TC09656 - [2025] UKFTT 01207 (TC)

There was much common ground between the parties on the facts, but there was an important issue about whether the letter dated 9 November 2023 was sent by Mr Luo to HMRC. The findings set out below represent our findings of fact unless otherwise stated.

HMRC opened an enquiry into LL Ltd’s VAT return for the 04/21 tax period by letter dated 5 July 2021. Over the following two years HMRC carried out their enquiry. During this period HMRC requested information and documents from LL Ltd’s agent, Linlin of YWC LLP (the First Agent), which HMRC then reviewed. HMRC also met with the First Agent and Mr Luo to discuss LL Ltd’s business operation and records.

On 13 October 2023 HMRC issued its decision letter (the Decision Letter) to the First Agent by email. The Decision Letter set out the reasons why HMRC rejected £153,357 of LL Ltd’s claim for repayment of £153,848.90 input tax. The same letter, but dated 16 October 2023, was sent by post to LL Ltd.

The Decision Letter offered LL Ltd a review of HMRC’s decision and explained that LL Ltd could either accept the offer of a review, or appeal to an independent Tribunal, but in either case it must do so within 30 days of the date of the letter. The letter further explained that if LL Ltd accepted the offer of a review it could still appeal to an independent Tribunal if it did not agree with the outcome of the review but that it must do so within 30 days of receiving the outcome of the review.

There is a significant internal inconsistency in the Decision Letter. On page four of the letter it states:

“As HMRC is unable to check every record held, in anticipation of the above amounts, I have on this occasion, as officer best judgement allows, granted repayment of 30% of your total input tax claim, which should adequately cover these concerns.”

However the table in the Decision Letter provides that only £491.86 of the claimed input tax will be repaid. The Decision Letter also refers to a spreadsheet which HMRC had sent to the First Agent showing the invoices against which it has denied the input tax. This spreadsheet corresponds with the table in the Decision Letter, so no repayment of £46,154.67 was allowed. Mr Corps submitted, accurately, that the letter only permitted a repayment of £491.86 in its effect. Mr Corps did accept, however, that there was no explanation of why the £46,154.67 had not been allowed as the Officer had suggested that it would be. It was also not apparent how the figure of £46,154.67 set out in the Decision Letter related to the repayment made to LL Ltd by HMRC on 8 September 2025 (see paragraph 35 below).

The document bundle included a printout and translation of WeChat exchanges between Mr Luo’s wife and the First Agent from 12 September 2023 to 8 November 2023. This printout shows that on 12 September 2023 the First Agent explained to Mrs Luo that the First Agent had taken some time off work due to her mother’s ill health but that she would continue to help with “the tax adjustment” after her mother’s surgery and when things had settled down.

Mrs Luo contacted the First Agent on WeChat again on 31 October 2023 to ask if there is any news from “Daniel and peter”, which were the first names of the two HMRC Officers who were dealing with the separate corporation tax enquiry and VAT enquiry into LL Ltd respectively.

The First Agent responded stating that “peter’s done with vat” adding that “it was postponed because my mom was in the hospital” and “he gave an extension”. Mrs Luo asked the First Agent whether she needed to call him back. The printout that we saw did not show the First Agent’s response to this question. The next communication on the printout regarding the VAT enquiry is on 8 November 2023 at 15:05 when Mrs Luo asked the First Agent about when the extension expired. The printout does not show any response from the First Agent to this question.

The document bundle included an email from the First Agent to Officer Peter Kershaw of HMRC at 15:21 on 8 November 2023. It appears, and we find, that this email was in response to the email from Officer Kershaw dated 13 October 2023 attaching the Decision Letter. The email reads:

“…

Thank you for contacting us, sorry that I just had a chance to read your email.

My mum had a brain surgery in September and since then her condition has been critical, so I took leave from work to look after her. and the director with his family also in China at the moment will be coming back in early December 2023.

In the exceptional situation, can I please request your kindly consideration to extend the deadline to respond to your assessment letter to around 15/12/2023.

…”

The WeChat printout shows that there was a subsequent WeChat call between the First Agent and Mrs Luo at 15:40 that day which lasted 12.02 minutes. Mr Luo stated in his oral evidence that both he and his wife were on this call and that as a result of this call he decided to write to HMRC because he was not sure that the First Agent would respond to HMRC on his behalf, due to the First Agent’s mother’s illness. As already noted, whether Mr Luo did write to HMRC, and if he did write whether he sent the letter, are points in issue.

Officer Kershaw responded to the First Agent at 17:46 on 9 November 2023 agreeing to extend the deadline until 15 December 2023.

The document bundle included, as an appendix to the grounds of appeal provided with the Notice of Appeal dated 14 October 2024, a photocopy of a handwritten letter from Mr Luo to Officer Kershaw at HMRC dated 9 November 2023 which reads as follows:

“My wife and I found out from my accountant LinLin on 31 October 2023 that you have issued a decision on April 2021 VAT period.

Before the deadline, my wife and I had a WeChat call with LinLin on 8 November 2023 on what to do and she told us her mother was ill with cancer.

I am writing to you to appeal and accept your offer of a review because I am not sure if my accountant LinLin is going to respond on my behalf before the deadline as her mother is diagnosed with cancer around the same time you had issued your decision.

