TC09517 - [2025] UKFTT 00527 (TC)

Following receipt of a closure notice, a taxpayer has 30 days to appeal to HMRC against the conclusion in that notice.

Following that appeal, a taxpayer may ask HMRC for a statutory review, HMRC may offer the taxpayer a review, or the taxpayer may notify the appeal to the tribunal.

If HMRC notify the taxpayer of an offer to review, they must also notify the taxpayer of HMRC’s view of the matter in question.

The taxpayer then has 30 days to do one of two things. It can take up that offer. Alternatively, it can notify the appeal to the tribunal. In the absence of either, HMRC’s view of the matter in question is treated as if it were contained in a section 54 agreement.

If HMRC have offered to review the matter but the taxpayer has not accepted the offer within 30 days, then the taxpayer may notify the appeal to the tribunal but only if the tribunal gives permission.

Under Rule 2 of the First-tier Tribunal (Tax Chamber) Rules 2009 (as amended):

“Overriding objective and parties’ obligation to co-operate with the Tribunal

(1)

The overriding objective of these Rules is to enable the Tribunal to deal with cases fairly and justly.

(2)

Dealing with a case fairly and justly includes—

(a)

dealing with the case in ways which are proportionate to the importance of the case, the complexity of the issues, the anticipated costs and the resources of the parties;

(b)

avoiding unnecessary formality and seeking flexibility in the proceedings;

(c)

ensuring, so far as practicable, that the parties are able to participate fully in the proceedings;

(d)

using any special expertise of the Tribunal effectively; and

(e)

avoiding delay, so far as compatible with proper consideration of the issues.

(3)

The Tribunal must seek to give effect to the overriding objective when it—

(a)

exercises any power under these Rules; or

(b)

interprets any rule or practice direction.

(4)

Parties must—

(a)

help the Tribunal to further the overriding objective; and

(b)

co-operate with the Tribunal generally”.

When deciding whether to give permission, the tribunal is exercising judicial discretion, and the principles which I should follow when considering that discretion are set out in Martland v HMRC [2018] UKUT 178 (TCC), (“Martland”) in which the Upper Tribunal considered an appellant’s appeal against the FTT’s decision to refuse his application to bring a late appeal against an assessment of excise duty and a penalty. The Upper Tribunal said:

“44.

When the FTT is considering applications for permission to appeal out of time, therefore, it must be remembered that the starting point is that permission should not be granted unless the FTT is satisfied on balance that it should be. In considering that question, we consider the FTT can usefully follow the three-stage process set out in Denton:

(1)

Establish the length of the delay. If it was very short (which would, in the absence of unusual circumstances, equate to the breach being "neither serious nor significant"), then the FTT "is unlikely to need to spend much time on the second and third stages" - though this should not be taken to mean that applications can be granted for very short delays without even moving on to a consideration of those stages.

(2)

The reason (or reasons) why the default occurred should be established.

(3)

The FTT can then move onto its evaluation of "all the circumstances of the case". This will involve a balancing exercise which will essentially assess the merits of the reason(s) given for the delay and the prejudice which would be caused to both parties by granting or refusing permission.

45.

That balancing exercise should take into account the particular importance of the need for litigation to be conducted efficiently and at proportionate cost, and for statutory time limits to be respected. By approaching matters in this way, it can readily be seen that, to the extent they are relevant in the circumstances of the particular case, all the factors raised in Aberdeen and Data Select will be covered, without the need to refer back explicitly to those cases and attempt to structure the FTT's deliberations artificially by reference to those factors. The FTT's role is to exercise judicial discretion taking account of all relevant factors, not to follow a checklist.

46.

In doing so, the FTT can have regard to any obvious strength or weakness of the applicant's case; this goes to the question of prejudice - there is obviously much greater prejudice for an applicant to lose the opportunity of putting forward a really strong case than a very weak one. It is important however that this should not descend into a detailed analysis of the underlying merits of the appeal”.

Also relevant to this decision are the principles set out inHMRC v Katib [2019] UKUT 189 (“Katib”) where the Upper Tribunal had to consider the extent to which reliance on an agent was a justifiable reason for failing to make a timely appeal. In Katib, the Upper Tribunal concluded that failings by an agent are deemed to be failings by the taxpayer and so failings to meet a time limit, by that agent, could not be a “good” reason when considering the second part of the Martland evaluation.