Factual and Procedural Background
This opinion concerns an out-of-time appeal against a Notice of Requirement to Provide Security (NOR) related to VAT, issued by HM Revenue and Customs (HMRC) to a company and its director in November 2017. The appeal was submitted 16 months late. The company, referred to as the Appellant, had a good VAT compliance record until 2016 when issues arose due to a large supplier’s failure to pay, leading to difficulties in meeting VAT obligations.
The NOR was sent to the company’s registered business address and the director’s home address by recorded delivery, with HMRC evidencing delivery. The director denied receipt of the original NOR but acknowledged receiving a reminder letter in December 2017. A telephone call on 4 December 2017 between the director and HMRC indicated that the NOR had been received and passed to solicitors.
The Appellant experienced postal issues after November 2017 due to closure of a mailbox service at the company address. The director engaged with HMRC’s debt management office and appointed professional advisers to handle VAT matters. Despite ongoing engagement and payment arrangements from March 2018, the director was prosecuted for trading without providing security, with the criminal case experiencing multiple adjournments and ultimately resulting in a conviction in absentia in September 2019.
The Tribunal heard detailed evidence from the director, who was found to be a consistent and credible witness. HMRC provided evidence of delivery of the NOR and telephone records. The Tribunal found that the NOR was received by the director but accepted that she did not fully understand it and immediately referred it to her solicitors.
Legal Issues Presented
- Whether there is a reasonable excuse for the delay in making the appeal out of time.
- Whether the appeal should be granted despite the serious delay, considering the engagement of the Appellant with HMRC and the circumstances surrounding the receipt and understanding of the NOR.
Arguments of the Parties
Appellant's Arguments
- The NOR was not received by the director, and consequently, the Appellant was unaware of the appeal rights until April 2019.
- The delay in lodging the appeal is excusable given the lack of awareness of appeal rights and ongoing attempts to resolve VAT liabilities with HMRC.
- The Appellant consistently engaged with HMRC, appointed professional advisers, and sought to pay outstanding VAT through instalments.
Respondents' Arguments
- The delay in appealing is very serious and unjustified.
- The NOR was properly served to both the company and the director, with evidence of delivery and a telephone call confirming receipt.
- The appeal is an attempt to overturn a criminal conviction related to trading without providing security.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Martland [2018] UKUT 178 (TCC) |
Guidance on considering late appeals, emphasizing that permission should not be granted unless justified. |
The Tribunal applied the Martland framework, including a three-stage process from Denton, to assess the reasonableness of the delay and balance the circumstances. |
| Data Select [2012] UKUT 187 (TCC) |
Set out five considerations for assessing late appeals: purpose of time limit, length of delay, explanation for delay, consequences of extension or refusal. |
The Tribunal considered these factors in evaluating the appeal delay and the parties' positions. |
| Katib [HMRC v Muhammed Hafeez Katib] [2019] UK UT 0189 |
Failure of an agent generally does not constitute a good reason for missing an appeal deadline. |
The Tribunal acknowledged this precedent but noted it applies at the third stage of the Martland analysis and considered the Appellant’s engagement with advisers. |
Court's Reasoning and Analysis
The Tribunal began by confirming the serious delay in lodging the appeal and the presumption against granting permission for late appeals unless justified. The Tribunal found, based on delivery records and telephone evidence, that the NOR was received by the director, although she did not fully understand it and promptly referred it to solicitors.
The Tribunal examined the Appellant’s explanation that unawareness of the appeal rights caused the delay. Despite the NOR setting out appeal rights, the director’s lack of understanding and absence of further correspondence mentioning appeals contributed to the delay. The Tribunal also considered the Appellant’s consistent engagement with HMRC, attempts to resolve VAT debts, and appointment of professional advisers.
The Tribunal acknowledged HMRC’s position that the appeal was a tactic to delay or overturn a criminal conviction but found that the Appellant had attended court multiple times and that adjournments were often due to administrative errors or HMRC actions.
Balancing all factors, including the prejudice to the Appellant and the director if the appeal were disallowed, and the merits of the underlying case, the Tribunal concluded that the circumstances justified allowing the appeal despite the delay.
Holding and Implications
The Tribunal ALLOWED the late appeal against the Notice of Requirement to Provide Security.
This decision permits the full hearing of the underlying appeal despite the significant delay in filing. The ruling acknowledges the importance of proportionality and fairness in allowing an appellant who has engaged with HMRC and sought to comply with VAT obligations to have their case heard. No new legal precedent was established; the decision applies existing principles to the facts presented, emphasizing the balance between respecting statutory time limits and ensuring justice in individual cases.