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You are here: BAILII >> Databases >> First-tier Tribunal (Tax) >> Pledger v Revenue & Customs [2010] UKFTT 342 (TC) (22 July 2010)
URL: http://www.bailii.org/uk/cases/UKFTT/TC/2010/TC00624.html
Cite as: [2010] UKFTT 342 (TC)
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David C Pledger v Revenue & Customs [2010] UKFTT 342 (TC) (22 July 2010)
VAT - APPEALS
Extension of time
[2010] UKFTT 342 (TC)
TC00624
Appeal number: TC/2010/03936
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Application to strike out notice of appeal – application for permission to appeal out of time – numerous disputed decisions – some unappealable, all apparently appealed out of time – some decisions before and some after 1 April 2009 changes in appeal procedures - factors to be taken into account in exercising Tribunal’s discretion to admit notice of appeal out of time – application partly successful |
FIRST-TIER TRIBUNAL
TAX
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DAVID C PLEDGER
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Appellant
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-and-
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THE COMMISSIONERS FOR HER MAJESTY’S REVENUE AND CUSTOMS |
Respondents
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TRIBUNAL: |
KEVIN POOLE (TRIBUNAL JUDGE) RICHARD CORKE FCA |
Sitting in public in Bristol on 16 July 2010
The Appellant in person
Christopher Shea, Higher Officer, HM Revenue and Customs, for the Respondents
© CROWN COPYRIGHT 2010
DECISION
Introduction
1. This is an application by HMRC to strike out an appeal. It is not a hearing of the substantive appeal itself.
2. To deal with the application properly it is necessary to set out some basic details of the underlying dispute between the Appellant and HMRC and the history behind the issue of the various assessments, penalties, etc which are potentially the subject of this appeal.
Background and history
3. The Appellant was previously the owner of a company called Beacon Internet Services Limited (“Beacon”), which was deregistered for VAT on 1 July 2005 and was eventually dissolved the following year, owing £56,000 of VAT. The business of Beacon up to 1 July 2005 was (or included) the running of “The Thatched Cottage Inn”, in Shepton Mallet.
4. The Appellant maintained that the tax in question was grossly exaggerated by HMRC and improperly imposed. No history was provided to the Tribunal of any appeal against the assessment by Beacon. However the Appellant felt seriously aggrieved by that episode and determined to arrange his affairs in the future so that he would never have to deal with HMRC again if he could possibly avoid it.
5. He states that he personally took over the business at the Thatched Cottage Inn in succession to Beacon in July 2005, but a few weeks later he transferred the “trading rights” in the four separate streams of the overall business to four different Seychelles Islands registered companies. Copies of one page agreements in similar form purporting to effect such transfers and dated 18, 20, 21 and 25 July 2005 were produced to HMRC (and were subsequently placed before the Tribunal at the hearing). They purported to transfer the trading rights of, respectively, the bed and breakfast accommodation, the Rendezvous Restaurant, the bar and gardens and the conference suite, private functions and outside catering. The Appellant maintains he has no interest in any of the companies, but he acts as their unpaid agent in running the four businesses. He continues to act as tenant of the premises (under a 15 year lease from Greene King in 2003) and is also the authorised person to supervise the sale of alcohol there. He says he lives off a small pension and his interest is in improving the businesses to the point where he can personally secure a profitable sale of the overall business for his own benefit.
6. HMRC were not aware of the new arrangements for running the business of the Thatched Cottage Inn until they made a check on it in November 2007. It was discovered that the business was still issuing till receipts containing the VAT registration number of Beacon (long since deregistered for VAT and dissolved). They had also received information that staff were being paid without any apparent accounting for PAYE and NIC and no payments of such PAYE and NIC were being made to HMRC.
7. A visit was arranged for 18 December 2007. On 12 December, the Appellant visited HMRC and told them there had been a fire at the business, the roof had been damaged and some business records had been destroyed. The visit was cancelled and rearranged for 12 January 2008.
8. At the visit, the Appellant maintained that the four companies each traded under the VAT registration threshold. He said the employees were all employed by the overseas companies, who were responsible for paying them and running any payroll, including the obligation to account for PAYE and NIC. He had almost no business records – these were supposedly all either destroyed in the fire or kept by the Seychelles companies. He refused to produce any bank records on the ground that they were all personal and he said he had no cheque book. The tills at the premises had been reset to zero on 21 December 2007 – the Appellant said he had done this in order to destroy a corrupted file which was displaying the incorrect VAT number on the receipts.
