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Revenue And Customs v Medpro Healthcare Ltd & Ors
Summary of Opinion (Anonymized)
Factual and Procedural Background
The Appellant challenged the approach taken by the Upper Tribunal ("UT") to guidance about how the First-tier Tribunal ("FTT") should exercise its statutory discretion to extend time for appeals under section 83G(6) of the VAT Act 1994. The UT (Judge Smith and Judge Cannan) had given a decision permitting an appeal from the FTT's refusal to extend time for three late notices of appeal brought by the Respondents (Company B and a director of Company B). The UT allowed the appeal and remitted the matter to the FTT, but its two members disagreed about whether the UT could give binding guidance about the weight to be attached to particular factors when the FTT exercises that statutory discretion. The Appellant obtained permission and appealed to this court. On remittal the FTT is to reconsider the extension applications.
Legal Issues Presented
- Whether a superior tribunal (the UT) is entitled to formulate guidance for the FTT on the exercise of a statutory discretionary power to extend time for an appeal under section 83G(6) VATA.
- If the UT may give such guidance, whether the specific guidance in Martland (as amplified by Katib) is appropriate, in particular the weight to be attached to the importance of compliance with statutory time limits and efficient litigation.
- Whether the exercise of the discretion under section 83G(6) is procedural (and therefore amenable to guidance) or substantive (and not subject to such guidance).
Arguments of the Parties
Appellant's Arguments
- The UT was not permitted to give guidance that effectively prescribed the weight to be given to particular factors when the FTT exercises the statutory discretion under section 83G(6), because that would fetter the FTT's statutory discretion.
- The UT's endorsement of treating the statutory extension as analogous to relief against sanctions (and elevating certain factors) was impermissible without statutory change.
Respondents' Arguments
- If the UT may give guidance, the Respondents contended that the Martland guidance is flawed. They also argued that the extension power under section 83G(6) is substantive (a right to appeal) rather than merely procedural, and so not analogous to relief against sanctions.
- Reliance was placed on earlier authority suggesting that provisions permitting late appeals are exceptional and the time limit reflects parliamentary judgment that particular reasons must be shown to disregard it.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Martland v Company A [2018] UKUT 178 (TCC), [2018] BTC 525 | Three-stage test (length of delay; reasons for delay; balancing all circumstances) and emphasis that efficiency, proportionate cost and respect for time limits are important. | Cited as established guidance for FTT; court held the three-stage structure unimpeachable and appropriate if UT may give guidance. |
| Company A v Katib [2019] UKUT 189 (TCC), [2019] STC 2106 | Endorsed Martland and stressed that the FTT must give proper force to the importance of respecting statutory time limits. | Used to support the view that Martland's emphasis on time limits is authoritative. |
| Romasave (Property Services) Ltd v Company A [2015] UKUT 254 (TCC), [2016] STC 1 | Exercise of discretion to allow late appeal is significant; time limits imposed by law should generally be respected. | Supported the proposition that respect for time limits is a legitimate and weighty factor. |
| R (Jones) v First-tier Tribunal [2013] UKSC 19, [2013] 2 AC 48 | UT's role includes developing structured guidance to reduce inconsistent results at FTT level; UT may interpret points of law flexibly to include points of principle. | Relied on to justify a supervisory tribunal developing guidance for consistency across FTT panels. |
| BPP Holdings Ltd v Company A [2017] UKSC 55, [2017] 1 WLR 2945 | UT entitled to develop guidance to achieve consistency; guidance on sanctions/time limits for procedural default permitted and authoritative. | Held to support the proposition that the UT may give guidance on time limits and procedural sanctions, and that such guidance can attach significant weight to certain factors. |
| Company A v McCarthy & Stone Ltd [2014] UKUT 196 (TCC), [2014] STC 973 | UT considered that civil courts' approach to time limits (Denton/Mitchell) should be followed in tax tribunals. | Identified as one of the UT authorities favouring adoption of the civil approach to non-compliance with time limits. |
| Leeds CC v Company A [2014] UKUT 350 (TCC), [2015] STC 168 | Contrasting UT view that without change in tribunal rules, previous practice should prevail. | Noted as a conflicting UT decision to McCarthy & Stone on approach to time limits. |
