UT/2024/000117 - [2024] UKUT 00435 (TCC)

Regarding the merits of the explanation for the delay, the reason for the delay which falls to be evaluated is the misapprehension Mr Eveleigh held that all that was required to be done to bring his appeal before the UT had been done and that no further action in that regard was required on his behalf. In my view the merits of that reason should be looked at from the point of view of how a reasonable appellant in the situation of Mr Eveleigh would have behaved in relation to the conduct of their appeal. On the basis of the evidence before me, Mr Eveleigh’s situation does not entail attributing any particular vulnerability or lack of capability to that reasonable appellant.

When that exercise is carried out it is clear the explanation for delay lacks merit:

Both of the above reasons would apply equally so as to mean there was not a good explanation for the delay even if (contrary to my view above) the FTT had wrongly omitted to send a decision to counsel. A reasonable appellant having received a letter addressed to them telling them they needed to file the notice within a time limit would still either have confirmed the notice had been filed by their representative, or even if they had not done that would have made further enquiry on the appeal’s progress if nothing had been heard by three months.

Putting Mr Eveleigh’s case at its highest, he might say that he would not have been expected to follow up on his appeal’s progress until around 30 December 2023. That is 3 months from 30 September 2023 – the expiry of the one month deadline (if it is assumed, again in Mr Eveleigh’s favour the FTT grant of permission was only received by him on 31 August 2023 despite the release date stated on the decision being 27 July 2023). Taking the contents of the correspondence between him and HMRC in June/July 2024 at face value to show that he considered he had taken steps around that time (following the prompt from HMRC on 20 June 2024) to follow up on the status of the appeal to the UT, that would still then leave a significant period of around six and a half months in which Mr Eveleigh had not kept tabs on his appeal in the way he ought reasonably to have done. Mr Eveleigh’s account as gleaned from the limited correspondence also does not, in addition, provide any good explanation for the delay in filing between any follow up in June/July 2024 and the filing date of 13 September 2024 (a delay of around two and half months).All in all that represents an delay without any reasons of merit in the order of at least nine months.

Turning then to the respective prejudice to the parties, if the time extension is refused, Mr Eveleigh will lose the opportunity to argue his appeal before the UT and to overturn the FTT’s decision which upheld the excise duty assessment on him. As set out in Martland (at [46]) the tribunal should consider the arguments of the case in outline so it can form a general impression of its strength or weakness to weigh in the balance. Mr Eveleigh’s grounds of appeal are as follows:

The FTT granted permission to appeal on all of these grounds on the basis it considered they were arguable (explaining it meant by this that that would mean the ground “would have a reasonable prospect of success” but commenting that was “…not a high threshold”). HMRC nevertheless point to the weakness of Mr Eveleigh’s case to argue that he would therefore only lose a small chance of success if I were to refuse to extend time. They refer to the Court of Appeal’s decisions in Perfect 2019 (Footnote: ³)and Perfect 2022 (Footnote: ⁴)as authorities for the strict liability for excise duty for those holding excise goods and that HMRC “must” assess that person for duty, and the ECHR’s decision in Ferrazini (Footnote: ⁵)regarding the application of Article 1 Protocol 1. It is submitted that the prospect of persuading the UT those binding cases can be distinguished must be low. To the extent it is argued those authorities stand in the way of the grounds being at least arguable as the FTT has determined then I disagree. Although the Court of Appeal in Perfect 2019 said at [67] (in a passage quoted at [10] of Perfect 2022)that the Court saw “very considerable force in the argument that given the policy underlying the Directive, the imposition of a strict liability…[did] not offend the principles of fairness or proportionality” the “driver in these circumstances” it referred to was not, as Mr Eveleigh was, one who had in fact been subjected to criminal sanctions. I also do not see that the proposition relied on from Ferrazini (at [29])that tax disputes fall outside the scope of civil rights and obligations necessarily precludes arguments regarding the applicability of Article 1 Protocol 1 (as opposed to Article 6).

My general impression of the appeal’s merits (which is not formed, in line with the authorities discussed in Martland,on the basis of detailed investigation or analysis (Footnote: ⁶)) remains that it encompasses grounds which are, as the FTT concluded at least arguable. (While Ms Brown’s various points on the merits of the grounds addressed Mr Davies’ assessment that the appeal’s prospects of success were weak, none went as far as suggesting the merits were overwhelmingly in Mr Eveleigh’s favour.)

