TPY Limited v HMRC: First-tier Tribunal dismisses application for preliminary hearing on validity of VAT assessment notices

The First-tier Tribunal (Tax Chamber) has dismissed an application by TPY Limited for a preliminary hearing on the validity of three letters issued by HMRC on 28 March 2022, ruling that even a favourable determination on the point would not dispose of the appeal as a whole.

The case concerns VAT assessments arising from returns made by the appellant for periods 03/18 to 12/20. HMRC had concluded that the appellant's output supplies did not meet the conditions for zero-rated exports and separately challenged input tax claims, culminating in an amended assessment of £1,126,443. The appellant also contested two February 2024 decisions refusing input tax credit worth approximately £466,281 for periods 09/20 and 12/20.

The application, brought by the appellant's representative Michael Feng of Feng and Co, sought a preliminary hearing on whether the three March 2022 letters, taken together, constituted a valid notice of VAT assessment. The appellant argued that a reasonable reader would not have understood the letters as notifying a determination of the amount of VAT assessed as being presently due, and that the purported notice was therefore not one capable of founding an appeal under section 83(1)(p)(i) of the Value Added Tax Act 1994.

Tribunal Judge Matthew Donmall, applying the principles set out by the Upper Tribunal in Wrottesley v HMRC [2015] UKUT 637 (TCC), refused the application. The power to direct a preliminary hearing, the judge reaffirmed, is to be exercised with caution and used sparingly, and is appropriate only where there is a succinct knockout point capable of disposing of the case or a distinct aspect of it.

The central difficulty for the appellant was that invalidity of the March 2022 Notice would not eliminate the remaining disputes. The December 2023 amendment, which reduced the assessment to £1,126,443, would in substance become a primary assessment under section 73(1) VATA 1994, keeping assessments for periods 12/19 to 06/20 alive. The February 2024 decisions on input tax for 09/20 and 12/20, representing a further £466,281, would be wholly unaffected. A substantive hearing would therefore remain necessary regardless of the outcome on the preliminary point, and directing a separate preliminary hearing would serve only to delay that final determination and add to costs.

Judge Donmall also expressed scepticism that the hearing would be as brief as the appellant maintained. HMRC indicated it would wish to call witness evidence, and the allegation raised by Mr Feng on 10 May 2026, that the HMRC officer had "deliberately and deceitfully misled" the appellant, introduced further factual complexity. Should that allegation be formally pursued, the Upper Tribunal's caution against preliminary hearings on questions of mixed fact and law would apply with particular force.

The decision also makes reference to the approach taken by Judge Brown KC in Jelly Vine Productions Ltd v HMRC [2024] UKFTT 562 (TC) and, more recently, by Judge Redston in BGC Services Holdings LLP v HMRC [2026] UKFTT 00558 (TC), affirming that the strength of an applicant's underlying argument is capable of being weighed, but only once the knockout point threshold from Wrottesley is independently satisfied.

The judge declined to address the merits of the appellant's contentions on the validity of the March 2022 letters, those being questions reserved for the substantive hearing.

In closing, Judge Donmall noted that the volume of correspondence generated by Mr Feng since the November 2025 case management directions, often restating arguments already made, had not assisted the Tribunal and risked causing further delay. Fresh directions for progression to a single final hearing were issued alongside the decision.

TPY Limited v The Commissioners for HMRC [2026] UKFTT 00843 (TC), TC/2024/03948, decided 5 June 2026.