move to phase 4 when we establish a new equilibrium and consolidate the good practices that have worked well during the lockdown and could be useful in the longer term while jettisoning (but learning from) those things that did not work.
Although planning is invaluable, I know there will be new, and as yet unforeseen, challenges. In future, we will keep our approach and processes under review as we respond to changing circumstances. Our response to Covid-19 over the past three months has shown that, even with reduced staffing and resource levels, the Tax Chamber can adapt and adopt new ways of working at speed. At all times, our aim is to meet the overriding objective of the chamber’s procedure rules of dealing with cases fairly and justly.
Notwithstanding negative comments from some, I am confident that the wider tax community recognises that the chamber has kept the wheels of justice turning, if a little more slowly, in the face of wholly unprecedented difficulties. I hope that community also recognises its obligations, set out in the rules, to help the tribunal to further the overriding objective and to co-operate with the tribunal generally.
With the help (and, yes, criticism if it is constructive) of parties and the tax profession, I am confident that we will meet the present and future challenges. I believe that, while never forgetting the terrible impact of the virus on individuals, Covid-19 will come to be seen as a positive catalyst in the evolution of the chamber into a modern tribunal that provides access to justice for all in new, efficient and innovative ways.
