TC09594 - [2025] UKFTT 00893 (TC)

The merits of the appellant’s underlying case are weak.

I will apply the three stage approach set out in Martland. I remind myself that I am exercising judicial discretion, and in that regard I am subject to the overriding objective in Rule 2 of the FTT Rules, namely, to deal with the case fairly and justly.

Both parties agree that the delay in notifying the appellant’s appeal to the tribunal is serious and significant.

The reasons for this, as asserted by the appellant, are set out above.

Having established these, I now turn to the third stage of the Martland analysis, namely, to undertake an evaluation of all the circumstances of the case. This requires me to conduct a balancing exercise, assessing the merits of those reasons, with the prejudice which would be caused to both parties by granting or refusing permission. And in undertaking this balancing exercise, I must 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.

Stripped to its essentials, the appellant’s case is that he relied (justifiably) on BP who (again justifiably) thought that they had asked for statutory review and were confused and misled by HMRC’s correspondence.

Mr Spencer cites Kotecha as authority for the proposition that reliance on adviser can be a reasonable excuse where that reliance is reasonable. With respect to him, that is a misreading of that decision. It also flies in the face of the Upper Tribunal decision in Katib.

In Katib the UT said:

“54.

It is precisely because of the importance of complying with statutory time limits 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…

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Given the importance of adhering to statutory time limits, we see no reason why a litigant who says that a representative failed to file an appeal on time should necessarily be in a different position from a litigant who says that a representative failed to advise adequately of the time limits within which an appeal should be brought…

56

Rather, we consider that the correct approach in this case is to start with the general rule that the failure of Mr Bridger 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 the Upper Tribunal’s decision in Uddin ([2023] UK UT99), the Upper Tribunal stated that “Put another way, a client will always rely on their advisers, but their advisers’ failings are still laid at their door. Why the adviser failed and how they lead their client to continue to rely on them is not relevant to the Martland analysis, unless the client can show that they did whatever any reasonable taxpayer in that situation would have done (which would generally be to make sufficient efforts to keep tabs on the adviser and make sure that matters were on track)”.

It was in respect of a submission by HMRC (similar to the submission made by HMRC in this case) that the appellant should have kept better tabs on his adviser, that the tribunal in Kotecha said:

“51

But it is equally clear that an appellant’s “obligation” to keep tabs on their adviser, once they have devolved responsibility for conducting appeal to that adviser, is qualified by a reasonableness test. One puts oneself in the position of the taxpayer, with that taxpayer’s qualities, and considers whether failing to monitor the ongoing activities of the adviser was reasonable in respect of the taxpayer’s personal qualities and the circumstances in which he found himself”.

The general rule, as set out in Katib, is that failings by an adviser are treated as failings by the taxpayer.

And so, the fact that the appellant put the conduct of his appeal in the hands of BP, who then failed to ensure that the time limits were met, is not a good reason, and carries little weight at this final evaluation stage.

The general rule, as set out in Uddin, is that “… Why the adviser failed and how they lead their client to continue to rely on them is not relevant to the Martland analysis…”.

This suggests that there is no need for me to consider the submissions made by Mr Spencer regarding the reasons why BP failed to make a timely notification of the appeal.

However, I have briefly considered them.

I have found as a fact that the Valentine’s Day letter was not a request for a statutory review. I accept that HMRC had extended the deadline within which BP could accept that offer (even if they had power to do so) but that simply meant that the appellant responded within that extended time limit. It does not affect the fact that the contents of that letter was not a request for a review.

It seems to me that Mr Finerty was not wholly familiar with the appeals process. This is evidenced by the fact that he asked HMRC to notify the appellant’s appeal to the tribunal, and the ambiguity in the Valentine’s Day letter. There is also a reference to a “peer review” rather than a “statutory review” which is what I would have expected an adviser to have referred to. It is clear that compliance with the relevant legislative provisions is crucial to the bringing of an effective appeal. I would have expected an adviser to have made it wholly clear in correspondence what that adviser was seeking. It is simple enough to set out in a letter that the request is for a statutory review and perhaps go on to provide the legislative reference.

Furthermore, there were, as suggested by Mr Riaz, and as set out in [9] above a number of trigger points which demonstrate (clearly) that HMRC did not consider BP to have made an effective request for review, and that they had the option to notify the appeal to the tribunal; but in these circumstances the tribunal was likely to want to understand the reasons for the delay as they needed to give permission for the late notification.

