TC09532 - [2025] UKFTT 00568 (TC)

Fecha: 09-May-2025

The lateness of the application

The lateness of the application

56.

Rule 5(3)(a) of the Tribunal Rules gives the Tribunal the power to extend the time to make an application, but the Tribunal must decide, in each case, whether it would be appropriate to do so given the particular circumstances of that case. When a party is late in undertaking any action, the onus of proof is upon that party to explain the reasons for their delay and to make the case for being given relief from their failure to comply with the relevant time limit.

57.

The Upper Tribunal in Martland v HMRC [2018] UKUT 178 (TCC) set out what the First-tier Tribunal should consider when deciding whether an extension of time should be granted. The Upper Tribunal stated:

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.

58.

Although Martland was concerned with an application to make an appeal out of time, the same principles apply to an application to make a costs application out of time.

59.

The first stage is to calculate the length of the delay.

60.

The Appellant’s application was received on 9 October 2024, but it was incomplete at that time. Mr Moran supplied further information in January, February and March 2025. Treating the Appellant’s application as being received on 9 October 2024, albeit incomplete, the application was received approximately 17 months late. That means it took the Appellant roughly 18 times as long as Parliament considered was required to make its application. As was said by the Court of Appeal in paragraph 105 of the Secretary of State for the Home Department v SS (Congo) and others [2015] EWCA Civ 387:

A party who delays by several weeks or months in applying to this court for permission to appeal can generally expect to have the delay treated as significant or serious.

61.

The delays commented upon in the appeals before the Court of Appeal were of 24 days and of three months. In that context, the Appellant’s delay of 17 months cannot be considered to be anything other than serious and significant.

62.

The second stage is to establish why the delay occurred.

63.

Mr Moran has stated that he was seriously unwell in January 2023, and then has been seriously unwell again since June 2023, only gradually recovering between June 2023 and January 2025. In response to this point, HMRC noted that Mr Moran was sufficiently well to make complaints to HMRC during the period April 2023 to April 2024.

64.

I agree with HMRC that Mr Moran was sufficiently well in the period April 2023 to April 2024, to give instructions to an agent to make a complaint on behalf of the Appellant. Mr Moran has provided the Tribunal with a copy of an email he sent to an agent on 16 October 2023, with 12 bullet points which Mr Moran wished to be included in the complaint. In that email, Mr Moran also gave instructions to that agent on the tone of the complaint to be sent, and how he should be portrayed. It may have taken Mr Moran considerably more effort to write that email in October 2023 than it would have done to write a similar email prior to his initial ill health and his collapse in June 2023, but it is clear from that email that by October 2023 Mr Moran was capable of making decisions and of giving clear and coherent instructions. I consider that, if Mr Moran had chosen to make a costs application to the Tribunal at the same time as, or before, the Appellant began its complaints to HMRC in April 2023, then Mr Moran would have been able, despite his ill health, to give similarly capable instructions to an agent to file an application for costs with the Tribunal.

65.

Therefore, while I accept that Mr Moran was not in good health between January 2023 and January 2025 than he had been previously, on the evidence of the emails from Mr Moran and the steps taken by the Appellant during this period, I find Mr Moran was able to give instructions to progress the Tribunal appeal (January 2023 – April 2023) and to take an active involvement in making complaints to HMRC (April 2023 – April 2024). On the evidence available to me, I do not accept that making a costs application to the Tribunal would have been beyond Mr Moran at this time due to his impaired health.

66.

In addition, as Mr Moran has made clear, the Appellant had developed a plan with its legal team to deal with various aspects of its grievances with HMRC in three phases. It is clear from Mr Moran’s emails to the Tribunal that the Appellant’s strategy was to recover the outstanding VAT from HMRC as phase 1, and that it was not until phase 2 that the Appellant intended to make a costs application to the Tribunal. I understand why the Appellant would want to ensure that the VAT claimed in its VAT returns was repaid promptly, but there is no explanation of why the Appellant – which had the assistance of multiple legal and accountancy agents at this time – was not able to make a costs application to the Tribunal at the same time that it was complaining to HMRC. Had simultaneous action been taken, the Appellant would have met the deadline in the Tribunal Rules.

67.

I do not consider that the Appellant’s decision to focus on another aspect of its affairs and then see that aspect to completion before returning to the Tribunal, gives the Appellant a good reason for the delay in making its costs application. In the circumstances I do not consider that the Appellant has provided a good reason for any part of its 17 months of delay.

68.

The third stage is to weigh all relevant factors. I remind myself what the Upper Tribunal said at paragraph 45 of Martland:

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.

69.

In weighing the relevant factors, first I consider the prejudice that each party would suffer if I either do, or do not, grant the Appellant permission to make a late application for costs.

70.

Looking first at the Appellant, if I refuse the Appellant permission to make a costs application out of time then the Appellant will lose the opportunity to have its costs application decided by the Tribunal. It is not appropriate for me to conduct a detailed investigation or conduct a mini-trial in considering the value of this loss. While Mr Moran has been clear that, in his words:

Without paying the specialist costs of over £67,000, [the Appellant] would have lost the £300,000 VAT repayment,

there is no explanation from the Appellant of any way in which HMRC is said to have acted unreasonably in their conduct of the Tribunal proceedings. As the Tribunal pointed out to the Appellant in its 10 December 2024 letter, the Appellant must demonstrate that HMRC acted unreasonably in the Tribunal proceedings in order for the Tribunal to make an order for costs. As there is no criticism of HMRC’s behaviour in the substantive Tribunal proceedings, there is no likelihood of the Appellant being successful in its application for its costs of those proceedings. In addition, the Appellant has made clear that, as phase 3 of its strategy, it intends to bring court proceedings against HMRC. While I do not comment on the likelihood of such court proceedings being successful, as many of the amounts sought by the Appellant in this costs application were not costs incurred in the Tribunal proceedings (and so were irrecoverable before this Tribunal in any event), the Appellant still has the opportunity to seek those costs in its court claim. These two factors mean that there is very limited prejudice to the Appellant if it is not now given permission to make a late application for costs.

71.

Turning now to the prejudice that would be suffered by HMRC if I give the Appellant permission to make a late application for costs, then HMRC would be required to respond in respect of Tribunal proceedings that they were entitled to consider resolved. That would involve HMRC spending further time and resources on this matter, at the expense of other appeals. Although the prejudice to HMRC (and other Tribunal users) is relatively limited, in this case I conclude that the prejudice to HMRC would be greater than the prejudice to the Appellant.

72.

In weighing the factors, I am required to take into account the particular importance of statutory time limits being respected. There is public interest in finality. I bear in mind that the delay is well in excess of a year, that the Appellant does not have a good explanation for its delay, and that there will be very limited prejudice to the Appellant if permission is refused (both because there is no likelihood of being successful, and also because the Appellant has said it will bring court proceedings as phase 3 of its strategy).

73.

I remind myself that the starting point is that permission should not be given, and it is for the Appellant to demonstrate that I should depart from that starting point. I conclude that, in this case, the Appellant has failed to demonstrate that it would be appropriate for me to grant permission.

74.

Therefore, the Appellant is refused permission to make its costs application out of time.

75.

As permission has been refused, the costs application is not admitted. Therefore, there are no further issues before the Tribunal. The 4 June 2024 Practice Direction issued by the Senior President of Tribunals, requires sufficient reasons to be given by this Tribunal but warns against excessively long decisions. Therefore, I do not set out what I would have decided if permission been granted. Instead, I set out only brief reasons on the substance of the Appellant’s application, sufficient only to better explain my assessment of the merits.