TC09600 - [2025] UKFTT 00919 (TC)

Ms Rahman submitted that the delays were caused by Mr Milhill not having received the decisions. We have already found that:

The remaining decisions were the late payment penalty of £1,022 issued in October 2018 for the tax year 2014-15; the late filing penalties of £6,500 which totalled £6,500, and the Sch 36 penalties of £2,160. These were all sent to Ms Griffiths’ home address, and we have already found that they were deemed to be received by her as an undisclosed agent for Mr Milhill. We thus do not accept that any of the decisions were not received: they were either received by Mr Milhill directly, or by Ms Griffiths as his agent.

Mr Milhill said he had appointed Haines Watts, which he described as a “top 10 firm” to be responsible for ensuring that all deadlines were met. He criticised the approach taken by that firm and what he saw as their failures to provide him with the information required to deal with the appeals.

We did not have any evidence from Haines Watts, or copies of any communications between Mr Milhill and that firm, to support his case that Haines Watts were significantly to blame for the delays in appealing the decisions. We have already found as a fact (see §31) that on 13 May 2021, Mr Loughlin emailed Ms McGuire saying that he had made “numerous attempts” to obtain information from Mr Milhill, but without success. Although that communication was not about the appeals, we make the reasonable inference and find as a further fact that that Mr Milhill bears at least some of the responsibility for the delays in complying with the statutory time limits.

Mr Milhill also relied on Ms Griffiths, his accountant, who received some of the penalties at her home address. We have already found as a fact that Mr Milhill entered into this arrangement because he travelled frequently and because Ms Griffiths dealt with his financial and tax affairs. Mr Milhill could not remember whether Ms Griffiths had discussed the decisions with him. However, it was Mr Milhill who set up this arrangement, and he plainly had a responsibility to check with Ms Griffiths as to what she had received from HMRC.

Even if Mr Milhill had shown that Haines Watts and/or Ms Griffiths were largely responsible for the delays, the case law is not helpful. In Hytec Information Systems v Coventry City Council [1997] 1 WLR 666 (“Hytec”), the Court of Appeal considered a similar issue: whether a litigant’s case should be struck out for breach of an “unless” order that was said to be the fault of his barrister. Ward LJ, giving the leading judgment, said:

“Ordinarily this court should not distinguish between the litigant himself and his advisers. There are good reasons why the court should not: firstly, if anyone is to suffer for the failure of the solicitor it is better that it be the client than another party to the litigation; secondly, the disgruntled client may in appropriate cases have his remedies in damages or in respect of the wasted costs; thirdly, it seems to me that it would become a charter for the incompetent…were this court to allow almost impossible investigations in apportioning blame between solicitor and counsel on the one hand, or between themselves and their client on the other. The basis of the rule is that orders of the court must be observed and the court is entitled to expect that its officers and counsel who appear before it are more observant of that duty even than the litigant himself..”

In Katib v HMRC [2019] UKUT 189 (TCC) (“Katib”),the UT said at [49] (their emphasis):

“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.”

The UT returned to the same issue at [54], saying:

“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.”

The UT then cited the passage from Hytec set out above, and continued at [56] by concluding that the correct approach in Mr Katib’s case was:

“…to start with the general rule that the failure of Mr Bridger [Mr Katib’s 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.”

This was followed by the following comment at [58]:

“…the core of Mr Katib’s complaint is that Mr Bridger 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.”

In deciding that little weight be given to Mr Katib’s reliance on his adviser, the UT also took into account that Mr Katib should have noticed “warning signs”, including direct contact from HMRC in the form of enforcement action, which “should have alerted him”, and they concluded Mr Katib was “not without responsibility in this story”.

It follows from this case law that the Tribunal should not normally find that a person’s reliance on his adviser provides a good reason for delay. We considered whether the facts of Mr Milhill’s case took him outside that normal range. We noted in particular that this was not a case where all communication was between the agent and HMRC, so that Mr Milhill was left in ignorance, or misled. Instead:

In addition, Mr Milhill did not provide any evidence as to instructions he had given to either Haines Watts or Ms Griffiths to make a timely appeal on his behalf.

We therefore decided that this case could not be distinguished from the normal position, where reliance on an adviser does not provide a good reason for delay.

The final reason given for the delays was that Mr Milhill worked hard, often overseas, and concentrated on those tasks; he was also involved with local organisations, including the cricket club. He repeatedly said in the course of his evidence that he regarded Haines Watts as being responsible for sorting out his tax affairs, because that was the nature of the engagement he had with them; the same was true of Ms Griffiths. In other words, he paid Haines Watts and Ms Griffiths to deal with HMRC so as to leave him free for his other activities.

