TC09513 - [2025] UKFTT 00523 (TC)

The first stage of the Martland analysis is to establish the length of the delay. We agree with Mr Redpath that the delay is in excess of five months and that this is serious and significant. We therefore need to proceed to the next stage of the analysis, namely to establish the reasons why this delay occurred.

It was Mr Helle’s evidence that it was because he wanted to be certain of his legal position and to do this he needed to analyse a large file of documents and to speak to HMRC. This was in light of the fact that he had submitted nine VAT returns without having any difficulty in recovering the input VAT. He attempted to obtain clarity from HMRC but without success until 11 March 2024 when he was told that the company’s VAT status was “exempt” (we do not think he means this in the technical VAT sense, just that the company was entitled to reimbursement or credit for the input VAT in question).

Mr Redpath, although he did not seriously cross-examine Mr Helle on this, did question the reliability of this evidence and pointed out that there was little corroboration. However, we accept the reliability of Mr Helle’s testimony on this point. There was corroboration from comments made by Mrs Helle. Mr Helle presented as a credible witness. Furthermore, on behalf of the company he had requested a statutory review within the statutory time limit. Therefore, there must have been a reason why he did not appeal within the 30 day period, and we accept that that reason was that given by Mr Helle.

It is also clear from the correspondence that the appellant had told HMRC that it intended to appeal, and indeed, from the email of 20 February 2024, that it was collecting the evidence it needed to do this.

We now need to carry out an evaluation of all the circumstances, assessing the merits of the reasons given above and the prejudice which would arise to the parties by granting or refusing permission. We take into account the particular importance of the need for litigation to be conducted efficiently and at proportionate cost, and that statutory time limits should be respected. We do not attribute much weight to the fact that the appellant took no professional advice, but we can have regard to any obvious strengths or weaknesses of its case.

This is very finely balanced. We cannot see how HMRC will be genuinely prejudiced if this application is granted. It is not as though they have shut their file, and the resources needed to proceed with this appeal will simply be deployed now rather than at an earlier period which would have been the case had the appellant appealed in time. Furthermore, HMRC were on notice that the appellant intended to bring an appeal. Mr Helle had specifically told HMRC this in correspondence.

As regards the appellant’s attitude towards the tribunal’s rules and procedure, we do not consider that the actions taken by Mr Helle in seeking to secure the company’s legal position for bringing appeal, demonstrate any disrespect. It is true that he could have put in a protective appeal and then considered the merits thereafter. But we can understand why he did what he did.

Indeed, it is to Mr Helle’s credit that he sought to clarify the position by engaging with HMRC, something which HMRC often criticise taxpayers for failing to do in other cases.

And we accept the evidence that as soon as Mr Helle received clarity from HMRC which he interpreted as indicating that he could obtain recovery of the input tax in dispute, he immediately submitted an appeal. This demonstrates to us a commendable engagement with the appeal process.

The primary substantial argument, by the appellant, as to why it should benefit from the input tax it has paid to its suppliers, is that it has evidence of the supplies made by those suppliers. To date it does not appear that the appellant has provided evidence satisfactory of this, to HMRC. But that is just HMRC’s view. The evidence which the appellant may be able to provide to a tribunal may be wholly adequate to justify a deduction or credit for that input tax.

Furthermore, although this was not submitted in such technical terms, it seems that one of the arguments which has been made by the appellant concerns recovering from HMRC, VAT it has wrongly paid to its suppliers. HMRC have dismissed this argument, but this sort of Reemtsa claim is currently the subject of litigation (see the FTT decision in Chris Poulton [2025] UKFTT 00240) which concerns the legitimacy of such a claim following the UK’s withdrawal from the EU.

Although the appellant’s primary ground of appeal is that it does have evidence that it paid input VAT to its suppliers, it is our view that the appellant should have the opportunity to run this alternative Reemtsa type argument.

Mr Helle said at the hearing that the reason he did not take professional advice was because they did not have the money. We would refer him to paragraph 34 of the ChrisPoulton decision where details are given of the Revenue Bar Association and the possibility of seeking representation, on a pro bono basis, from a member of that Association.

It is our view that the balance of prejudice weighs in favour of granting the appellant’s application and giving it permission to appeal out of time.