| Mitchell v News Group Newspapers Ltd (Practice Note) [2014] 1 WLR 795 | Stricter approach to compliance with rules/directions in civil procedure. | Referenced in discussions about whether civil approach applies in tribunals. |
| Denton v TH White Ltd [2014] 1 WLR 3926 | Framework for relief from sanctions and weight to be given to factors in relief applications. | Cited as the civil standard which some UT decisions and this court have applied analogously in tax tribunals. |
| R (Perinpanathan) v City of Westminster Magistrates' Court [2010] EWCA Civ 40, [2010] 1 WLR 1508 | Even where statutory discretion appears unfettered, an appellate court of record may lay down guidance or rules to promote certainty, subject to flexibility for special circumstances. | Used by the court to support the proposition that superior courts may give guidance on exercise of apparently unfettered statutory discretions. |
| Competition and Market Authority v Flynn Pharma Ltd [2022] UKSC 14, [2022] 1 WLR 2972 | Endorsed Perinpanathan principle that guidance by appellate courts is appropriate even where discretion appears unfettered. | Relied upon to reinforce that appellate guidance on discretionary powers is permissible. |
| Advocate General for Scotland v General Commissioners for Aberdeen City [2005] CSOH 135, [2006] STC 1218 | Provision allowing appeals out of time is exceptional; time limit reflects parliamentary judgment and reasons must be shown to disregard it. | Relied upon by Respondents; court treated the case as consistent with an analogy to other powers permitting late proceedings but did not accept it precluded applying the Denton approach. |
| Data Select Ltd v Revenue and Customs Commissioner [2012] UKUT 187 (TCC), [2012] STC 2195 | Approach to extending time under section 83G(6) should consider purpose of time limit, length of delay, explanation, and consequences—analogous to CPR r 3.9 matters. | Cited as an instance where a UT judge applied CPR r 3.9 principles by analogy in the tax tribunal context. |
| R (Hysaj) v SSHD [2014] EWCA Civ 1633, [2015] 1 WLR 2472 | Applications for permission to appeal out of time are treated in the same way as applications for relief against sanctions. | Used to support analogy between applications to extend time for appeals and relief from sanctions. |
| Lakatamia v Su [2019] EWCA Civ 1626 | Even where appellant has an entitlement, time limits still apply and extensions are treated like relief from sanctions. | Cited to reinforce that time limits operate similarly across different appellate contexts. |
Court's Reasoning and Analysis
The court analysed whether a superior tribunal can give guidance on the exercise of a statutory discretion conferred on an inferior tribunal. It reviewed authoritative decisions (including R (Jones), the Court of Appeal and Supreme Court decisions in BPP Holdings and related authorities) establishing that the UT has an important function to develop structured guidance to secure consistency at FTT level. The court rejected the Appellant's contention that the UT's guidance amounted to an impermissible fetter on the FTT's statutory discretion.
The court distinguished arguments that section 83G(6) creates a substantive right from the countervailing position that section 83G and rule 20(4) are part of the procedural framework governing appeals; accordingly guidance on the exercise of the FTT's rule-based discretion is permissible. Analogies with other statutory discretions (e.g. costs orders) and with civil practice on relief from sanctions (Mitchell/Denton) supported the proposition that a superior court may lay down guidance, including guidance as to the weight to be attached to factors such as respect for statutory time limits, efficiency and proportionate cost. The court found that Martland's three-stage structure is an appropriate framework and that attaching particular weight to the need to respect statutory time limits is consistent with the statutory scheme and prior authority. The court concluded that guidance is non-binding and an inferior tribunal may depart from it if it gives sound reasons.
Holding and Implications
HOLDING: The appeal is allowed. The court rejected the point in the Respondent's Notice and held that the UT is entitled to give guidance to the FTT about the exercise of the discretion under section 83G(6). The Martland guidance (as amplified by Katib) is appropriate, and on remittal the FTT should proceed on that basis.
Implications: The direct effect is that the FTT must reconsider the extension applications applying the Martland three-stage framework and giving appropriate weight to factors identified in Martland/Katib (including respect for statutory time limits and efficient conduct of litigation). The court emphasised that guidance is just that — the FTT may depart from it if it provides sound reasons.
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