The First-tier tribunal has ruled in the case of Maqsood Hussain T/A Nisa Local v HMRC [2023] UKFTT 40 (TC).
The case considered whether it was possible to reinstate an appeal on matters that had already been subject to two earlier appeal applications and whether a late appeal could be made in respect of two new but connected matters. Both were refused.
In respect of the reinstatement application an appeal had initially been made in January 2019 but this had been withdrawn in May 2019 by the company’s accountant. The accountant lodged a new appeal in January 2020 but as this appeared to concern the same matter the tribunal advised that it would need either a reinstatement application or an explanation as to how the two appeals differed. As neither were forthcoming the file was closed.
In November 2021 the business owner then appealed. As this again concerned the same matters it was held to be a reinstatement application. The application was refused on the grounds that the first appeal had been clearly withdrawn and HMRC had been told of the withdrawal. VATA 1994, s. 85 therefore applied and as a result the first appeal was deemed to have been decided by the tribunal and thus no reinstatement was possible.
With regards to the late appeal in respect of the new matters the tribunal followed the three-stage process set out by the UT in Martland v HMRC [2018] UKUT 178 (TCC):
- establish the length of the delay and whether it is serious and/or significant;
- establish the reason(s) why the delay occurred; and
- evaluate all the circumstances of the case, using a balancing exercise to assess the merits of the reason(s) given for the delay and the prejudice which would be caused to both parties by granting or refusing permission, and in doing so take into account “the particular importance of the need for litigation to be conducted efficiently and at proportionate cost, and for statutory time limits to be respected.”
In this case, the delay was almost six years, clearly very significant. The reason given by the owner for this delay was that his accountants gave him poor advice and poor service, and did not inform him about what was happening. However, the UT in Katib v HMRC [2019] UKUT 189 (TCC) had stated “that failings by a litigant’s advisers should be regarded as failings of the litigant” and that reliance on an adviser would not normally provide a good reason for a delay.
In respect of the balancing exercise the owner’s reliance on the adviser was therefore a matter that should be given very little weight. Furthermore, he was aware of time limits as he was clearly copied in on some correspondence with HMRC. The tribunal concluded that while the owner would suffer prejudice if he was unable to appeal, that was an inevitable consequence of losing the opportunity to challenge an HMRC decision. HMRC would suffer prejudice if the tribunal were to give permission, because they would have to devote time and attention to defending these very old decisions. Granting permission would also prejudice the position of other taxpayers, in that both HMRC and the tribunal would divert resources from other cases.
Leave for appeal was therefore not granted.
https://www.bailii.org/uk/cases/UKFTT/TC/2023/TC08695.html
Related content from Claritax Books
Value Added Tax, written by Ciaran McGee MA (Oxon), FCA, CTA, is an extensive volume (over 1,000 pages), written primarily for non-VAT specialist accountants and tax advisers.
