The without prejudice rule is founded partly in public policy and partly in the agreement of the parties. In appropriate circumstances, the without prejudice rule will apply in tax proceedings, see The Leasing Number 1 Partnership; The Leasing Number 2 Partnership [2015] UKFTT 601 (TC).’ In that case, Judge Robin Vos stated at [74] to [77], ‘in litigation generally, it is accepted that ADR proceedings constitute, at the very least, some form of without prejudice discussions. … It is equally clear that without prejudice material (subject to certain exceptions) cannot be allowed in evidence in any proceedings relating to the dispute in question (see Unilever v the Proctor & Gamble Co [2000] 1 WLR 2436). The general rule therefore is that material arising from any ADR process cannot be used in relation to subsequent proceedings before the Tribunal. [Furthermore] Robert Walker LJ in Unilever [at 2446B] [stated] that: “one party’s advocate should not be able to subject the other party to speculative cross examination on matters disclosed or discussed in without prejudice negotiations simply because those matters do not amount to admissions”….’ I am not aware of any authority to support the legal proposition that as a matter of public policy, and by way of any statutory exception to the general rule, the WP rule does not apply to ADR in a tax appeal. Consequently, subject to any agreed contractual carve-out in HMRC’s ‘Mediation Principles’, HMRC is subject to the rule of law and must apply it in their decision-making processes. Furthermore, paragraph 28 of the Chancery Guide 2022 (‘Revenue List’) states:

‘… [T]he proposed claim [may] be brought in the Revenue List …. by way of Part 7 or Part 8. The general provisions of the Civil Procedure Rules, Practice Directions and this Guide apply to claims issued in the Revenue List.’
It therefore appears that:
(i) An interim order can be granted to stay the hearing of an application in the Revenue List for Mediation.
(ii) Part 36 applies, consequently the WP rule applies to structured Part 36/Calderbank Offers made in Mediation whilst proceedings in the Revenue List are stayed.

Even though the CPR does not apply to proceedings in the FTT, based upon the policy of the court underlying the application of the WP rule, can the FTT consider a Part 36/Calderbank Offer at the conclusion of a trial? If they can, that would open a door to the making of structured offers/proposals in the Mediation of a tax appeal, that: (i) are protected by the WP rule; and (ii) have teeth, for the benefit of both parties.