Judicial review of a tribunal-approved Schedule 36 notice: the grounds available in 2026

A third-party information notice arrives. The covering letter says the First-tier Tribunal has approved the notice in advance under paragraph 3 of Schedule 36 to the Finance Act 2008. The recipient turns to the appeal section and finds paragraph 30 — and then paragraph 30(3), which closes the appeal door for any notice that has been tribunal-approved.

The merits-route is shut. What remains is judicial review of the approval decision itself — brought in the Administrative Court of the High Court, against an approval the recipient did not see being made.

This piece walks the public-law grounds available in that situation, the forum question, the case-law authority that defines what the approval hearing actually is, and the timing trap. It is a procedural-architecture explainer aimed at SDLT compliance work on high-value buyer files. It is not advice — talk to a specialist tax barrister or a solicitor with public-law experience before acting.

The statutory closing of the appeal door

Paragraph 30(1) of Schedule 36 FA 2008 gives the recipient of an information notice a single appeal right: the requirement is "unduly onerous". That ground is examined in detail in our paragraph 30 unduly-onerous case-law explainer.

Paragraph 30(2) carves out statutory records — there is no appeal at all against a requirement to produce records the taxpayer is statutorily required to keep. Paragraph 30(3) carves out tribunal-approved notices. The statutory text reads:

"Sub-paragraph (1) does not apply to a requirement in a taxpayer notice or third party notice to which the approval of the tribunal has been given under paragraph 3."

The drafting choice is deliberate. Parliament gave the recipient of a non-approved notice a merits appeal at the FTT; for an approved notice it gave nothing. The approval is the merits scrutiny — performed once, in advance, by the same tribunal that would have heard the appeal.

That leaves judicial review. The High Court has supervisory jurisdiction over the FTT under section 31 of the Senior Courts Act 1981; that jurisdiction can in principle be transferred to the Upper Tribunal under section 15(1) of the Tribunals, Courts and Enforcement Act 2007, but a Schedule 36 paragraph 3 approval is usually pursued in the Administrative Court at first instance.

What judicial review is, and what it isn't

The same distinction that bites after a post-FTT appeal applies here — and we explored it in detail in the post-FTT judicial review companion piece. Judicial review is supervisory, not appellate. The court asks whether the FTT acted within its powers, on a defensible legal basis, and through a fair process. It does not ask whether the FTT got the merits right.

That ceiling matters in practical terms. A recipient who disagrees with the tribunal's view that a notice is proportionate cannot re-litigate proportionality in the Administrative Court. The challenge has to land on one of the classic public-law grounds — and the evidence has to make out the ground without re-running the underlying balancing exercise.

The three classic grounds were synthesised by Lord Diplock in Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374 (GCHQ): illegality, irrationality, and procedural impropriety. Each maps onto a different way an FTT approval can go wrong.

The three grounds, applied to a paragraph 3 approval

Illegality — error of law on the paragraph 3(3) preconditions

Paragraph 3(3) FA 2008 sets out five conditions the FTT must be satisfied of before approving a third-party notice. They are gatekeeping: each has to be met.

An illegality challenge says one of those preconditions was not met, and the FTT therefore had no statutory power to approve the notice. The classic targets are 3(3)(c) and 3(3)(d) — the summary-of-reasons and representations-opportunity steps that protect the taxpayer's involvement in a process that otherwise excludes them.

Irrationality — Wednesbury unreasonableness on the merits

A Wednesbury irrationality challenge — Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 — says the FTT's approval was so unreasonable that no tribunal properly directing itself could have reached it. The bar is famously high. It is not enough that the recipient thinks the burden outweighs the benefit; it has to be a decision that no rational tribunal could have made on the material available.

In practice, irrationality challenges to paragraph 3 approvals are rare and rarely succeed. The approval-hearing record will usually show the FTT engaging with the proportionality balance using HMRC's published guidance (CH24420 on "unduly onerous"). The court will not second-guess that engagement.

Procedural impropriety — fairness in the ex parte hearing

The paragraph 3 approval is structurally one-sided. Under paragraph 3(2A) (inserted by FA 2009) HMRC can apply for approval without notice to the recipient — the recipient does not file evidence, does not appear, and does not see what HMRC told the tribunal. Procedural-impropriety challenges focus on what the rules of fairness require given that structural one-sidedness.

