How To Make A Late Appeal Against An HMRC Tax Assessment And Succeed

The case of YT Medical Ltd & Anor v Revenue and Customs [2024] UKFTT 496 (TC) shows you some of the ingredients required to make a late appeal against an HMRC tax assessment and succeed.

One of the reasons that the appeal was allowed was because the taxpayer got their skates on and moved themselves when they became aware.

As is clear from the Martland decision, moving like molasses never helps when making a late appeal against an HMRC tax assessment. Moving like a missile might and it did in this case. 

Need For Speed When Appealing Late

The decision in Martland v HMRC [2018] UKUT 178 (TCC) says the assumption is a late appeal should be refused unless the Tribunal is shown good reasons otherwise after taking into account prejudice considerations.

It is a bit of an uphill struggle to appeal an HMRC tax assessment late. The Tax Tribunal tends to often dismiss such applications and all too frequently is unimpressed when the taxpayer looks to blame their tax agent who they thought was dealing with the matter. However, taxpayers seem to fare badly in such applications to the Tribunal because of the persistent line fleshed out in its judgments, that litigation has to be done efficiently at proportionate cost with time limits respected. Ironic that the taxpayer had to wait some nine months before the appeal was heard.

One may wonder if the merits of the proposed appeal should matter more than the fact that it is late. Should a taxpayer lose the chance to appeal when they have a good case because they were slow to get an appeal moving?

Here however as soon as the taxpayer was aware of the matter they got on with the job of the appeal with more than satisfactory speed.

A recurring theme in the judgment, in this case, was the engagement and diligence of the second appellant taxpayer:

It seems to me, as a general observation, that the second appellant has been extremely diligent in corresponding with HMRC when she had received correspondence. She has not kept her head down and hoped that things would go away. She has engaged with HMRC. In reasonable excuse terms, it seems to me that she is a “responsible trader conscious of and intending to comply with [her] obligations regarding tax”.

…

Time limits need to be respected and litigation conducted efficiently. As I have said in respect of the second appellant, she strikes me as someone who is conscious of her responsibility towards the tax system, and that responsibility is reflected in her actions, and her engagement with HMRC. I accept her position, as set out in the correspondence, that she understood that her agents had appealed against all matters.

…

This is very finely balanced. However, given the second appellant’s conscientious attitude and exemplary engagement with HMRC, where it is clear that she has received communications, at this final evaluation stage I think the balance of prejudice favours the first appellant.

Reasons The Late Appeal Succeeded

The Tribunal said:

108.     Turning now to the reasons given by the appellants for this delay. I have found as a fact that the appellants’ then agent received the 4 April 2022 corporation tax assessments. 

109.     It is the second appellant’s position that she relied on that agent to submit appeals and believed that it had done so. If they did, then no evidence of that was presented to me, and HMRC have, as clearly indicated, no record of any such appeal. I find as a fact therefore that the appellants’ agent did not submit an appeal against the 4 April 2022 corporation tax assessments.

110.     As a general principle (see [54] of Katib [2019] UKUT 189) “failures by a litigant’s adviser should generally be treated as failures by the litigant“.

111.     So failure to make a timely appeal by the appellants’ agent  is a failure by the appellants. And thus, cannot be seen as a “good” reason why the first appellant failed to make a timely appeal. However, that failure is something which can be considered at the final evaluation stage.

112.     The failure, however, is more acute if the appellants themselves were aware of the assessments, by virtue of the fact that the agent had sent them to the appellants.

113.     The appellants’ late submission to amend their pleadings to include one that the appellants did not receive those assessments has not been supported by any oral testimony by the second appellant.

114.     And so, if I am to accept any submission, there must be evidence on which I can base that acceptance.

115.     I have already made clear that I believe that the second appellant has acted conscientiously towards HMRC and towards the tax system. And furthermore, there is evidence that she has responded to HMRC’s correspondence as and when it is clear that she received it and engaged fully with HMRC.

116.     Furthermore, it is clear from the 4 April 2022 email that both personal and corporate tax assessments were sent to the appellant’s agent. And that subsequently the second appellant in her letter of 7 April 2022, to HMRC, submitted an appeal against amendments to her personal self-assessment tax return for three tax years.

117.     It is my view that had she received, from the agent, the corporation tax assessments, she would have, similarly, appealed against them to HMRC. That would be consistent with her aforesaid attitude and behaviour. The fact that she did not permits me to infer that her agent did not send to her the letters relating to the corporation tax assessments. The agent only sent to her the letters relating to her personal tax position.

118.     It was reasonable, therefore, for her to believe that the agent had appealed against the corporation tax assessments, and that reasonable belief continued until she received the email of 5 December 2022 from Officer Metcalfe which made it clear that as far as HMRC were concerned, no valid appeals had been made against any corporation tax assessments.

119.     However, on the following day, 6 December 2022, she sent, to HMRC, the 6 December 2022 letter.

120.     So the first time that she personally became aware that there had been no appeals against the corporation tax assessments was 5 December 2022, and she appealed against them the following day. Once again this demonstrates a commendably conscientious attitude towards her tax obligations.