Cases

BPP Holdings v HMRC: When The Tribunal Can Sanction HMRC

HMRC missed deadline after deadline and offered no explanation. The Supreme Court upheld the tribunal's power to bar them from the proceedings entirely. Here's what BPP Holdings means for your case—and the same rules that apply to you.

Liam Williams

20 Mar 2026 — 12 min read

HMRC missed a deadline. Then another. When it finally responded, the tribunal found it had failed to state "a single fact" in support of its case. It offered no explanation for any of it.

The First-tier Tribunal did something drastic: it barred HMRC from the proceedings entirely. HMRC fought back through the Upper Tribunal and the Court of Appeal. The case reached the Supreme Court. Five justices heard it—and unanimously upheld the tribunal's power to shut HMRC out.

If HMRC has missed a direction in your case, BPP Holdings v HMRC is the case you need to understand. It establishes what the tribunal can do when a party fails to comply with its orders—and the same rules apply to you.

What This Case Was About

BPP Holdings supplied education and books to students. Following a corporate restructure in 2006, BPP treated education (standard-rated for VAT) and books (zero-rated) as two separate supplies by separate companies. HMRC disagreed and issued two VAT assessments in November 2012. BPP appealed to the FTT in May 2013.

What followed was a pattern of escalating non-compliance by HMRC:

Statement of case: Served 14 days late. BPP did not oppose the extension.
Disclosure: Provided a few days late, with a defective disclosure statement.
Further information: BPP requested further and better particulars. After exchanges went nowhere, BPP applied to the tribunal for an order compelling HMRC to respond.
The conditional order: In January 2014, Judge Hellier made a Rule 8(3)(a) conditional order—if HMRC failed to provide the information by 31 January 2014, it "may" be barred from the proceedings.
The inadequate response: HMRC served something by the deadline, but Judge Mosedale found it failed to state "any fact or matter on which HMRC relied."
No improvement: Months passed. "Hardly any further information had been supplied by HMRC" by the time BPP applied for debarring.

In July 2014, Judge Mosedale barred HMRC from the proceedings. She described it as "a draconian remedy" but "virtually the only sanction that the Tribunal has"—and that costs would not be an adequate remedy for the prejudice BPP had suffered.

HMRC challenged the debarring. Judge Bishopp in the Upper Tribunal overturned it. The Court of Appeal restored it. HMRC appealed again. In July 2017, the Supreme Court—Lord Neuberger, Lord Clarke, Lord Sumption, Lord Reed, and Lord Hodge—unanimously dismissed HMRC's appeal.

What The Supreme Court Decided

The judgment in BPP Holdings v HMRC [2017] UKSC 55 is short—35 paragraphs. But it established five principles that govern how tribunals handle non-compliance to this day.

"Tribunals Should Generally Follow A Similar Approach"

At paragraph [26], Lord Neuberger addressed the central question: does the civil courts' approach to sanctions apply in tribunals?

The answer was yes—by analogy, not directly. The CPR (Civil Procedure Rules) govern court proceedings in England and Wales, not tribunal proceedings. Tribunal rules apply UK-wide and have their own structure. But Lord Neuberger endorsed the UT's guidance that tribunals should not adopt a more relaxed approach to compliance:

"In a nutshell, the cases on time-limits and sanctions in the CPR do not apply directly, but the Tribunals should generally follow a similar approach."

This resolved a conflict between two earlier UT decisions. In McCarthy & Stone [2014] UKUT 196 (TCC), Judge Sinfield held that the strict approach was appropriate for tribunals. In Leeds City Council v HMRC [2014] UKUT 350 (TCC), Judge Bishopp—the same judge who later overturned the debarring in BPP—held it was not. BPP settled the question in McCarthy & Stone's favour.

The Supreme Court also affirmed the UT's "important function" of giving binding guidance to the FTT. This was not optional housekeeping—it was a core part of the UT's role in ensuring consistency across tribunal panels. That principle later became central to Martland v HMRC, where the UT's guidance on late appeals was challenged and upheld through the same reasoning.