Two common targets:

1. Non-disclosure of material HMRC was aware of. An ex parte applicant has a duty of full and frank disclosure. If HMRC knew of a material consideration that would weigh against approval — for example, that the taxpayer had already provided substantially the same information voluntarily — and did not put that to the tribunal, the approval may be unsafe.
2. Departure from the published procedure. HMRC's Compliance Handbook sets out internal procedural steps before a paragraph 3 application (see CH23730 and CH24320 for the approval-application practice). Significant departure from published guidance can ground a legitimate-expectation argument.

The Derrin Brother authority — what it actually settled

The leading Court of Appeal authority on Schedule 36 paragraph 3 approvals is R (Derrin Brother Properties Ltd) v Commissioners for Her Majesty's Revenue and Customs and Tax Chamber of the First-tier Tribunal [2016] EWCA Civ 15. It is the case any judicial-review claim in this corner of Schedule 36 will engage with first.

Three points from Derrin Brother that any practitioner working on a JR challenge to a paragraph 3 approval needs to internalise:

1. The approval hearing is supervisory and protective, not adversarial. The FTT's role under paragraph 3 is to police HMRC's conduct, not to host a contested merits hearing. The recipient is not a party to the approval application.
2. The recipient has no general right to attend or see the HMRC submissions. Parliament's design is ex parte. Disclosure of HMRC's submissions to the recipient is the exception, not the rule, and only happens if and to the extent the FTT directs it.
3. The summary procedure is not a breach of natural justice. The Court of Appeal held that the statutory scheme — with its paragraph 3(3)(c) reasons-summary and paragraph 3(3)(d) representations-opportunity — discharges fairness in the round, given the public interest in HMRC being able to investigate tax position without tipping off the taxpayer.

The consequence for a recipient considering JR: the structural fact of having been excluded from the approval hearing is not, in itself, a ground of challenge. Derrin Brother settled that. What can be a ground of challenge is the quality of HMRC's disclosure to the tribunal in that ex parte hearing, and the FTT's handling of the paragraph 3(3) conditions on the material before it.

Forum and timing — CPR 54

A claim for judicial review is brought under Part 54 of the Civil Procedure Rules. The procedural shape:

CPR 54.5(1) contains two requirements, not one. The three-month long-stop is well known. The "promptly" requirement is independent and routinely shorter. In Schedule 36 work, where the underlying information notice has its own response deadline (usually 30 days from issue), delay in launching JR can be fatal even within the three-month window — HMRC will argue that any delay beyond what was strictly necessary to take advice is itself disqualifying.

The practical timeline:

1. Day 1: approval letter and notice arrive.
2. Day 1–7: instruct counsel; preliminary review of approval order and any disclosure.
3. Day 7–14: pre-action letter sent.
4. Day 14–28: HMRC response window; iterate.
5. Day 28–42: claim form filed if response is not satisfactory.

That cycle pushes the practical filing window inside six weeks of the notice arriving, not three months. The 30-day notice response clock keeps running in the background; an application to stay compliance (under the FTT's case management powers or by undertaking from HMRC) is usually a parallel step.

The evidence problem in an ex parte challenge

A challenger has a structural evidence problem. The recipient was not at the approval hearing and did not see HMRC's submissions. Three routes to bridge that gap:

1. Disclosure on the JR claim itself. The Administrative Court has jurisdiction to order disclosure where it is necessary to dispose of the claim fairly. Where the approval order is silent on a key precondition, the court can require HMRC to produce the application file.
2. The reasons summary supplied under paragraph 3(3)(c). The taxpayer received a summary of HMRC's reasons before the approval was sought. That summary is often the only contemporaneous record of HMRC's case the recipient holds.
3. Subject access under data protection law. A subject access request to HMRC for the taxpayer's compliance file can surface relevant internal correspondence. Schedule 36 paragraph 23 LPP carve-outs (covered in our privileged material carve-outs piece) sit alongside but do not displace these data rights.

None of these unlocks the FTT's deliberations themselves. The approval order, where it exists in reasoned form, is the primary target document.

High-value SDLT context: the universe this matters in

Schedule 36 paragraph 3 third-party notices proliferate in HMRC's high-value SDLT enquiry work. Land Registry's price-paid record shows 11,208 transactions above £1.5m in 2025 across England and Wales — the slice above the 12% SDLT slab where enquiry yield per case is highest. A wider 33,161 transactions cleared £925k (the 10% slab boundary). For comparison, 848,775 transactions completed in total in 2025 (data pulled 2026-05-31).