Ms Brown goes on to highlight the serious prejudice to Mr Eveleigh if he loses the opportunity to fight the appeal against an assessment which is for a significant sum relying on the finding of fact the FTT made regarding his personal financial circumstances (at [20]). There the FTT noted Mr Eveleigh:

“…is employed as a Class 1 HGV driver and earns approximately £450 to £600 per week. His wife works part-time as she looks after their child. The family home was purchased in 2020 at a cost of £225,000. It is held in joint names and the mortgage is of the order of £220,000. The appellant’s outgoings apart from the mortgage include the finance costs for his vehicle which replaced the van which was seized. He has no savings.”

Ms Brown contrasts that far-reaching prejudice with the limited prejudice to HMRC in allowing Mr Eveleigh’s appeal to proceed. The e-mail correspondence from HMRC was consistent with HMRC assuming an appeal was proceeding to the UT (see [14] above). HMRC did not regard the appeal as final and did not spend any time or money or allocate resources elsewhere on the basis it was. Any loss arising from being kept out of the money due an appeal that ultimately proved unsuccessful could be catered for by interest.

Mr Davies acknowledged that it could be said the consequences of granting the extension for HMRC, as a public body with access to greater resources as compared with the amount in issue, would be less severe but argued that would generally be the case where an individual was litigating against a public body and it would not therefore make sense for that to be taken as a determinative factor against public bodies. However Mr Eveleigh does not argue such prejudice is determinative and I consider it is correct to recognise that the prejudice to HMRC is more limited as a factor to weigh in the balance as compared to that which Eveleigh will suffer by loss of the chance to argue his appeal. Mr Davies was however right to emphasised, as was noted in Martland and the authorities referred to there, the importance and public interest in finality underlying the purpose of time limits and the need to give that factor due weight.

Ms Brown also raised various other points to be considered as part of considering all of the circumstances but I do not agree these take Mr Eveleigh’s case further. She submitted that the fact Mr Eveleigh’s case was not a simple dispute, but concerned a dispute involving the fundamental right, Article 1 Protocol 1 ECHR between the state and an individual. That issue should, she submits, be properly decided and not determined by default on an administrative oversight by a taxpayer.

I disagree however the above should weigh in Mr Eveleigh’s favour as a particularly relevant factor. Any point of law which goes to the ability of the litigant to overturn the FTT decision may be viewed as of a fundamental nature for the appellant concerned. I do not see what basis there is for the UT, in the context of looking at all the circumstances when deciding a time extension application, to essentially make a societal value judgment on which points of law are more important than others. The reference to determining the issue on an “administrative oversight” also does not take the case further. Every time extension case in relation to appeal time limits, by definition, engages the question of whether the substantive matters under appeal are allowed to proceed further, or whether they remain as determined by the FTT decision under appeal because the time limit is not extended.

Similarly, I also reject the suggestion that, because of its subject matter, any public interest in the case being litigated should be an additional factor to take into account. To the extent I have formed a view of the overall impression of the merits those already include consideration of the case’s subject matter. The public interest, which in an appeal is in determining whether there has been any error of law and if so addressing that, is the same as any other appeal.

Moving on to the overall balancing exercise, the main factor operating in Mr Eveleigh’s favour is the greater prejudice to him if the time extension is refused. He will lose the opportunity to proceed with an arguable appeal that, if successful, would mean he was not liable to a large excise duty assessment with the significant personal and financial consequences that would in turn entail. That prejudice exceeds the particular prejudice to HMRC in this case where HMRC had not in fact assumed the matter was final and ought to be in a position to respond to an appeal which will turn on submissions on points of law. Nevertheless the tribunal should in considering the significance of the adverse consequences for Mr Eveleigh if the time extension is not granted, keep in perspective that his having an arguable case merely means there is a chance, not a certainty, of overturning the FTT decision and assessment. In other words it needs to be taken account that even if the time extension were granted Mr Eveleigh might still lose the appeal and remain liable for the assessment. So although the comparative greater degree of prejudice is a factor in Mr Eveleigh’s favour of some weight its weight is not to be overstated.

On the other side of the balance and against Mr Eveleigh is the serious and significant delay. Taking it at its most generous to Mr Eveleigh, the duration is in the order of nine months. For all the reasons already explained that is a delay for which there is no explanation of any merit. There is also the public interest in finality, in complying with time limits, which weighs against granting the extension.

In my judgment the unjustified lengthy delay of such magnitude combined with the public importance in finality (which is a factor to be accorded its due weight irrespective of the particular manifestation of prejudice to HMRC on the facts of the case) points firmly towards refusing the application. The lack of good explanation for the delay and the particular importance for statutory time limits to be respected given the public interest in finality outweigh the comparative greater prejudice on the other side of the scales that points in Mr Eveleigh’s favour. A consideration of all the circumstances accordingly leads to the conclusion the application for extension of time should be refused.