TC09527 - [2025] UKFTT 00563 (TC)

He also wants clarity on the current timetable for this appeal.

I agree with Miss Grainger that this is not a relief from sanctions case. Case law shows that the application for an extension of time to take any particular step in litigation is not an application for relief from sanctions provided that the applicant files his application notice before expiry of the permitted time period. Here the original 60 day time period had been extended by agreement until 24 February 2025 (the additional 60 days consensual stay expired on that date as the 60 days strictly expired on 22 February 2025 which was a Saturday, and the tribunal rules provide that the deadline date is the next working day, namely 24 February 2025).

Under rule 2, I must deal with the application fairly and justly. It is clear to me that there has been no culpable delay on the part of HMRC. It was proper and sensible for them to await the appellant’s evidence before drafting their statement of case. This was finally submitted to them via SDES on 20 January 2025. HMRC instructed counsel within nine days. Counsel’s response on 18 February 2025 meant that further internal advice needed to be taken before the statement of case could be finalised.

It seems wholly appropriate to me that HMRC sought a further short extension of 14 days to cater for this.

And as things turned out, they were able to serve their statement of case on the appellant on 4 March 2025.

It is important for the smooth running of an appeal that the parties are able to participate fully in proceedings. A crucial element of that is that each party should understand the other parties’ case. Without a properly drafted and comprehensive statement of case, the appellant would not be able to understand the basis on which HMRC have made their decisions to assess him for a substantial amount of additional income tax, and the reasons for that. Having received the statement of case, he is now absolutely clear what HMRC’s position is and is able to deal with it in a comprehensive manner.

I do not believe he is prejudiced by receiving the statement of case on 4 March 2025 rather than on 24 February 2025.

And it would certainly not be fair and just to sanction HMRC by, for example, barring them from further participation in this appeal, because they have submitted their statement of case on the former date rather than the latter.

As Mr Lloyd colourfully described it, this is a foot fault by HMRC and does not warrant a draconian sanction.

Indeed, if I were to allow the application and permit the appeal to continue without the benefit to both the appellant and the tribunal, of a comprehensive statement of case, not only would the smooth conduct of the appeal be seriously jeopardised, but the appellant will be prejudiced in that he would not fully understand the case which HMRC are levelling against him. And would therefore be unable to prepare his case to oppose it.

I can understand the appellant’s irritation in being told by Miss Grainger on 13 February that HMRC anticipated that they should be able to make the agreed deadline, and then being told shortly before the deadline expired that they were not able to do so. But in fairness to Miss Grainger, at that stage it was an honestly made and reasonable comment. At that time, she was not to know that when counsel responded, that response would include advice that required further internal consideration by HMRC.

Even if this was a relief from sanctions case, I would still allow the application. The first stage of the Martland test is to determine the length of the delay. This is the difference between 24 February 2025 and 4 March 2025, some 5 working days. I do not believe this to be serious or substantial, but I still move on to consider the reasons for it. I have recorded those above.

Finally, I need to conduct an evaluation of all the circumstances balancing those reasons with the prejudice caused to either party by granting or refusing the application. When doing this I must take into account that litigation should be conducted efficiently and at proportionate cost and that time limits should be respected.

The balance of prejudice clearly weighs in favour of granting the application. The appellant is not, and has not been, prejudiced. HMRC will be considerably prejudiced if I was to deny the application. The tribunal, too, will be prejudiced as it will be considerably more difficult to deal with the appeal in accordance with rule 2. The reasons given by HMRC are good ones, and the delay was short.

I fully appreciate the appellant’s position. Indeed, I discussed this with him at the hearing. He wants to resolve this dispute as quickly as possible. He does not want his appeal to be lumped in with other users of the syndicates. He wants his appeal to be determined on his particular facts and does not want to be part of any class action. He also wants to understand the timetable for the further conduct of this appeal.

I will therefore give directions for the further conduct of his appeal under separate cover.