The pattern in our SDLT enquiry-window explainer: a buyer's solicitor receives a paragraph 2 third-party notice for completion-file material a year or more after a high-value purchase, often as part of a non-resident SDLT-surcharge or first-time-buyer-relief enquiry into the taxpayer. Where the taxpayer has not agreed under paragraph 1(2), HMRC takes the paragraph 3 approval route. Tribunal-approved notices in that universe are not unusual.

If the recipient is the solicitor, the challenge calculus runs through professional-conduct considerations (the solicitor's duty to the client) as well as the public-law grounds. If the recipient is the bank, the agent, or a related-party trustee, the considerations differ. None of those nuances changes the basic statutory architecture: paragraph 30(3) closes the merits door, judicial review is the only remaining route, and the Derrin Brother settlement of the approval hearing's procedural shape is the starting point.

Worked example: a £2.4m SW1A 1AA file

A non-resident corporate buyer completes on a £2.4m Westminster flat. HMRC opens a Schedule 9A FA 2003 enquiry into the non-resident SDLT surcharge eighteen months later. The conveyancing solicitor (a paragraph 2 third-party) receives a notice for the full completion file. HMRC has applied for approval under paragraph 3 without notice to the solicitor; the FTT has approved. The cover letter cites paragraph 30(3) and confirms there is no FTT appeal.

The solicitor's options:

1. Comply. Produce the file as directed; consider whether any specific item engages paragraph 23 LPP or paragraph 25 statutory tax-adviser privilege (see the privileged material piece) and redact under paragraph 27.
2. Negotiate scope. Engage HMRC on the precise list — the practical reduction in burden is often substantial without litigation.
3. JR the approval. Only if a specific public-law ground is made out: an unmet 3(3) precondition, an irrationality argument the file actually supports, or a procedural-fairness failing in HMRC's disclosure to the tribunal.

Try the Westminster postcode SW1A 1AA on the True Cost tool to see the price-paid record for the same postcode, or run the SDLT figure for the same file in our stamp duty calculator.

Practical checklist before issuing a JR claim

1. Has the merits door actually closed? Confirm the notice is tribunal-approved (paragraph 3 covering letter) and that paragraph 30(3) applies. Statutory-records under paragraph 30(2) close the door separately.
2. Is there a specific public-law ground? Map the complaint to illegality / irrationality / procedural impropriety. A general sense the notice is excessive is not enough; Derrin Brother settled that.
3. Is the timing live? Calculate from the approval date, not the notice issue date. Inside CPR 54.5(1) and "promptly" — usually six weeks is the practical ceiling.
4. Has the pre-action protocol been followed? An unparcelled JR claim will be criticised at permission stage.
5. Is there a parallel stay strategy for the underlying notice deadline? HMRC's standard 30-day response window keeps running.
6. Is JR proportionate to the scope dispute? Compliance with negotiation is often shorter, cheaper, and less destructive of the underlying client relationship than the JR route.

Sources and limits

This piece anchors on the statutory text of Schedule 36 paragraphs 3 and 30 (legislation.gov.uk), CPR Part 54 and the Judicial Review Pre-Action Protocol (justice.gov.uk), the HMRC Compliance Handbook chapters CH23730 and CH24320–24420, and the Court of Appeal decision in R (Derrin Brother Properties Ltd) v HMRC and the Tax Chamber of the First-tier Tribunal [2016] EWCA Civ 15. Other case-law referenced — CCSU v Minister for the Civil Service [1985] AC 374 and Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 — is the standard public-law authority on judicial-review grounds.

The piece does not cover the costs treatment of failed JR claims (capped costs orders are not generally available outside the statutory schemes), the interaction with closed-material procedure (extremely rare in this area), or the Cart-jurisdiction question on JR of Upper Tribunal decisions on Schedule 36 matters (a different procedural posture).

This is general information about the procedural architecture, not advice on any particular file. Speak to a qualified tax barrister and a solicitor with public-law experience before mounting a judicial-review challenge to a tribunal-approved Schedule 36 notice.

Browse other procedural-tax explainers in the buyer guides category.