"Higher Standards For Public Bodies"

HMRC argued that barring it from proceedings would prevent it from discharging its public duty to collect VAT. At paragraph [30], Lord Neuberger rejected this:

"I consider that it would set a dangerous precedent if that point were accepted, as it would discourage public bodies from living up to the standards expected of individuals and private bodies in the conduct of litigation."

He went further. Far from deserving special treatment, HMRC should expect stricter scrutiny: "there is at least as strong an argument for saying that the courts should expect higher standards from public bodies than from private bodies or individuals."

In the Court of Appeal, Ryder LJ—the Senior President of Tribunals—had been blunter about HMRC's attitude. At paragraph [39] of BPP [2016] EWCA Civ 121:

"I found the approach of HMRC to compliance to be disturbing. At times it came close to arguing that HMRC, as a State agency, should be treated like a litigant in person and that the constraints of austerity on an agency like the HMRC should in some way excuse unacceptable behaviour."

His conclusion was direct: "a litigant in person is expected to comply with rules and orders and a State party should neither expect to nor work on the basis that it has some preferred status—it does not."

"The Windfall Argument Is No Defence"

HMRC argued that debarring gave BPP an unjustified windfall—a win without having to prove its case on the merits. At paragraph [32], Lord Neuberger dismissed this:

"that point can always be made by a party facing a debarring order, and to give the point any weight, save perhaps in exceptional circumstances, would appear to me to undermine the utility of the sanction of a debarring order."

This matters. Every party facing a barring or strike-out order can argue that the other side will get a windfall. If that argument worked, the sanction would never be available. Lord Neuberger acknowledged it but refused to let it become a trump card.

"Tough But Justified"

At paragraph [33], Lord Neuberger accepted the debarring was "tough" and that "some Ft-T judges may not have made that decision." But the issue was "very much one for the tribunal making that decision." An appellate court should only interfere where the decision "cannot be justified"—where it is "so plainly wrong that it must be regarded as outside the generous ambit of the discretion entrusted to the judge."

Then, at paragraph [34], the honest assessment:

"It may well be that this case is not far from that limit."

But the combination of factors—the nature and extent of the failure, the length of delay, the absence of any compensation, the absence of explanation, and the previous breaches—justified the order. In other words, BPP was borderline. Debarring was not routine. It was the last resort in a case where everything else had failed.

The Binary Problem

At paragraph [35], Lord Neuberger identified a structural weakness in the tribunal's sanctions toolkit. Judge Mosedale had been "faced with a binary question, involving two unpalatable choices":

"Making the debarring order, which she described as draconian, or not making the order, which, to use the vernacular, would have meant that HMRC effectively would have got away with it."

Lord Neuberger suggested "with some diffidence" that it might be worth considering whether tribunals should have additional sanction powers—fines, procedural disadvantages, or other intermediate measures. As of March 2026, this suggestion has not been implemented. The binary choice remains.

How Rule 8 Works

Rule 8 of the FTT Tax Chamber Rules is the mechanism. It provides two routes to barring or striking out, and they work differently.

Automatic Barring

Under Rule 8(1), read with Rule 8(7), if a direction states that failure to comply "will" lead to barring, the barring is automatic. It happens the moment the deadline passes. The tribunal has no discretion—the party is barred, and must apply to have the bar lifted.

In HMRC v Elite Management Consultancy Ltd [2024] UKFTT 567 (TC), a direction stated that non-compliance "WILL result in the proceedings being STRUCK OUT." HMRC uploaded its authorities bundle at 7:05pm—two hours after the 5pm deadline. The tribunal held that HMRC's application was automatically struck out at 5:01pm. There was no discretion to exercise. Two hours late meant struck out.

Watch for the word "will" in any direction you receive. It creates an unless order—a trip wire with no flexibility.

Discretionary Barring

Under Rule 8(3)(a), read with Rule 8(7), if a direction states that failure "could" or "may" lead to barring, the tribunal retains discretion. This was the BPP route. After HMRC failed to comply with Judge Hellier's conditional order, BPP had to make a separate application asking the tribunal to exercise its discretion to bar HMRC.

This is where the Denton v TH White [2014] EWCA Civ 906 three-stage framework comes in—applied by analogy. The tribunal considers: (1) how serious the breach was, (2) why it happened, and (3) all the circumstances, giving particular weight to efficient conduct and compliance with rules.