9. HMRC attempted to contact the Seychelles companies at the address given by the Appellant, but three of their letters were returned marked “insufficient address”. The Appellant could not or did not supply any further address details when requested, though he admits he is in email contact with the companies and should therefore have been able to obtain that information.
10. In relation to VAT, HMRC took the view that the Appellant had admitted taking over the business as a going concern from Beacon for VAT purposes with effect from 2 July 2005; under s 49(1) VAT Act 1994 (“VATA”) the turnover of Beacon was therefore attributed to him in deciding whether he exceeded the compulsory VAT registration threshold; he had therefore immediately exceeded the turnover threshold for compulsory registration; they therefore registered him compulsorily for VAT in October 2008, with effect from 2 July 2005; no application for deregistration had ever been received from him; and he was therefore responsible for the VAT which they estimated should have been paid in respect of the overall business for the period after 2 July 2005.
11. In relation to PAYE and NIC, HMRC took the view that either as employer or as payer of the relevant earnings, the Appellant was liable to account for PAYE and NIC on the earnings of the employees of the business. In the absence of proper information from the Appellant, they estimated the amounts involved based on the only information they had.
12. The Appellant had also failed to submit a personal tax return for the year ended 5 April 2006, and had failed to comply with the requirements of a notice requiring him to deliver information and/or documents to HMRC (no detail of this notice was provided at the hearing).
Imposition of disputed liabilities
13. HMRC therefore issued a number of decisions, assessments, determinations and penalty/surcharge notices:
(1) A series of 11 Notices of Decision dated 19 September 2008, whereby they confirmed their decision that a number of named and unnamed individuals were employed earners in respect of their engagement with the Appellant, resulting in specified sums being due from him in respect of unpaid primary and secondary class 1 National Insurance Contributions for each of them for the years ended 5 April 2006, 2007 and 2008. The amounts involved totalled £76,275.72. Following an appeal, two of these Notices were replaced by amended Notices of Decision dated 12 January 2009, in reduced amounts. All of these notices contained the following wording:
“Appeals
If you do not accept this decision please appeal telling us why you think the decision is wrong. The appeal must be made in writing to me within 30 days of the date of issue shown above.
If agreement cannot be reached we will arrange for your appeal and any other appeal to be heard by the General Commissioners who are an independent tribunal. Refer to guide DAA2 A guide to your Notice of Decision.”
These NIC decisions are referred to in the remainder of this decision as “Item 1”
(2) Three Notices of Regulation 80 Determination dated 19 September 2008, whereby they confirmed their view that the Appellant was responsible for payment of unpaid PAYE income tax in respect of a number of named and unnamed individuals for the years ended 5 April 2006, 2007 and 2008. The amounts involved totalled £54,714.74. Each of these notices contained the following wording:
“Making an appeal
Write to us at the address shown aside within 30 days from the date of issue. Tell us why you think the determination is wrong. Usually we can reach an agreement as to the amount due. But if we cannot agree then you can ask for the matter to be put before the appeal Commissioners. They are an independent body who will consider the matter and make a decision. If you want to know more about appeals, please ask any HMRC office for a copy of leaflet ‘Tax Appeals. A guide to appealing against decisions of HMRC on tax and other matters.’”
These PAYE Notices are referred to in the remainder of this decision as “Item 2”.
(3) A letter dated 30 September 2008 in which, after giving short reasons, HMRC stated as follows:
“You will be registered for the purpose of Value Added Tax with effect from 2nd July 2005.
From that date you will become liable to pay Value Added Tax to HM Revenue & Customs on all your taxable supplies of goods and services, as explained in the enclosed Notice 700/1 “Should I be registered for VAT?”
...
A compulsory registration form will be completed in 7 days time (16th October) unless you can provide further information as to why we should not do so.
...
If you disagree with a decision made by HM Revenue & Custom you can ask for it to be reconsidered. You should do this if you can provide further information, or there are facts which you think may not have been taken fully into account. If you are still not satisfied you may be able to appeal to an independent VAT and Duties Tribunal. Whether or not you have asked for reconsideration, you have the right of appeal against the Commissioners’ decision. You will find out more about the appeal procedure in the Explanatory Leaflet, “Value Added Tax – Appeals and Applications to the Tribunals”, issued by the President of the VAT and Duties Tribunals. Copies of the leaflet and forms for making an appeal can be obtained from any VAT Tribunal Centre or the National Advice Service on 0845 010 9000. If you wish to request reconsideration or submit an appeal to a Tribunal in relation to any decision of HM Revenue & Customs notified in this letter you must do so within 30 days from the date of this letter.”
