Snar Associates Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 15 November 2016 |
| Neutral Citation | [2016] UKFTT 763 (TC) |
| Date | 15 November 2016 |
| Court | First-tier Tribunal (Tax Chamber) |
Judge Rupert Jones, Mr John Cherry
Mr Steve Rampat appeared for the appellant
Rita Pavely, officer of HM Revenue and Customs, appeared for the respondents
Value added tax – Registration – Belated notification penalty – Assessment – Appeal dismissed.
[1] This is an appeal brought by SNAR Associates Limited, the appellant, against a decision of HMRC dated 20 November 2013. The decision was that the appellant: a) was required to be registered for VAT for the period 01 July 2003 to 31 July 2008; b) was assessed to pay VAT in the sum of £46,342 in respect of the same period; and c) was liable to pay a penalty in the sum of £3,475.00 for failure to notify this liability at the rate of 15% of the net tax liability but mitigated by 50%.
[2] The appellant filed its appeal against the decision on 20 January 2016. This was considerably later than the 30-day time limit for appeals provided under section 83G of the Value Added Tax Act 1994 (“VATA”) which period expired on 20 December 2013.
[3] At the beginning of the hearing Mr Rampat, director of the appellant, applied to the tribunal for permission to bring the appeal out of time pursuant to rule 20(4) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (“the Rules”). Mr Rampat relied upon the agreed bundle of correspondence and documents provided by HMRC.
[4] Mr Rampat, on behalf of the appellant, gave two main reasons for the delay of two years and one month in filing the appeal at the tribunal. The first was that he continued in correspondence with HMRC throughout the period 2014 to 2016 but was confused by the alternative routes to challenge the decision of 20 November 2013. The second was that he was awaiting HMRC to provide information he had requested during this two-year period.
[5] As early as 16 December 2013 Mr Rampat had written to HMRC regarding the 20 November 2013 decision. A copy of that letter was no longer available. However, in an undated letter received by HMRC on 3 February 2014, he wrote to HMRC's VAT Registration Service and stated, “We refer to our previous letter dated 16th December 2013 and after discussions with Denise Flindall, we can confirm our appeal against the VAT claim and would appreciate our hearing heard by an Independent Tribunal. Kindly advise the next stage or process to take place.”
[6] In a letter dated 12 February 2014 HMRC wrote to Mr Rampat asking him to set out in writing the reasons for his appeal. In a letter dated 23 February 2014 Mr Rampat stated his grounds of appeal as: “1. The period covered in the assessment; 2. The method of calculation”.
[7] Thereafter the appellant relied upon a chain of correspondence between himself and HMRC between February 2014 and June 2014. The correspondence concerned the two avenues of challenge available to the appellant as were set out in the original decision letter of 20 November 2013. These avenues were a review by an HMRC officer or appeal to the independent tribunal. He submitted that the subsequent correspondence with HMRC concerned the preferable route to follow. He also submitted he relied upon the advice and guidance of HMRC to clarify which avenue to pursue.
[8] The correspondence culminated in the appellant first filing a notice of appeal to the tribunal on 14 July 2014. The grounds of appeal were those set out in his letter of 23 February 2014. The notice of appeal was returned by the tribunal as it did not enclose a copy of the decision letter or review conclusion letter. On 12 August 2014 the appellant was advised by letter from the tribunal that a copy of such a decision or review letter was required if he had received one and also that further and better particulars of the grounds of appeal were required. Mr Rampat had stated in his covering email to his notice of appeal that he had not received any letter from HMRC and that it had all been done verbally and by telephone. He had stated within his notice of appeal that the date of decision was 26 June 2014 and the date of HMRC's conclusions of review was 30 May 2014. During the course of the hearing he accepted that the decision in question was in fact that of 20 November 2013 and that no review had ever been conducted.
[9] Thereafter, from August 2014, he contacted HMRC by phone requesting a copy of the review decision believing that such a review decision either existed or was awaited. He relied upon one letter of HMRC dated 30 May 2014 which stated it had referred his case to the Review and Appeal Unit for consideration. During the latter half of 2014 and 2015 he continued to believe that he was awaiting the conclusions of review from HMRC for his appeal to proceed. He contacted the tribunal orally and by email in 2015 and eventually he was advised to send the decision letter of 20 November 2013. This he did by attaching the decision letter when on 12 January 2016 he re-filed his notice of appeal. The notice of appeal itself was identical to that of 14 July 2014, including retaining the old date.