What Happens When HMRC Is Barred

Rule 8(8) sets out the consequences. When HMRC is barred:

The tribunal need not consider any response or submissions from HMRC.
The tribunal may summarily determine any or all issues against HMRC.

This does not mean automatic victory. The tribunal still decides the case—but without HMRC's participation. In practice, a debarring order puts significant pressure on HMRC to concede or settle rather than allow an unopposed hearing.

Getting Back In

Under Rules 8(5) and 8(6), a barred party can apply for reinstatement. The application must be in writing and received within 28 days of the tribunal sending notification of the barring. The tribunal then decides whether to lift the bar, applying the same framework—seriousness, reasons, all the circumstances.

The Same Rules Apply To You

Everything in this article works in both directions. Rule 8 applies to appellants through Rule 8(1) and Rule 8(3) directly—no need for the Rule 8(7) reading-in that applies to HMRC.

If the tribunal issues a direction requiring you to serve a document by a particular date, and you miss that deadline, the consequences depend on the wording:

"Will" language: Your appeal is automatically struck out. You must apply for reinstatement within 28 days.
"May" language: HMRC can apply to have your appeal struck out, and the tribunal decides using the same proportionality framework.

In HMRC v Breen [2023] UKUT 252 (TCC), Mr Breen's income tax appeal (approximately £942,000) was automatically struck out after he failed to comply with an unless order. The FTT reinstated it—but the UT overturned the reinstatement, finding the FTT had failed to apply the Martland three-stage test properly.

The Denton/Martland framework is symmetrical. The same principles that allow you to hold HMRC accountable also bind you. The tribunal expects both parties to comply with its directions. Rule 2(4) makes this explicit: parties must help the tribunal further the overriding objective, and co-operate with the tribunal generally.

If you are preparing for a hearing and have received directions, treat every deadline as absolute.

What To Do If HMRC Misses A Direction

If HMRC has failed to comply with a tribunal direction in your case, here is what to do.

1. Check The Wording Of The Direction

Read the direction carefully. Does it say HMRC "will" be barred if it fails to comply, or that it "may" be barred?

If "will": HMRC is already barred the moment the deadline passes. Write to the tribunal pointing this out and asking for confirmation. You do not need to apply for a barring order—it has already taken effect automatically.

If "may": HMRC is not automatically barred. You need to apply to the tribunal asking it to exercise its discretion.

2. Write To The Tribunal

Don't wait weeks hoping HMRC will comply on its own. The Court of Appeal in BPP noted that HMRC should proactively apply for extensions if it has difficulties—if HMRC hasn't done so, the breach is unlikely to resolve itself. Write promptly once the deadline has clearly passed. There is no fee for making an application to the tribunal.

Send a letter or email to the tribunal ([email protected]), copied to HMRC. You do not need to make a formal application—a clear letter is sufficient. Include:

The specific direction HMRC has breached, with the date and wording.
How long the breach has lasted. If the deadline was 14 days ago, say so.
The prejudice you have suffered. Are you unable to prepare your case because HMRC hasn't served its statement of case? Has the delay added months to the proceedings?
Any previous breaches by HMRC in the same proceedings. A pattern of non-compliance was central to the BPP decision.
What remedy you are seeking. Be specific—see step 3.

Example wording:

Dear Tribunal,

I write in connection with appeal [your case reference]. By direction dated [date], HMRC was required to [serve its statement of case / provide disclosure / comply with the direction at paragraph X] by [deadline date]. That deadline has passed and HMRC has not complied. I have received no application from HMRC for an extension of time.

[Describe any prejudice — e.g., "I am unable to prepare for the hearing listed on [date] because I have not seen HMRC's case."]

I respectfully ask the tribunal to [state remedy — e.g., "direct HMRC to comply within 14 days, failing which HMRC be barred from taking further part in the proceedings"].

