TC09656 - [2025] UKFTT 01207 (TC)

We are sitting in the FTT Tax. It is our duty, as a matter of precedence, to apply the guidance on the law given by the Upper Tribunal. We are, however, now confronted with differing approaches to be applied from the Upper Tribunal namely that set out in Martland and that set out in the judgment of Marcus Smith J in Medpro.

We should state immediately that we doubt that the difference in the approach to the test to be applied to determine whether to grant permission to bring a late appeal between Martland and Medpro is likely to lead to different results in many cases. This is because when it comes to evaluating all the circumstances of the case, factors specific to the case are always likely to determine the outcome.

We will, in determining whether to grant permission to make a late appeal, adopt the three stage test, which it is common ground between Martland and Medpro should be applied. Thereafter we will consider all the circumstances of the case by applying the test, and stricter approach, set out in Martland. This is because it seems to us that the approach in Martland is consistent with the approach of the Court of Appeal in BPP Holdings which was affirmed, or permitted, by the Supreme Court. In that case, as appears from the passages from Ryder LJ’s judgment, the Court of Appeal directed that although CPR 3.9 was not part of the Tax Tribunal Rules, the approach set out in Denton v White should be followed. That was not said in the context of the unfettered statutory discretion in section 83G(4)(c) or 83G(6), but it seems to us that it was a statement of general application to the exercise of such discretions by the FTT Tax. We will, however, also cross-check our decision against the test set out in Medpro to see whether it leads to a different result.

Applying the three stage test set out in Martland to the facts of this case we find as follows. As to step one and the length of the delay, the statutory time limit for LL Ltd to submit its appeal to the Tribunal was 4 January 2024. This was the extended period allowed by Officer Kershaw for LL Ltd to accept the offer of a review. HMRC received LL Ltd’s request for a review on 23 October 2024. This is a delay of 292 days. We find that a delay of 292 days is both serious and significant.

As to step two and the reasons for the delay, Mr Feng’s submission on behalf of LL Ltd was that there was not in fact a delay because the First Agent’s email of 8 November 2023 was a request for a review or an appeal and because the letter dated 9 November 2023 was an in-time request for a review and appeal. For the reasons given in our findings on issues one and two, we do not accept either of these submissions. There was no other excuse or explanation that was offered, but it was apparent from the facts that there had been a serious illness of the First Agent’s mother and Mr Luo’s absence overseas. However we do not consider that either of these are good reasons for the delay in circumstances where HMRC had properly allowed an extension.

As to step three and all the circumstances of the case, in weighing up the prejudice to each party of granting or refusing the permission we have considered all the relevant factors, of which there are six which have seemed to us of particular relevance. First there was a serious and significant delay for which there was no good reason offered. Time limits are there to be complied with. Delays prevent Tribunal proceedings being conducted efficiently and at proportionate cost. Secondly LL Ltd wrongly attempted to rely on a letter dated 9 November 2023 which, for the reasons set out above, was not sent to HMRC. Thirdly there is an important principle of finality in tax proceedings. The time limits exist to bring an end to proceedings. These three factors strongly militate against granting permission to appeal out of time.

Fourthly however, since LL Ltd submitted its application to make a late appeal to the Tribunal, HMRC have exercised their collection and management powers to allow a repayment of £42,321.84, which is a significant proportion of the input tax claimed, having originally submitted in the response to the appeal that an appeal out of time limited to that sum should be permitted. When Mr Corps was asked how the important principle of finality in tax proceedings should be applied in circumstances where HMRC had itself originally accepted that there should be an appeal, albeit limited to the sums set out in their Notice of Objection to the Application if the parties were not able to come to an agreement, and revisited the repayment of input tax due to LL Ltd some two days before the hearing. Mr Corps submitted that HMRC only wanted to collect the tax that was due and that with this payment there was no further input tax repayable to LL Ltd, so permission to submit the late appeal should not be granted. It seemed to us that HMRC’s decision dated 13 October 2023 was, in the particular circumstances of this case, not as final as many other decisions made by HMRC.

Fifthly, for the detailed reasons given in paragraph 15 above, there is an important internal inconsistency in the Decision Letter. The Decision Letter stated that inputs of £46,154.67 would be allowed, but only £491.86 was in fact allowed. It is not apparent, from the information before us, 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. This suggests that there is a real possibility that there may be merits in any appeal. We could not conclude that either party’s case was particularly weak or strong. We do consider, however, that the internal inconsistency in the Decision Letter is a matter that ought to be resolved by the FTT Tax.

Sixthly it is not apparent that the delay from January 2024 until October 2024 has caused HMRC any prejudice, this is because HMRC has by its own volition revisited and adjusted the inputs, albeit prompted by the application to appeal out of time.

In balancing all of the relevant factors we have concluded that LL Ltd ought to be permitted to appeal out of time. It is apparent that despite the importance of a strict approach to procedural defaults, the importance of complying with procedural requirements and finality in tax proceedings, adjustments have been made to the inputs by HMRC (for good reason) after the application for permission to appeal out of time. The Decision Letter itself raises matters that deserve a principled answer. It is impossible to escape the fact that HMRC have, by offering to make adjustments to the inputs in their Notice of Objection to the application, and by making adjustments to the inputs on the 8 September 2025, never in practice treated this matter as closed by reason of the expiry of time.

This decision is made applying the stricter Martland test. We can confirm that, given that we have granted permission to make a late appeal in the particular circumstances of this case, we would have come to the same conclusion applying the Medpro test.