Upper Tribunal May Issue Weighting Guidance on Statutory Time-Extension Discretions: Martland/Katib Confirmed for VAT Act 1994 s 83G(6)

1. Introduction

Revenue And Customs v Medpro Healthcare Ltd & Ors concerned a recurring procedural flashpoint in tax litigation: how the First-tier Tribunal (“FTT”) should exercise the statutory discretion to admit a late VAT appeal under VAT Act 1994 s 83G(6), which permits an appeal out of time “if the tribunal gives permission”.

The immediate dispute arose after HMRC investigated Medpro Healthcare Ltd in 2019 and issued assessments, penalties and personal liability notices. Some appeals were notified to the FTT more than 30 days after the review conclusion letters. The FTT refused to extend time. The Upper Tribunal (“UT”) allowed the taxpayers’ appeal and remitted, but divided sharply on a point of principle: whether it is permissible for the UT to issue guidance to the FTT that not only structures the discretion but also gives “particular importance” (i.e., special weight) to certain factors, notably the need to respect statutory time limits.

The Court of Appeal resolved that institutional and constitutional question and, consequentially, reaffirmed the continuing authority and appropriateness of the UT’s extension-of-time framework in Martland v HMRC as approved in HMRC v Katib.

2. Summary of the Judgment

The Court of Appeal (Whipple LJ and Miles LJ concurring) allowed HMRC’s appeal. It held that:

The UT is entitled to give guidance to the FTT on the exercise of statutory discretions such as VAT Act 1994 s 83G(6), including guidance that indicates the weight to be given to particular factors.
Such guidance does not unlawfully “fetter” the FTT’s discretion because it remains guidance: the FTT may depart from it for sound reasons (special circumstances).
The Martland three-stage structure (modelled on civil relief-from-sanctions jurisprudence) is “unimpeachable”, and the additional emphasis in Martland and Katib on the “particular importance” of respecting time limits and efficient, proportionate litigation is appropriate.

The matter remains remitted to the FTT for re-determination, but the FTT must proceed on the basis that Martland (as amplified by Katib) is the correct approach.

3. Analysis

3.1 Precedents Cited (and How They Shaped the Decision)

(a) Tribunal-system function: structured guidance and consistency

R (Jones) v First Tier Tribunal: Lord Carnwath described as “an important function” of the UT the development of structured guidance to reduce inconsistency in the FTT, not only on interpretation but also on the application of specialised statutory schemes. This directly undercut the suggestion that appellate “guidance” must stop at abstract legal propositions and cannot address how open-textured standards should operate in practice.
BPP Holdings Ltd v HMRC: The Supreme Court reaffirmed that it is not for the Supreme Court to interfere with UT/Court of Appeal guidance on time limits/sanctions save where “wrong in law”, and stressed that it is an “important function” of the UT to develop guidance to achieve consistency in the FTT. Crucially, the Supreme Court endorsed guidance that—like Denton—does more than list factors: it indicates the prominence of some considerations (efficient conduct, compliance).
HMRC v McCarthy & Stone Ltd and Leeds CC v HMRC (as discussed in the Court of Appeal decision in BPP): They illustrated divergence in UT approach post-Mitchell/Denton, and formed the background to Ryder LJ’s strong statement that a stricter compliance culture should apply in the tax tribunals as well.

(b) Civil-court time-limit culture (by analogy)

Mitchell v News Group Newspapers Ltd (Practice Note) and Denton v TH White Ltd (De Laval Ltd, Part 20 defendant) (Practice Note): These define the modern “relief from sanctions” approach, including the emphasis on efficient, proportionate litigation and compliance. The Court of Appeal treated their relevance as not merely structural (a staged analysis) but also normative (why compliance and finality matter), and found nothing in VATA s 83G(6) inconsistent with importing that emphasis.
R (Hysaj) v SSHD and Lakatamia v Su: They confirm, in the CPR appeal context, that seeking permission to appeal out of time is treated akin to relief from sanctions, reinforcing the Court’s view that “permission to appeal late” and “sanction relief” are not meaningfully distinct for methodology.

(c) Tax-tribunal extension-of-time authorities

Data Select Ltd v HMRC: Morgan J (UT) treated s 83G(6) extensions as governed by a well-established extension-of-time approach and explicitly endorsed considering the overriding objective and “all the circumstances”, including by analogy to CPR r 3.9. The Court of Appeal found it significant that Data Select (which the taxpayers did not say was wrong) supports the very analogy the taxpayers resisted.
Martland v HMRC: The UT’s core guidance: (1) length/seriousness of delay, (2) reasons, (3) evaluation of all circumstances, with a balancing exercise. This structure was not controversial in the Court of Appeal; rather, it was affirmed.
HMRC v Katib: The UT stressed that, “as a matter of principle”, respecting statutory time limits is of “particular importance”. The Court of Appeal upheld that as a legitimate emphasis rather than an impermissible fetter.
Romasave (Property Services) Ltd v HMRC: Emphasised that extending time is materially important because it confers a jurisdiction the tribunal would not otherwise have and that “Time limits imposed by law should generally be respected.” This supported the Court’s view that statutory time limits are not mere “targets”.
Advocate General for Scotland v General Commissioners for Aberdeen City: Lord Drummond Young described out-of-time appeal provisions as exceptional: Parliament’s chosen limit is the norm and “particular reasons” are needed to go beyond it. The Court of Appeal read this as consistent with (not contrary to) a Denton-style approach and as supporting the policy weight attached to compliance/finality.

