Tribunal dismisses HMRC's appeal and confirms no general principle of reciprocal disclosure

In HMRC v Ducas Ltd [2025] UKUT 362 (TCC), the Upper Tribunal (UT) dismissed HMRC's appeal against certain case management directions and confirmed that there is no general rule that extended disclosure must apply equally to both sides in a tax dispute.

Background 

HMRC alleged that Ducas Ltd (Ducas) facilitated the fraudulent evasion of more than £171 million in national insurance contributions (NICs). It was also alleged that Ducas supplied its customers (employment agencies) with fraudulent documents suggesting that income tax and NICs had been properly deducted and paid when, according to HMRC, this was not the case. HMRC argued that such activity made Ducas liable for the unpaid NICs as a deemed secondary contributor under the Social Security (Categorisation of Earners) Regulations 1978/1689. Ducas appealed to the First-tier Tribunal (FTT). 

HMRC’s evidence was obtained from investigations into Ducas’ customers, rather than from Ducas itself. The result was a significant imbalance in the parties’ access to potentially relevant material. Matters escalated in December 2024, when the High Court granted HMRC freezing orders against Ducas and several connected companies. 

The FTT held a case-management hearing in March 2025, setting out the procedural steps leading to a 20-day substantive hearing listed for April 2026. 

With regard to disclosure, the FTT adopted a tailored approach. Although standard disclosure, under rule 27 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, only requires a party to disclose those documents which it intends to rely on, the FTT directed HMRC to provide a wider, CPR-style form of extended disclosure. HMRC was required to disclose not only the documents it intended to rely on at the appeal hearing, but also any material in its possession that supported Ducas’ case or undermined HMRC’s own case. 

The FTT explained that HMRC, as the party bearing the burden of proving fraud, was in a very different position from the taxpayer. Most of the key documents were held by HMRC because they had been obtained from third-party agencies. Ducas, on the other hand, might have no knowledge of certain documents that were potentially relevant to its defence. Against that backdrop, the FTT considered it appropriate to require HMRC to disclose a wider range of material.

In contrast, the FTT required Ducas to provide only standard disclosure. Ducas was not required to conduct broad searches for documents that might be harmful to its case or to match HMRC’s extended disclosure obligations. This was because the FTT regarded HMRC's position as fundamentally different in light of its evidential third party sources and the nature of the allegations it was pursuing. The FTT also rejected HMRC’s argument that fairness demanded reciprocal disclosure obligations. 

The disclosure direction given by the FTT became the centre of HMRC’s appeal to the UT.

The FTT's decision can be viewed here. 

UT decision 

HMRC's appeal was dismissed.

The UT confirmed that no general principle of reciprocal disclosure exists in tax tribunal proceedings. It accepted that extended disclosure can sometimes promote equality of arms but that did not mean that extended disclosure had to be imposed on all parties whenever it was imposed on one. The procedural rules are inherently flexible and disclosure must depend on the needs and circumstances of each case.

The UT emphasised that disclosure orders must be party-specific and issue-specific, rather than driven by symmetry for its own sake. An order for disclosure must be informed by the circumstances of a particular party and the primary issues in dispute, rather than by what has been ordered for the opposing party. In this case, the FTT had been entitled to consider the fact that HMRC bore the burden of proving serious allegations of fraud and that it held a substantial body of documents, sourced from third parties, which Ducas did not have. Those factors justified the FTT imposing extended disclosure on HMRC alone. 

HMRC also advanced a rationality challenge, arguing that even if no reciprocity principle existed, the FTT’s decision could not be justified because fairness required Ducas to also make extended disclosure. The UT disagreed. It acknowledged that there were reasons why the FTT could have imposed extended disclosure on Ducas, but reiterated that appellate tribunals must show significant restraint when reviewing case-management decisions. The question was not whether the UT would have reached the same view, but whether the FTT’s decision fell outside the “generous ambit” of its case-management discretion. In this instance, it did not. The FTT had considered the relevant factors, exercised judgement and reached a conclusion that was plainly open to it. HMRC's rationality challenge therefore failed.

Comment

Although the UT’s decision may not be surprising given the high threshold for interfering with case-management decisions of the FTT, it is nevertheless significant in confirming that there is no general principle of reciprocity in the disclosure regime before the FTT.  

The UT's decision also serves as a reminder that disclosure applications must be determined on the specific facts and circumstances of the case. HMRC had based its disclosure application almost exclusively on the basis of reciprocity. It had not advanced a broader, fact-specific argument, for why extended disclosure from Ducas was necessary. If it had done so, it might have been more successful.

The UT's decision can be viewed here.