[10] HMRC did not oppose the appellant's application. Ms Pavely accepted there was a degree of confusion on the appropriate avenue for the appellant to pursue and an ongoing discussion between HMRC and Mr Rampat regarding review or appeal. She also accepted there had been some delay on HMRC's part in handling the matter and that there was confusion as to whether the appellant was requesting a statutory review or requesting an appeal.
[11] At the hearing the tribunal granted permission to admit the appeal under rule 20(4)(b) and extended time for the notice of appeal under rule 5(3)(a) of the Rules.
[12] These are our reasons.
[13] The tribunal applied the overriding objective under rule 2(1) of the Rules to deal with cases fairly and justly. It also considered the factors set out in rule 2(2) namely:
(2) Dealing with a case fairly and justly includes–
a) dealing with the case in ways which are proportionate to the importance of the case, the complexity of the issues, the anticipated costs and the resources of the parties;
b) avoiding unnecessary formality and seeking flexibility in the proceedings;
c) ensuring, so far as practicable, that the parties are able to participate fully in the proceedings;
d) using any special expertise of the Tribunal effectively; and
e) avoiding delay, so far as compatible with proper consideration of the issues.
[14] The tribunal notes the useful summary provided by the First Tier Tribunal at paragraph 4 of its decision in Butt TAX[2014] TC 04068:
In terms of the tests and general approach that we must adopt in dealing with applications to appeal out of time we have considered the recent decisions of the Court of Appeal in Mitchell v News Group Newspapers Ltd [2103] EWCA Civ 1537 and Denton v T H White Ltd UNK[2014] EWCA Civ 906, and those of the Upper Tribunal in McCarthy & Stone (Developments) Ltd v R & C Commrs VAT[2014] BVC 504, Data Select Ltd v R & C Commrs VAT[2012] BVC 1,743 and Leeds City Council v R & C Commrs VAT[2014] BVC 531. Taking together all those decisions, we concur with the conclusion reached by this Tribunal in the recent case of Mathers TAX[2014] TC 04008 (at [25]):
… briefly, we consider the main points to be that:
• even if Tribunals are not required to follow the full requirements of the latest guidance given to the higher courts in terms of seeking to ensure much stricter adherence to time limits and other directions, in order to ensure the efficient and most cost-effective conduct of litigation, we must certainly pay some regard to that intended stricter adherence to such matters;
• as Tribunals, we are entitled to approach matters slightly more flexibly than the higher courts are now encouraged and directed to do;
• we must certainly not, however, allow litigation to be side-tracked by other parties in litigation seeking to rely on, and exploit, trivial procedural steps that their opponents may have failed to address; and
• in considering generally how to deal with late applications (for instance to bring an appeal, as in this case) we should still address the list of points summarised by Mr. Justice Morgan in Data Select. Those points are that we should address the questions:
1) What is the purpose of the time limit?
2) How long was the delay?
3) Is there a good explanation for the delay?
4) What will be the consequences for the parties of a refusal to extend time or the grant of such an extension?
5) We also consider it appropriate in this case to pay some regard to whether we consider that the Applicant was likely to have been able to raise valid and compelling points, should an appeal proceed, particularly because it seemed that the tax and penalties being imposed would be a serious matter for the particular appellant; and
6) It is also relevant to pay some regard to the whole conduct of the enquiries, and to the issue of whether there have been repeated delays, non-cooperation and failures to advance points, arguments and explanations at many earlier times.
[15] The approach we adopted was therefore to concentrate upon the criteria set down by Mr Justice Morgan in Data Select at para. 34 of the decision:
As a general rule, when a court or tribunal is asked to extend a relevant time limit, the court or tribunal asks itself the following questions: (1) what is the purpose of the time limit? (2) how long was the delay? (3) is there a good explanation for the delay? (4) what will be the consequences for the parties of an extension of time? and (5) what will be the consequences for the parties of a refusal to extend time. The court or tribunal then makes its decision in the light of the answers to those questions.
[16] However, the tribunal considered all the circumstances of the case and also noted the Court of Appeal's judgment in BPP Holdings Ltd v R & C Commrs VAT[2016] BVC 9 in which the Senior President of...
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