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The rule in HMRC v Katib [2019] UKUT 189
The rule in HMRC v Katib [2019] UKUT 189
In PBS Wholesale Limited and others v HMRC [2025] UKFTT 210 (TC) (‘PBS’) Judge Sinfield relevantly discussed and applied the Upper Tribunal’s decision in HMRC v Katib [2019] UKUT 189 (TCC) (‘Katib’):
First, as recognised by Mr White, I am bound by the UT's decision in HMRC v Katib [2019] UKUT 189 ('Katib'). At [49], the UT stated (emphasis in original):
"We accept HMRC's general point that, in most cases, when the FTT is considering an application for permission to make a late appeal, failings by a litigant's advisers should be regarded as failings of the litigant … Therefore, in most cases, a litigant seeking permission to make a late appeal on the grounds that previous advisers were deficient will face an uphill task and should expect to provide a full account of exchanges and communications with those advisers. It will often be impossible to give the requisite full account without waiving privilege." [49]
The UT stated in [54] that "when considering applications for permission to make a late appeal, failures by a litigant's adviser should generally be treated as failures by the litigant". In Katib, the UT had to consider the extent to which reliance on an adviser was a justifiable reason for failing to make an appeal in time. In that case, the adviser did not provide competent advice to Mr Katib, misled him as to what steps were being taken to appeal and failed to appeal on Mr Katib's behalf. On the facts of the case, the UT concluded that failings by the appellant's agent could not be relied upon by the appellant at any stage in the Martland analysis. The UT observed at [56] that:
"… the correct approach in this case is to start with the general rule that the failure of [the adviser] to advise Mr Katib of the deadlines for making appeals, or to submit timely appeals on Mr Katib's behalf, is unlikely to amount to a 'good reason' for missing those deadlines when considering the second stage of the evaluation required by Martland. However, when considering the third stage of the evaluation required by Martland, we should recognise that exceptions to the general rule are possible and that, if Mr Katib was misled by his advisers, that is a relevant consideration."
In [58] and [59], the UT said:
"… the core of Mr Katib's complaint is that [the adviser] was incompetent, did not give proper advice, failed to appeal on time and told Mr Katib that matters were in hand when they were not. In other words, he did not do his job. That core complaint is, unfortunately, not as uncommon as it should be. It may be that the nature of the incompetence is rather more striking, if not spectacular, than one normally sees, but that makes no difference in these circumstances. It cannot be the case that a greater degree of adviser incompetence improves one's chances of an appeal, either by enabling the client to distance himself from the activity or otherwise."
[Counsel for Mr Katib] urged us to give particular weight to the FTT's finding, at [15], that Mr Katib did not have the expertise to deal with the dispute with HMRC himself, but that does not weigh greatly in the balance since most people who instruct a representative to deal with litigation do so because of their own lack of expertise in this arena. We do not consider that, given the particular importance of respecting statutory time limits, Mr Katib's complaints against [the adviser] or his own lack of experience in tax matters are sufficient to displace the general rule that Mr Katib should bear the consequences of [the adviser's] failings and, if he wishes, pursue a claim in damages against him or [the adviser's firm] for any loss he suffers as a result."
Following Katib, if the failure to appeal within the time limits were due to KMB not carrying out instructions (and I make no finding as to that), that would not constitute a good reason for the delay in appealing. That is because I would have expected the Appellants, notwithstanding that English is not their first language, to have taken steps, either themselves or through their tax adviser, to assure themselves that all the assessments, penalties and liability notices were being properly challenged. In his witness statement, Mr Baczmaga says that the sums of money that are the subject of the late appeals are, in his view, incredibly large and the Appellants do not have those amounts to pay HMRC. In that case, it is inexplicable, and to my mind not credible, that the Appellants did not monitor carefully what KMB was doing but were content to take a 'hands off' approach to the appeals. I was not shown what communications there were between the Appellants and KMB and, of course, those were almost certainly privileged as noted in Katib, but it would probably not have made any difference. If the Appellants did not monitor what KMB were doing then that would, in my view, be blameworthy and not a good reason for the failure to appeal in time. If the Appellants did regularly check what KMB were doing then they should have known that the appeals had not been made and done something about it. It would only be in the unlikely event that KMB actively misled the Appellants about the state of the proceedings that the Appellants might establish that they had a good reason for the delay. There is, however, no evidence to support that in this case and, for that reason, I do not consider the possibility further when weighing up all the circumstances of the case in the third stage of the Martland approach.