This decision to compulsorily register the Appellant for VAT is referred to in the remainder of this decision as “Item 3”.
(4) VAT Notices of Assessment dated 27 February 2009, 15 May 2009 and 14 August 2009 addressed to the Appellant in respect of the VAT accounting periods ended 31 December 2008, 31 March 2009 and 30 June 2009, for £57,022.92, £3,808.00 and £3,745.00 respectively. Only a copy of the first Notice of Assessment was provided to the Tribunal, and only a copy of the front page of the document, which contained no wording concerning any right of appeal, but instead (apart from the wording “Please see the notes overleaf”) the following wording:
“If this tax assessment understates your liability and you do not draw this to the Commissioners’ attention within 30 days then you may become liable to a Misdeclaration Penalty and Default Interest. You are advised to render your return without delay.”
These VAT assessments are referred to in the remainder of this decision as “Item 4”.
(5) Penalty notices in respect of failure to submit employer’s P35/P14 returns in relation to the years ended 5 April 2006, 2007 and 2008. The detail of these notices provided to the Tribunal was sketchy at best. No copies of the notices themselves were supplied, merely screen prints of abbreviated information about their issue extracted from HMRC’s computer system. There are some doubts in the Tribunal’s mind about the accuracy of that information, as it appears to give dates of issue of the 2005-06 penalty notices in March and May 2007, well before HMRC’s investigation had begun. The Tribunal therefore considers all the “issue date” information given in these documents to be unreliable and therefore has no cogent evidence before it of when the penalty notices were issued or what notification they contained about rights of appeal. Mr Shea was only able to say that it was HMRC’s policy that suitable statements of rights of appeal should always appear on any relevant HMRC document.
These P35/P14 employer’s annual return penalty notices are referred to in the remainder of this decision as “Item 5”
(6) Notices imposing penalties totalling £200 for late filing of the Appellant’s self assessment tax return for the year ended 5 April 2006, issued on 16 February 2007 (as to the first £100) and 31 August 2007 (as to the other £100). Again, no copies of the penalty notices themselves were available to the Tribunal and no evidence was put forward (beyond Mr Shea’s statement as to HMRC’s general policy) as to what statements they would have contained regarding rights of appeal. The Tribunal notes, however, that such penalties are routine matters and the Appellant confirmed at the hearing that he still had not validly filed this self-assessment return.
These penalties for failure to file the Appellant’s self-assessment tax return for 2005-06 are referred to in the remainder of this decision as “Item 6”.
(7) A notice imposing a penalty of £50 apparently dated 17 March 2009, apparently for non-compliance with an information or document production notice. Again, no copy of the penalty notice itself was available to the Tribunal and no evidence was put forward (beyond Mr Shea’s statement as to HMRC’s general policy) as to what statements it would have contained as regards rights of appeal.
This penalty is referred to in the remainder of this decision as “Item 7”.
(8) A notice of determination of the Appellant’s income tax liability for 2005-06, in the absence of any return submitted by him, in the sum of £4,300, apparently issued on 16 December 2008, and some associated notices imposing default surcharges of £430 in relation to the non-payment of this liability. Again, no copies of the notices or evidence about their content in respect of appeal rights was put before the Tribunal.
This determination and associated default surcharges are together referred to in the remainder of this decision as “Item 8”.
Subsequent Events
14. In relation to the NIC decision notices (Item 1), the Appellant and his wife had written to HMRC on 24 September 2008 in response. The Appellant’s letter read:
“Dear Sir
Further to your letter of 19th September 2008 I most certainly do want to appeal.
I am sixty six years old (23/04/1942), an age when I am not required to pay National Insurance contributions.
I look forward to your prompt removal of this “decision”
Yours faithfully
Mr D Pledger.”
15. His wife’s letter read:
“Dear Sir,
Further to your letter of 19th September 2008 I most certainly do want to appeal.
I am [......], an age when I am not required to pay National Insurance contributions.
I am not an employed earner in any capacity nor have I received any remuneration from my husband. If you have any evidence to the contrary I would be obliged for a copy.
I look forward to your prompt removal of this “decision”.
Yours faithfully
Mrs Pledger”
16. In response to these letters of appeal, HMRC issued revised notices of decision in January 2009 in respect of the Appellant and his wife to reflect the fact that they regarded Mr Pledger as liable to account only for secondary (employer’s) Class 1 NIC’s and not for primary (employee’s) Class 1 NIC’s in relation to himself and his wife. They do not appear to have accepted Mrs Pledger’s assertion that she had received no remuneration.
