Ray
| Jurisdiction | UK Non-devolved |
| Judgment Date | 25 January 2024 |
| Neutral Citation | [2024] UKFTT 141 (TC) |
| Court | First-tier Tribunal (Tax Chamber) |
Ray
[2024] UKFTT 141 (TC)
Judge David Harkness Simon Bird
First-Tier Tribunal (Tax Chamber)
Keywords – Application to make late appeal against APN penalties – Martland applied – Application refused.
DECISION
Summary
[1] The matter before the Tribunal was an application (the “Application”) for permission
to notify late appeals to HMRC pursuant to s49 Taxes Management Act 1970 (“TMA1970”) against a series of notices of penalty assessment.
[2] The details of the notices of penalty assessment are set out in the schedule to this judgment. For the sake of brevity, the word “penalties” is used in this judgment even though strictly some are surcharges charged under notices of surcharge; nothing turns on the distinction for the purposes of this judgment.
[3] In summary, 26 notices of penalty assessment were issued to Mr Ray at various dates in 2016 and 2017. In respect of 7 of those, appeals were made to HMRC within the statutory time limits and the appeals in respect of those are proceeding separately to the Tribunal under case reference TC/2023/07471. Appeals were not made to HMRC within the statutory time limits in respect of the remaining 19 of those notices of penalty assessment and the Application to the Tribunal is in respect of those.
[4] In deciding whether or not to allow the Application, we applied the three-stage test set out by the Upper Tribunal (“UT”) in Martland v R & C Commrs[2018] BTC 525 (“Martland”), which is as follows:
- establish the length of the delay and whether it is serious and/or significant;
- establish the reason or reasons 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.
[5] Applying those tests, we found as follows:
- the delays in making the appeals were all of over five years (and in some cases over six years). These delays were plainly very serious and significant.
- they occurred because of Mr Ray's failure to make the appeals by the statutory time limits.
- although the consequence of refusing permission is that Mr Ray cannot challenge the penalties at the Tribunal, the circumstances of the case were overwhelmingly in favour of refusing permission. This was essentially because:significant weight must be given to the failure to respect statutory timethere was no good reason for the long delays;allowing cases to proceed when the appeal has been made out of time prejudices both HMRC and other taxpayers; andthe merits of Mr Ray's appeals appeared to be weak.
[6] Accordingly, the Tribunal decided that the Application should be dismissed.
Evidence
[7] The documents to which we were referred were: HMRC's statement of case (23 pages) and skeleton argument (10 pages), Mr Ray's skeleton argument (3 pages), HMRC's main document bundle (454 pages) and two supplemental document bundles (27 pages and 41 pages).
Facts
[8] We found the following facts which were not disputed by Mr Ray:
- Mr Ray was issued with the Accelerated Payment Notices (APN) detailed in the schedule to this judgment;
- The APNs were issued as a result of Mr Ray having entered into arrangements that were notified under the DOTAS regime in the Finance Act 2004 and to which HMRC had allocated a scheme reference number;
- On 7 September 2015, Mr Ray made representations under section 222 Finance Act 2014 in relation to one APN, attaching detailed evidence as to the calculation of the tax due. In consequence HMRC withdrew their original APN relating to 2010–11 and issued a replacement in a reduced amount on 27 November 2015;
- Mr Ray failed to pay the APNs within the time allowed and in consequence on 9 August 2016 he was issued with nine notices of penalty assessment as detailed in the schedule to this judgment. All of these notices gave details of how to appeal and of the 30 day appeal period;
- On 5 September 2016 Mr Ray wrote to HMRC. His letter was stated to be an appeal against those penalties arising on late payment of APNs for tax years 2011–12, 2012–13 and 2013–14. The letter was treated by HMRC as an in time appeal against seven of the nine notices of penalty assessment issued on 9 August 2016. The relevant notices are marked as such in the schedule to this judgment. Because it was stated to bean appeal against those penalties arising in respect of failure to pay APNs for tax years 2011–12, 2012–13 and 2013–14, HMRC – correctly in our view – did not treat the letter as appealing the penalties for failure to pay APNs for tax years 2009–10 or 2010–11. Accordingly, Mr Ray had done nothing to appeal against the two notices of penalty assessment issued on 9 August 2016 in respect of tax years 2009–10 and 2010–2011;
- On 7 September 2016, Mr Ray was issued with further notices of penalty assessment relating to the unpaid APNs, as detailed in the schedule to this judgment. All of these notices gave details of how to appeal and of the 30 day appeal period. MrRay did not appeal those notices within the 30 day period for appeal;