We agree that this is the key reason for the delay in making the appeals. But it is plainly not a good reason. The decisions in question related to Mr Milhill’s tax returns; he repeatedly failed to ensure that those returns were filed on time, leading to penalties for late filing and late payment; he failed to provide the information required by the Sch 36 Notices, leading to penalties for non-compliance, and when he did belatedly submit his SA returns, they contained errors, leading to closure notice amendments and inaccuracy penalties.

The third stage in the Martland approach is to consider all the circumstances, and then to carry out a balancing exercise.

Significant weight must be placed as a matter of principle on the need for statutory time limits to be respected. This was described as “a matter of particular importance” in Katib;the same point is made in Martland at [46]. In Mr Milhill’s case, most of the delays were over two years, with the longest being eight years. This factor weighs heavily against him.

Parts of the UT’s judgment in Katib were set out earlier in this decision, including their finding at [56] that in the context of the second stage, reliance on advisers “is unlikely to amount to a “good reason” for missing the statutory deadlines. The UT continued in the same paragraph:

“…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.”

However, the UT then went on to find that, for the same reasons as those relating to the second stage, the behaviour of Mr Katib’s adviser had no “real weight” at the third stage.

The position is the same in Mr Milhill’s case. He has not proved that responsibility for the delays rested solely with Haines Watts and/or Ms Griffiths: instead, he repeatedly emphasised that he expected them to get on with his tax affairs without bothering him or requiring his involvement, and thought it was “unjust” that he was now having to “pay for other people’s mistakes”.

However, Mr Milhill was informed directly of the time limits for almost all of the decisions, and Ms Griffiths was informed of the others. Mr Milhill had a responsibility to read those letters and ensure that they were actioned, rather than simply leaving matters to his advisers.

The UT said in Martland thatthere is “much greater prejudice for an applicant to lose the opportunity of putting forward a really strong case than a very weak one”, and added that the Tribunal should not “descend into a detailed analysis of the underlying merits of the appeal” but instead “form a general impression of its strength or weakness to weigh in the balance”.

Mr Milhill’s position on the merits was as follows:

We find that Mr Milhill has not shown that the merits of his case were “overwhelmingly in his favour”, as the UT put it in Martland, because:

Taking into account all the above, we place no weight on the merits when conducting the balancing exercise.

If Mr Milhill fails to obtain permission to appeal, the HMRC decisions he is now seeking to challenge will become final, so he will owe HMRC £875,623 plus interest. That is however an inevitable consequence of losing the opportunity to challenge an HMRC decision at the Tribunal, and we accord it little weight.

In addition, the bankruptcy proceedings will recommence. While that is plainly a serious matter, it is also a consequence of the exceedingly long delays in this case. It would be unfair to give this factor significant weight, because it would advantage those who, like Mr Milhill, leave it to the very last minute to seek permission to challenge a HMRC decision, compared to other applicants who apply to the Tribunal well before they are facing enforcement proceedings in the High Court.

If this application were to be allowed, the hearing of the appeals would take significant time: there are multiple issues extending over many years. Organising those appeals will take the time of tribunal staff, and the historic nature of the issues means that this is likely to take longer than if the appeals had been made by the statutory time limits. That time would otherwise be spent on the appeals of other Tribunal users, who have complied with the statutory requirements.

If permission were to be given, HMRC would have to divert resource to prepare for the appeals and attend a lengthy hearing. Those resources could be used to ensure that other taxpayers are paying the correct amount of tax.

One of the factors on which the Tribunal must place particular weight is that litigation is to be conducted efficiently and at proportionate cost, see Martland at [44] cited above. Given that these HMRC decisions relate to periods between 2014 and 2019, and the decisions were made in 2020 and 2021, requiring HMRC to litigate those decisions so many years later will increase the prejudice they will suffer were permission to be given. In particular, it will be more time consuming to gather all the relevant evidence.

Once the circumstances have been identified, they must be balanced.

In doing so, we are required by Denton and Martland to place particular weight on (a) enforcing compliance with statutory time limits and (b) the need for litigation to be conducted efficiently and at proportionate cost. In relation to the former, Mr Milhill failed to comply with the statutory provisions setting a 30-day time limit: most of the delays were over two years, and so were plainly serious and significant; there was no good reason for any of those delays. In relation to the latter, the long delays in this case mean that it will be more difficult to gather the evidence. In addition, there is prejudice to HMRC and to appellants in other cases for the reasons set out above.

On the other side of the scales is the prejudice to Mr Milhill if he loses this opportunity of appealing to the Tribunal because he will have to pay the tax and penalties, and his bankruptcy proceedings will recommence.

There is no doubt that those factors are significantly outweighed by those on the other side of the scales, and permission to appeal late is therefore refused.

This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to "Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)" which accompanies and forms part of this decision notice.