17. In response to HMRC’s letter stating their decision that the Appellant was subject to compulsory VAT registration (Item 3), the Appellant wrote back on 11 October 2008. His letter included the phrase “I reject your assertion that I was and am the registered trader.” At the hearing, Mr Shea conceded (correctly, in the Tribunal’s view) that in the light of this wording, his application to strike out any appeal against the VAT registration decision on the grounds that it was made out of time should be withdrawn. He also accepted that no payment or deposit of any amount of VAT was required as a precondition of an appeal against a decision to register.
18. On 6 October 2009, the Appellant sent a letter to HMRC’s Debt Management Unit (which was by then seeking to enforce recovery of the various sums owing) which the Tribunal regards as effectively giving notice, to the extent notice had not already been given, that the Appellant wished to appeal against all the various assessments, penalties, etc then outstanding.
19. HMRC proceeded to enforcement of what they regarded as the outstanding debt, culminating in the issue of a statutory demand on 27 October 2009, based on all the liabilities set out above, plus interest. This spurred the Appellant into action and after one attempt to set aside the statutory demand, a notice of appeal was submitted on his behalf to the Tribunal on 19 April 2010.
The appeal and the application to strike out
20. The Appellant’s notice of appeal was unclear. It was not possible to make out with any clarity precisely what the Appellant was appealing against. HMRC therefore took a prudent view that the notice of appeal should be read as seeking to appeal against all the decisions giving rise to outstanding liabilities.
21. The Tribunal takes it (as the Appellant confirmed at the hearing) that the appeal applies to all of Items 1 to 8 above.
22. Upon being notified of the appeal, HMRC applied by letter dated 18 May 2010 for the appeal to be struck out. Their grounds were:
(1) the appeal was made late (this ground applies to all of Items 1 to 8, subject to the concession made at the hearing by HMRC that they now accept the appeal in relation to Item 3 has been made in time, as mentioned at [17]);
(2) the VAT due had not been paid and no hardship application had been made (this ground only applies to Item 4); and
(3) the Appellant had not included copies of all the decisions being appealed against with his notice of appeal as required by the Tribunal’s rules (this ground applies to all of items 1 to 8 except for the VAT registration decision (Item 3) and the February 2009 VAT assessment included in Item 4.
23. In relation to the VAT assessments (Item 4), it was accepted by Mr Shea that the validity or otherwise of the assessments would depend on the outcome of the appeal as to the Appellant’s liability to be registered for VAT (Item 3) and if the Appellant was found to be required to be registered, then he would need to submit VAT returns for the relevant periods in order to displace the assessments that had already been raised. In those circumstances, he was content to agree that his strike-out application in relation to the assessments themselves could be left in abeyance for the time being, along with the whole matter of hardship. The Tribunal notes however that because the Appellant has submitted no return for the period covered by these assessments, he has no right to appeal against them (see s 83(1)(p) VATA); his remedy, if he loses his appeal against his compulsory VAT registration, is to submit returns for the relevant periods, whereupon HMRC’s practice is to withdraw the original assessments and either accept the returns as filed or issue new assessments (which would be appealable) in respect of any shortfall they consider to arise from the returns as filed.
24. At the hearing, Mr Shea pointed out that the determination of the Appellant’s personal income tax liability for 2005-06 (Item 8) is not an appealable matter – for that assessment (and associated default surcharges) to be displaced, the Appellant simply needs to file his 2005-06 self-assessment tax return. Until he does so, the determination which has been served on him is treated as his self-assessment under s 28C TMA for various purposes, but it is not an “assessment” and the Tribunal agrees that therefore no right of appeal against it arises under s 31 TMA. The Appellant had previously submitted the return but it had been returned to him for some minor non-compliance; he had that return with him at the hearing and said he would re-submit it, appropriately amended, forthwith.
The Appellant’s submissions
25. The Appellant claims that he was generally confused by the whole process, right from the time at the meeting in January 2008 when he was sat down between two HMRC officers who took it in turns to put questions to him about VAT and PAYE/NIC. He says that when the NIC and PAYE decisions/determinations arrived in September 2008 he intended, by his letter dated 24 September 2008, to express his intention of appealing against everything that was being put to him HMRC, not just against the particular decision in relation to the NIC liability arising in relation to his own “engagement”. He assumed that when the NIC decision notices said “we will arrange for your appeal and any other appeal to be heard by the General Commissioners”, it meant that once he had expressed his disagreement, HMRC would put in train the necessary process for his overall appeal to be heard. He says he did not realise until he was advised in March 2010 that he had a right of appeal to the Tribunal, he says he thought his only recourse was action in the County Court in the context of the statutory demand.