3. Ask For The Right Remedy

Don't start with the nuclear option. The tribunal expects proportionality. Consider an escalation ladder:

Extension with conditions: Ask the tribunal to set a new deadline with a warning. This is appropriate for a first breach with a plausible explanation.
Unless order: Ask the tribunal to make a direction stating HMRC "will" be barred if it fails to comply by a specific date. This converts the situation into the automatic barring route.
Barring order: If HMRC has already breached a conditional order, or there is a pattern of non-compliance, apply for debarring under Rule 8(3)(a) read with Rule 8(7).

You might also consider a costs application as an alternative or additional remedy. If HMRC's non-compliance has caused you to incur unnecessary costs, Rule 10(1)(b) allows the tribunal to award costs for unreasonable conduct.

4. Document Everything

Keep a chronological record of every direction, every deadline, every communication with HMRC, and every instance of non-compliance. Judge Mosedale's decision in BPP was supported by a clear factual record of escalating breaches. Your application will be stronger with a timeline.

5. Be Proportionate—Don't Overreach

BPP was borderline. Lord Neuberger said the case was "not far from" the limit of the tribunal's discretion. A single missed deadline without a pattern of non-compliance is unlikely to result in debarring. The tribunal will expect you to have explored lesser remedies first.

Don't ask for debarring in response to HMRC being a few days late on a single direction. The tribunal will take that as disproportionate—and it may reflect badly on you. Match your remedy to the seriousness of the breach.

After BPP: The Case Law In Action

BPP established the framework. The cases that followed show how it works in practice.

BGC Services (2025): £96 Million With No Reasons

In BGC Services Holdings LLP v HMRC [2025] UKFTT 700 (TC), HMRC had issued PAYE determinations for £96 million—without providing any reasons. When the appellant appealed, HMRC asked the appellant to explain the case HMRC should have set out itself. HMRC's statement of case also failed to give proper reasons.

Judge Redston refused to debar HMRC at that stage but issued directions requiring proper particularisation. She noted that "the Tribunal receives many applications for HMRC to be barred from the proceedings but rarely makes such an order." Debarring was held in reserve—the nuclear option available if HMRC failed to comply with the new directions.

The lesson: the tribunal will usually try to fix non-compliance before reaching for the barring order. But the barring order is there if compliance doesn't follow.

Elite Management (2024): Two Hours Late, Automatically Struck Out

The Elite Management case discussed above illustrates the same framework from a different angle. HMRC was two hours late. The direction said "will." The tribunal held there was no discretion to exercise—and the overriding objective could not override the automatic provision.

The lesson: when a direction says "will," the deadline is absolute. Two hours is no different from two months.

Jeneruhl Trading (2024): Debarring Refused On The Merits

In Jeneruhl Trading Ltd v HMRC [2024] UKFTT 735 (TC), the appellant applied to debar HMRC under a different route—Rule 8(3)(c), which allows striking out where there is "no reasonable prospect of success." The tribunal refused. HMRC's case went beyond bare assertion; it had substance.

The lesson: debarring is not a shortcut around a weak case. HMRC's position must be genuinely unsustainable before the tribunal will shut it out.

What This Means For Your Case

BPP Holdings established a framework that governs every tribunal case where a party fails to comply with directions. Here are the practical takeaways:

The tribunal has real power to sanction HMRC. Debarring is available—and the Supreme Court has confirmed it. HMRC cannot hide behind its status as a public body.
But debarring is the last resort, not the first. Expect the tribunal to try lesser measures first. Unless orders, extended deadlines, and costs applications come before barring.
Watch the wording. "Will" means automatic. "May" means discretionary. The distinction determines whether HMRC is already barred or whether you need to apply.
Document the pattern. A single missed deadline is unlikely to result in debarring. A pattern of non-compliance—like BPP's escalating failures—is what makes the case.
The same rules bind you. Every principle that empowers you to hold HMRC accountable also applies to your own compliance. Miss a "will" deadline and your appeal is struck out. The tribunal expects you to take its directions seriously—the costs regime means the stakes of non-compliance are real for both sides.
Be proportionate. Ask for the remedy that matches the breach. Overreaching undermines your credibility with the tribunal.

Key Legislation And Resources

This article is for informational purposes only and does not constitute legal or tax advice. For advice specific to your situation, consult a qualified tax adviser, accountant, or solicitor.