(d) “Unfettered” statutory discretions and appellate guidance

R (Perinpanathan) v City of Westminster Magistrates' Court: Although about magistrates’ costs under Magistrates Court Act 1980 s 64, it was pivotal by analogy: even where a statute appears to confer an “ostensibly unfettered discretion”, a court of record may lay down guidance or even rules (not too rigid) to balance flexibility with certainty and consistency.
Competition and Market Authority v Flynn Pharma Ltd: Lady Rose expressly approved Perinpanathan’s principle: guidance/rules can properly be laid down for apparently unfettered statutory powers, absent special circumstances. This directly answered the UT majority concern that weighting guidance necessarily “fetters” the FTT.

3.2 Legal Reasoning

(a) The core institutional holding: guidance can include weighting

The judgment treats the UT’s role as not merely error-correction but system-shaping within a specialist appellate structure. In that context, “open-textured” statutory language (like “if the tribunal gives permission”) invites principled guidance to prevent unpredictability and inconsistent first-instance outcomes.

Marcus Smith J’s concern below was that giving “particular importance” to some factors amounts to an unlawful fetter of a discretion allocated by Parliament to the FTT. The Court of Appeal rejected that as an overstatement. Drawing on Perinpanathan and Flynn Pharma, it held that:

appellate guidance is compatible with a statutory discretion even if the statute does not list factors or weights;
the key safeguard is that guidance is not absolute: the decision-maker may depart from it with sound reasons (special circumstances);
therefore, giving guidance on prominence/weight does not necessarily convert discretion into a rigid rule.

(b) Statutory time limits as policy signals

The Court reasoned that the legislature’s imposition of a 30-day limit is itself a “clear clue” to policy: a time limit is meant to be respected and is not merely aspirational. That justified giving compliance and finality “significant weight” within the “all the circumstances” evaluation.

(c) “Procedural vs substantive” rejected

The taxpayers argued that guidance on procedural case-management (once a case is “in the system”) differs from guidance affecting whether proceedings can be commenced at all. The Court found the distinction unpersuasive because:

s 83G is itself part of the procedural scheme for challenging HMRC decisions;
the operative mechanics run through Rule 20(4) (procedural in character), including a mandatory explanation for delay;
many procedural decisions have jurisdictional effects (the Court gave an analogy of service out of the jurisdiction).

(d) Why Martland/Katib is appropriate in the tax context

The Court emphasised the tax dispute lifecycle (investigation, assessments, reviews) and the public-law environment: by the appeal stage, the claim has already been investigated and decided. The time limit functions to protect HMRC and the tribunal from staleness and to promote certainty and finality. This made the Denton-style approach especially apt, rather than analogies to limitation extensions in private litigation (e.g., Limitation Act 1980 s 33 or the Inheritance (Provision for Family and Dependants Act) 1975).

3.3 Impact

Clarified constitutional position in tribunal justice: the UT can issue binding-in-practice (but departable) guidance on how to exercise open-textured statutory discretions, including on weighting. This is likely to be cited beyond VAT, wherever similar “permission” discretions exist.
Reinforced compliance culture for tax appeals: FTT panels should treat statutory time limits and efficient/proportionate conduct as factors of “particular importance” when deciding whether to admit late appeals.
Reduced variance between FTT panels: the decision directly addresses the risk (highlighted by the Court) that some judges might give strong weight to the time limit while others might not—an inconsistency the appellate structure is designed to prevent.
Framed limits of guidance: guidance must remain guidance; departures are permitted for sound reasons. Future litigation may focus less on whether guidance is permissible, and more on whether particular departures are justified on the facts.

4. Complex Concepts Simplified

Statutory discretion: A power given by Parliament that allows (but does not require) a tribunal to decide whether to grant a step—here, permission to appeal late.
“Fettering” discretion: Treating a flexible discretionary power as if it were a fixed rule. The Court held that guidance is not a fetter if it can be departed from for good reasons.
Structured guidance: An appellate framework telling first-instance decision-makers how to organise their thinking (e.g., staged questions) to promote consistency.
Relief from sanctions (Denton approach): A civil-procedure method for deciding whether to excuse non-compliance, typically asking: how serious the default was, why it happened, and then assessing all circumstances with special attention to efficient conduct and compliance.
“Particular importance” / weighting: Not all relevant factors are equal. Guidance may legitimately say that some considerations (like respecting statutory time limits) usually carry significant weight, while still allowing exceptional cases.

5. Conclusion

This decision establishes a clear rule of tribunal public law: the Upper Tribunal may issue guidance—including as to the weight of relevant factors—on the exercise of statutory discretions conferred on the First-tier Tribunal. Applying that principle, the Court confirmed that the Martland v HMRC framework, as endorsed and emphasised in HMRC v Katib, remains the correct approach to late VAT appeals under VAT Act 1994 s 83G(6), and that respect for statutory time limits and the efficient, proportionate conduct of litigation are matters of particular importance within the “all the circumstances” inquiry.