26. The Appellant also maintains that his appeal is a matter of enormous importance to him – if it does not proceed, he is likely to be made bankrupt.
27. He also asserts that “there are facts which are demonstrably incorrect which HMRC have not countenanced”. For example, he says that some of the PAYE and NIC liability relates to a student who only worked for a period of four weeks but whom HMRC have assumed to have earned £15,000. He also says that “a short examination of bank statements” would demonstrate that HMRC have “estimated income figures much higher than they were”. He asserts that his rights under the Human Rights Act would be violated if he is not given the opportunity to argue his appeal in full.
The law relating to striking out applications
28. The relevant provisions are contained in rule 8 of the The Tribunal Procedure (First-tier Tribunal)(Tax Chamber) Rules 2009 (“the Procedure Rules”). Rule 8(2), so far as relevant, provides:
“The Tribunal must strike out the whole or a part of the proceedings if the Tribunal –
(a) does not have jurisdiction in relation to the proceedings or that part of them; and
(b) does not exercise its power under rule 5(3)(k)(i) (transfer to another court or tribunal) in relation to the proceedings or that part of them.”
29. The argument of HMRC is effectively that if any of the appeal relates to a matter that is not appealable, then that part of the appeal must automatically be struck out for lack of jurisdiction; and where any part of the appeal requires the permission of the Tribunal to be appealed out of time, then to the extent the Tribunal refuses its permission, that part of the appeal automatically becomes outside the Tribunal’s jurisdiction and therefore must be struck out.
30. It is therefore necessary to consider:
(1) which of the matters appealed are unappealable in any event, and
(2) which of the strike out applications fall at the first hurdle due to acceptance of their failure by HMRC or lack of adequate supporting evidence to show that the appeal is out of time.
It is then necessary to decide how the Tribunal’s discretion to permit an appeal out of time in relation to the remaining matters should be exercised.
Unappealable matters
31. The Tribunal considers that the following matters are unappealable in any event:
(1) In relation to the appeal against the VAT assessments (Item 4), the Tribunal considers that it does not have jurisdiction to hear that appeal for the reasons set out at [23] above and accordingly strikes out the appeal insofar as it relates to that issue.
(2) In relation to the appeal against the determination of the Appellant’s 2005-06 income tax liability and associated default surcharges (Item 8) the Tribunal considers that it does not have jurisdiction to hear that appeal for the reasons set out at [24] above and accordingly strikes out the appeal insofar as it relates to that issue.
Applications to strike out which fail due to withdrawal by HMRC or lack of adequate supporting evidence
32. In relation to the decision to register the Appellant compulsorily for VAT (Item 3), HMRC’s application to strike out his appeal was withdrawn by HMRC at the hearing (see [17]. To the extent necessary, the Tribunal therefore rejects that part of HMRC’s application to strike out the appeal.
33. In relation to the appeal against the penalties for failure to file employer’s annual returns (Item 5), the Tribunal finds that HMRC have not provided sufficient evidence to support their application to strike out that part of the appeal on the grounds that it is out of time (the Tribunal finding that the supposed dates of issue provided are unreliable), and the Tribunal accordingly dismisses HMRC’s application to strike out the appeal insofar as it relates to Item 5, but subject to the Appellant providing copies of all the disputed penalty notices and any covering letters detailing the reasons for their issue to HMRC and the Tribunal within 28 days of the date of release of this decision, in order to satisfy rule 20(2)(d) and 20(3) of the Procedure Rules.
34. In relation to the appeal against the penalty for failure to provide information/documents (Item 7), the Tribunal finds that HMRC have not provided sufficient evidence to support their application to strike out that part of the appeal on the grounds that it is out of time (wholly inadequate information having been provided as to the nature of the notice served, and the Tribunal not being satisfied that the date of service of such a non-routine penalty notice identified on the Appellant’s self-assessment statement of account can be relied on), and the Tribunal accordingly dismisses HMRC’s application to strike out the appeal insofar as it relates to Item 7, but subject to the Appellant providing a copy of the disputed penalty notice and any covering letter detailing the reasons for its issue to HMRC and the Tribunal within 28 days of the date of release of this decision, in order to satisfy rule 20(2)(d) and 20(3) of the Procedure Rules.