- On 27 September 2016, HMRC wrote to Mr Ray regarding the appeals he had made on 5 September 2016 against penalties, noting that he was a claimant in a judicial review relevant to the APNs and also noting that Mr Ray had given a witness statement in the course of that claim evidencing hardship. HMRC went on to state that they would not take steps (save in certain circumstances) to enforce the accelerated payments and related penalties which had been appealed until the judicial review proceedings had been determined or disposed of by the courts. HMRC also stated that the accelerated payments remained due and that penalties would apply if the accelerated payments were not paid in full and on time. We observe that HMRC did not point out that Mr Ray had not appealed against two of the penalty assessments which had been issued to him on 9 August 2016, although there was no obligation on HMRC to point that out;
- On 1 November 2016 HMRC issued further notices of penalty assessment (as detailed in the schedule to this judgment), accompanying the assessments with a short letter stating that the accelerated payments and penalties remained due and payable but that (save in certain circumstances) HMRC would not take steps to enforce the accelerated payments and late payment penalties until the judicial review claims had been determined or disposed of by the Courts. All of these notices gave details of how to appeal and of the 30 day appeal period. Mr Ray did not appeal those notices within the 30 day period for appeal;
- On 2 June 2017, HMRC issued further notices of penalty assessments (as detailed in the schedule to this judgment), again accompanying the assessments with a short letter stating that the accelerated payments and penalties remained due and payable but that (save in certain circumstances) HMRC would not take steps to enforce the accelerated payments and late payment penalties until the judicial review claims had been determined or disposed of by the Courts. All of these notices gave details of how to appeal and of the 30 day appeal period. Mr Ray did not appeal those notices within the 30 day period for appeal;
- In September 2020 Mr Ray reached a time to pay agreement with HMRC. The settlement agreement stated that penalties and surcharges for not paying APNs on time did not form part of the settlement agreement and accordingly were still payable;
- On 11 November 2022, HMRC wrote to Mr Ray advising that the judicial review proceedings of Marek Pudjak and others, which they understood Mr Ray to be a member of, had been discontinued. The letter contained a list of outstanding penalties and the late payment penalty interest then due. It was not entirely clear to us why that letter listed only some of the penalties, but we infer that was because the judicial review proceedings referred to related only to certain of the APNs to which Mr Ray was subject – but nothing turns on this. The letter stated that now that the judicial review proceedings had been discontinued, HMRC would be seeking to collect payment of the outstanding late payment penalties;
- On 20 January 2023, HMRC wrote a further letter to Mr Ray advising that the judicial review proceedings of Hilary Anne Duggan and Others, which they understood Mr Ray to be a member of, had also been discontinued. The letter listed outstanding penalties due and the late payment interest then due. Again that letter listed only some of the penalties, although when combined with the list in the 11 November 2022 letter, the list was complete. While not entirely clear to us, we infer that was because the judicial review proceedings referred to related only to certain of the APNs to which Mr Ray was subject – but again nothing turns on this. The letter stated that now that the judicial review proceedings had been discontinued, HMRC would be seeking to collect payment of the outstanding late payment penalties;
- In a letter dated 6 February 2023, received 9 February 2023, Mr Ray wrote to HMRC to appeal against the APN penalties detailed in HMRC's letters of 11 November 2022 and 20 January 2023;
- On 17 February 2023, HMRC wrote to Mr Ray setting out their view that the time limit to appeal against the late payment penalties was 30 days from the date the notices of penalty assessment were issued and therefore Mr Ray's appeal was out of time and that in their view the reasons given did not satisfy the requirements for a reasonable excuse for a late appeal;
- On 27 February 2023, the Appellant made the Application, seeking permission from the Tribunal to allow a late appeal to HMRC against the late payment penalties.
Legislation and case law
[9] Section 31A(1) TMA 1970 provides that notice of an appeal...
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