It is submitted that BP were confused, and even misled, by HMRC. I do not accept that as a good reason for failing to notify a timely appeal. It is for the adviser to understand the procedural law not to rely on HMRC’s interpretation of it. Nor do I accept that failure to distinguish between a deemed section 54 TMA agreement (from which there is no right to resile) and a formal section 54 TMA agreement, in HMRC correspondence, justifies failings by BP.

But in any event, HMRC have made their position regarding the review abundantly clear in correspondence, and what BP needed to do in response.

It is accepted that both the appellant and BP received HMRC’s letter of 8 March 2023. The appellant specifically spoke to Mr Finerty about it when the latter was on holiday. However, due to a failure in office procedures, it seems the letter did not come to Mr Finerty’s attention. That letter explains the appellant’s options. Mr Riaz submits that it was not reasonable for the appellant not to have followed up his conversation with Mr Finerty to check that the latter had responded. I have some sympathy with this. The appellant is a solicitor and although therefore perhaps not intimately acquainted with the time limits relating to tax appeals, might reasonably expect it to have checked with Mr Finerty that he had responded, especially when their initial conversation had been held whilst the latter was on holiday. He could have asked for an update on HMRC’s response to Mr Finerty’s response to the letter of 8 March 2023. That would have driven out the fact that there had been no such response by Mr Finerty.

There is no evidence that the appellant followed up HMRC’s letter 8 February 2024 it clearly sets out HMRC’s position regarding the lateness of the review, and the appellant’s right to notify his appeal to the tribunal. Once again, I think a solicitor receiving that letter should have contacted BP and discussed the position with them.

BP’s letter of 20 November 2023 asserts that “our client wishes to proceed with an internal peer review”. I find this surprising if, as submitted, it was genuinely thought that an effective review had already been requested by the Valentine’s Day letter.

It goes on to say that if the “peer review process cannot be enacted, then we will apply for a hearing of the case before the first Tier Tribunal…”.

In HMRC’s response of 20 December 2023, HMRC made it very clear that the deadline for the independent review “has long passed” and went on to say that the appellant could contact the tribunal who is likely to require reasons for a late appeal.

BP also take the view that it was not until 20 December 2023 that they understood HMRC to be saying that, as far as HMRC were concerned, the matter was settled.

But even then, it was not until July 2024 that notification of the appeal was made to the tribunal.

To the extent, therefore, that I can take into account details of an agent’s failings when weighing up the balance of prejudice, I attach very little weight to these failings.

I attach little weight either way to the respective merits of each party’s case. I am not persuaded that HMRC will be prejudiced since, as submitted by Mr Spencer, they have always been on notice that the appellant wished to notify his appeal to the tribunal. The problem for the appellant is that the agent did not do that on a timely basis.

Drawing these threads together. Reliance on an agent is not, generally speaking, a good reason for a default. Failings by an agent are attributable to an appellant. In this case, to the extent that I can look behind failings by the agent and consider the reasons for those failings, I find that the reasons do not weigh heavily in favour of granting permission. The agent should be expected to understand the appeals process which includes the review process. In this case the agent was put on notice of HMRC’s position regarding the review, and the right to notify the appeal to the tribunal. I do not consider that these notifications were seriously affected by misunderstandings regarding the state of the review nor the status of a deemed section 54 agreement. HMRC had made it expressly clear in correspondence that they had not accepted the Valentine’s Day letter as a valid review and that the appellant’s time for seeking further review had long expired.

I appreciate that if I do not grant permission, the appellant will lose the right to have his appeal heard by the tribunal. But as the UT said in Katib:

“60

The financial consequences of Mr Katib not being able to appeal were very serious because his means were limited such that he would lose his home. That, the FTT concluded, was too unjust to be allowed to stand. We have considered this factor anxiously for ourselves. However, again, when properly analysed, we do not think that this factor is as weighty as the FTT said it was. The core point is that (on the evidence available to the FTT) Mr Katib would suffer hardship if he (in effect) lost the appeal for procedural reasons. However, that again is a common feature which could be propounded by large numbers of appellants, and in the circumstances we do not give it sufficient weight to overcome the difficulties posed by the fact that the delays were very significant, and there was no good reason for them”.

Given the particular importance of the need for litigation to be conducted efficiently and at proportionate cost, and for statutory time limits to be respected, I am not persuaded that the reasons given by the appellant for the default outweigh the serious and significant delays to notify his appeal to the tribunal.

Accordingly, I do not grant him permission to notify a late appeal to the tribunal.