I look forward to hearing from you

Yours sincerely

MrY Luo”

In his written witness statement Mr Luo stated:

“The letter was written on 9 November 2023 with my wife, I then photocopied it, and posted in the morning using one 1^st class stamp.”

In oral evidence Mr Luo said that he could not remember when he photocopied the letter. He stated that he had not sent the letter by recorded delivery because, although it was important, the letter itself had no value.

Mr Luo stated further in oral evidence that he was not in China at the time of his WeChat conversation with the First Agent or on 9 November 2023, as stated in the First Agent’s email to Officer Kershaw on 8 November 2023. Mr Luo stated that he posted the letter dated 9 November 2023 on that day. Mr Luo stated that he did not know why the First Agent had told Officer Kershaw on 8 November 2023 that Mr Luo was in China.

By emails dated 10 and 23 July 2025 sent during the preparation for this hearing, HMRC had asked Mr Luo to provide a copy of his passport as evidence that he was in the UK and not in China between 8 and 10 November 2023. Mr Luo confirmed in his oral evidence that Mr Feng had passed this request for his passport on to him, but he did not provide a copy of his passport as requested. Mr Luo did not provide any explanation as to why he did not provide a copy of his passport.

HMRC have no record of receiving the letter from Mr Luo dated 9 November 2023 and stated that they did not see the photocopy of the letter until 19 December 2024 when they received the Tribunal appeal documents. Although Mr Feng made the point that Officer Kershaw had not been called to state that he did not receive the letter, it is apparent that HMRC have no record of receiving the letter. That is apparent from HMRC’s correspondence. On 14 December 2023 Officer Kershaw wrote to the First Agent extending the deadline for LL Ltd to request a review to 4 January 2024. He gave this extension because he was about to go on leave and would not be able to review any request until after 4 January 2024 in any event. Such a letter would not have been necessary if HMRC had received Mr Luo’s letter dated 9 November 2023 asking for an appeal and review.

The First Agent then emailed HMRC on 15 December 2023 regarding the corporation tax enquiry. HMRC provided a substantive response regarding the corporation tax enquiry to the First Agent on 9 February 2024, to which the First Agent responded on 11 March 2024. HMRC wrote again to the First Agent regarding the corporation tax enquiry on 17 April 2024 and 14 October 2024 but there is no further correspondence between the First Agent and HMRC in the document bundle that relates to either the corporation tax or VAT enquiries.

Mr Luo stated in his oral evidence that he did not discuss the VAT enquiry further with the First Agent after he posted the letter to HMRC on 9 November 2023. He said that he did not contact HMRC to find out what was happening with his request because he was used to HMRC taking a long time to deal with things, as it had taken them over two years to complete the VAT enquiry. We will address this evidence in our findings about whether Mr Luo sent the letter dated 9 November 2023 to HMRC.

Mr Feng sent an email to Peter Kershaw on 1 October 2024 stating that he was now acting for LL Ltd. Mr Feng emailed HMRC again on 3 October 2024 saying:

“Having spoken to the client I am advised that he was told by the previous agent that a review of the decision had been made and that this had never been received which accounts for the delay. The previous agent has now been removed and I would like to formally make a late appeal against the decision. Please confirm your acceptance of the appeal and I will make arrangements to submit further information for your consideration of R13 VATR 1995.”

HMRC relied on the fact that Mr Feng did not in that email state that Mr Luo had written a letter dated 9 November 2023 asking for an appeal and review, which suggested that Mr Luo had not written or sent such a letter.

HMRC provided a substantive response to Mr Feng’s email of 3 October 2024 by letter dated 10 October 2024 in which they rejected the late request for a review because LL Ltd did not have a reasonable excuse for the delay. This letter also advised that LL Ltd could apply to the Tribunal for permission to make a late appeal against the Decision Letter.

Mr Feng wrote to Officer Kershaw again on 15 October 2024 as follows:

“…

Thank you for your email and letter.  The client wants a statutory review. See my previous email that because you did not action the acceptance of a review the client changed his tax agent to me.  Please contact the review team to action it. I have new information ready to send to you. I am planningto send the new information next week.”

LL Ltd submitted their notice of appeal to the Tribunal dated 14 October 2024 together with an application for permission to make a late appeal to the Tribunal (the Application).

Mr Feng and LL Ltd did not provide any new information to HMRC. However in their Notice of Objection to the Application, HMRC stated at paragraph 67 that:

“the Respondents are now prepared to further allow input tax deduction on those invoices which were originally refused only because they were issued more than 30 days after the date of supply, or were a ‘consolidated invoice’, based on the information provided to Officer Kershaw ahead of making his decision….. This would permit repayment of £44,556.44. To that limited extent, and only so far as the Parties have not been able to come to an agreement before the Tribunal considers the Appellant’s Application, the Respondents consider the Application should be allowed.” (underlining added)

On Monday 8 September 2025, HMRC repaid £42,321.84 to LL Ltd which was the £44,556.44 referred to at paragraph 67 of HMRC’s Notice of Objection, less late submission or payment penalties and interest outstanding for more recent VAT periods. At the hearing Mr Corps submitted that, given this payment had been made, there was no need to allow LL Ltd to bring an appeal out of time.