The First-tier Tribunal have judged the case of Tajinder Singh Pawar v HMRC  UKFTT 81 (TC). The appellant sought permission to appeal a personal liability notice issued on 5 October 2017 that had been subject to a statutory review that had been concluded on 19 November 2018. The appeal of 22 February 2022 was just over 38 months late and was rejected by the tribunal.
In considering the late appeal the FTT followed the principles established in Martland v HMRC  UKUT 178 (TCC), i.e.:
- Establish the length of the delay.
- Establish the reason (or reasons) why the default occurred.
- Evaluate “all the circumstances of the case”. This involves a balancing exercise that essentially assesses the merits of the reason(s) given for the delay and the prejudice that would be caused to both parties by granting or refusing permission.
The delay was clearly significant.
The penalties should have been based on the VAT liabilities of the appellant’s company that was in liquidation, but these amounts were in dispute and had been subject to correspondence and negotiation with HMRC. HMRC had agreed that the proposed penalties were excessive and therefore sought an agreement for the penalties based on a “reasonable amount of tax”, but no agreement had been reached.
The appellant argued that the appeal was late as his adviser had not told him of the need to appeal the review letter. The appellant also believed that there was still an open agreement in principle with HMRC that had simply not been quantified.
The tribunal rejected this. Notwithstanding the tenet that “failures by a litigant’s adviser should generally be treated as failures by the litigant” established in HMRC v Katib  UKUT 0189 (TCC) the review conclusion letter contained a clear statement of the appellant’s appeal rights if he disagreed with the conclusion. Furthermore, the issue of the review letter in November 2018 brought clarity to HMRC’s position that negotiations over the penalties were now over.
In terms of the overall evaluation it was clear that the prejudice to the appellant if permission to appeal was not granted would potentially be very great (exposure to excessive penalties and potential bankruptcy) but that was common to all such cases. Given that permission should not be granted unless (a) the appellant discharges the burden of satisfying the tribunal that it should be, (b) the particular importance of the need for statutory time limits to be respected, and (c) what the tribunal considered to be the lack of any good reason for the delay, the balancing exercise clearly militated against granting permission for a late appeal.