Application under CPR 52.30 fails in long-running tax scheme litigation (Ingenious Games LLP and ors v HMRC)

10 Aug 2022

An application made to reopen grounds of appeal on which permission was refused under CPR r. 52.30 has failed. There was no significant failure in the reasoning of the judge who refused permission and it was wrong for the application to be made only after the substantive appeal on other grounds had been determined.

Ingenious Games LLP and ors HMRC [2022] EWCA Civ 1015

What are the practical implications of this case?

Overall, this appears to have been a rather weak application under CPR r. 52.30 to reopen the decision of Arnold LJ to refuse permission to appeal on certain grounds, whilst granting permission on others. The decision is most important, however, in relation to the points of principle set out at the end. First, the Court of Appeal has rejected the notion that (in circumstances where permission is refused on some grounds and granted on others) it is appropriate to await the outcome of the substantive appeal before challenging the refusal to grant permission on the other grounds. It was wrong to suggest that it was possible only to assess whether injustice had been caused once the outcome of the substantive appeal was known. On the contrary, applications under r. 52.30 must be made as soon as possible after the decision refusing permission to appeal. Second, the Court has clarified how the Court of Appeal will address second appeals which raise important points of principle or practice. Where it is apparent that some grounds of appeal raise such a point, it does not follow that all arguable grounds raised alongside should be permitted to proceed to a substantive appeal. It is proper and appropriate for the Court to consider the test for a second appeal against each of the grounds individually.

What was the background?

This is the latest judgment in a lengthy series concerning the tax treatment of various entities. The Appellants were associated with film and video games finance schemes. In the first-tier tax tribunal (“FTT”), on a true analysis of what the LLPs did, their operations were conducted on the so-called 30:30 basis and not the Ingenious basis. On that basis, the Film LLPs, but not the Games LLP were trading with a view to profit. The Upper Tribunal (“UT”) upheld the contractual analysis of the FTT but held that none of the LLPs was trading on that basis, nor had a view to profit. The LLPs applied for permission to appeal from the Court of Appeal. This was a second appeal and, accordingly the Appeals from the Upper Tribunal to the Court of Appeal Order SI 2008/2384 applied (the “Appeals Order”). Article 2 of the Appeals Order provided that permission should not be granted unless the proposed appeal would raise some important point of principle or practice or there is some other compelling reason for the relevant appellate court to hear the appeal. Arnold LJ granted permission on two of the seven grounds raised and refused permission on the other five. The appeal was successful as regards the Film LLPs but unsuccessful as regards the Games LLP. In this latest application, the LLPs seek to reopen Arnold LJ’s dismissal of permission to appeal on the five grounds on which he refused permission pursuant to CPR r. 52.30.

What did the court decide?

The LLPs argued that “something had gone badly wrong” with the decision by Arnold LJ. However, the authorities established that in an application under CPR r. 52.30, it was necessary to demonstrate that the impugned decision was something which was not a proper judicial process at all. It is not sufficient to show that the earlier decision had produced the wrong result. The Court of Appeal here took the view that if Arnold LJ had concluded that permission should be refused in respect of Ground 2, he was entitled also to refuse permission on Grounds 4-7 due to the inherent overlap between them. Having reviewed the approach which Arnold LJ took in relation to Ground 2, the Court of Appeal was satisfied that the process before Arnold LJ had not been corrupted and had not come in any way close procedurally to the narrow set of circumstances in which CPR r.52.30 can properly be invoked. Although that finding sufficed to dispose of the application, the Court of Appeal offered two further pieces of analysis. First, the Court of Appeal ‘unhesitatingly’ held that an application under CPR r. 52.30 must be brought as soon as possible and (in circumstances where permission to appeal is given on some grounds) it is improper to await the outcome of the substantive appeal on those other grounds before deciding whether or not to make an application under CPR r. 52.30. This is particularly so where the grounds of the r. 52.30 application themselves emphasise the overlap between the grounds on which permission was given and the grounds upon which permission was refused. Second, there is nothing improper in considering whether each of the grounds of appeal meets the test in Article 2 of the Appeals Order and deciding whether permission should be granted in respect of them individually. The Court is not required to permit all arguable grounds to go forwards just because one of them, and hence the appeal as a whole, raises an important point of principle and practice.

Case details

Court: Court of Appeal, Civil Division

Judges: Lord Justice Phillips, Lord Justice Nugee and Sir David Richards

Date of judgment: 19 July 2022

Article by Phillip Patterson – first published by LexisNexis 8th August 2022


Phillip Patterson

Call: 2008


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