Permission to appeal out of time
The statutory provisions on time limits for appealing and on relaxation of those time limits
35. All the appeals are strictly out of time, subject to permission being granted by the Tribunal for late notice of appeal to be given. The statutory provisions in relation to each relevant matter are summarised below.
36. With respect to NIC’s (Item 1), at the time of issue of the relevant decisions in September 2008, the relevant time limit was contained in s 12 of the Social Security Contributions (Transfer of Functions, etc) Act 1999 (“SSC(TF)A”), which provided:
“(1) Any appeal against a decision must be brought by a notice of appeal in writing given within 30 days after the date on which notice of the decision was issued.
(2) The notice of appeal shall be given to the officer of the Board by whom notice of the decision was given.”
37. Under s 13 SSC(TF)A), the Board (of Inland Revenue, as it then was) was empowered to make regulations to make provision with respect to NIC appeals to the tax appeal Commissioners (as they were then constituted). Under regulation 9 of the Social Security Contributions (Decisions & Appeals) Regulations 1999, s 49 Taxes Management Act 1970 (“TMA”) was made to apply to such appeals brought out of time. S 49 TMA stated at the time as follows:
“(1) An appeal may be brought out of time if on an application for the purpose an inspector or the Board is satisfied that there was a reasonable excuse for not bringing the appeal within the time limited, and that the application was made thereafter without unreasonable delay, and gives consent in writing; and the inspector or the Board, if not satisfied, shall refer the application for determination by the Commissioners.”
38. Under s 49 TMA as it has stood since 1 April 2009, there is no similar “reasonable excuse/no unreasonable delay” wording. There is instead an apparently wide ranging discretion to allow late appeals if “the tribunal gives permission”.
39. In relation to the PAYE determinations (Item 2) under regulation 80 of the Income Tax (Pay as you Earn) Regulations 2003 (“the PAYE Regs”), by virtue of regulation 80(5) the provisions of TMA in relation to appeals were made to apply as if the determinations were assessments to tax. The provisions of s 49 TMA (as it stood in September 2008 and as it currently stands) mentioned above therefore apply equally in the case of the PAYE determinations (Item 2).
40. In relation to the penalties for late filing of the Appellant’s personal tax return (Item 6), the position in relation to the time limit for appeal against the penalties is the same as the position in relation to the PAYE determinations (see [39]), as s 100B TMA brings in the same rules.
General points on the Tribunal’s discretion
41. In relation to Items 1 and 2, therefore, it appears that the Tribunal has a discretion, conferred by s 49(2) TMA, as to whether to permit a late appeal.
42. In relation to Item 6, the Tribunal has the same discretion in relation to the penalty notices for late filing of the Appellant’s personal 2005-06 self-assessment tax return.
43. Given that the Tribunal has a statutory discretion to permit a late appeal in relation to some of the matters which are the subject of the appeal, how should it go about exercising that discretion?
44. The starting point must be that the time limits are there for a good reason, and the Tribunal should not override them without an equally good reason. The Tribunal was referred to the case of Ogedegbe v HMRC Tax Tribunal reference LON/2009/0200, in which the President of the First-tier Tribunal (Tax Chamber) Sir Stephen Oliver said:
“While this Tribunal has got power to extend the time for making an appeal, this will only be granted exceptionally.”
45. The Tribunal notes that in that case, the Tribunal also considered the Appellant’s case to have very little prospect of succeeding.
Application of the Procedure Rules
46. The Tribunal has a general obligation to give effect to the overriding objective, expressed in rule 2 of the Procedure Rules, to deal with cases fairly and justly when it “exercises any power under these Rules” or “interprets any rule or practice direction” (rules 2(3)(a) and (b)). This includes “ensuring, so far as practicable, that the parties are able to participate fully in the proceedings” and “avoiding any delay, so far as compatible with proper consideration of the issues” (see rule 2(2)(c) and (e)). This general obligation must be borne in mind when the Tribunal exercises its case management power under rule 5 of the Procedure Rules (rule 2(3)(a)).
47. Rule 5(3) of the Procedure Rules provides:
“(3).... the Tribunal may by direction-
(a) extend or shorten the time for complying with any rule, practice direction or direction, unless such extension or shortening would conflict with a provision of another enactment setting down a time limit;
....”
If the language of rule 5 were interpreted on its own, the Tribunal would take the view that it had no application in relation to the question of whether permission for a late appeal should be granted – it is headed “Case management powers”, rule 5(1) confers a power on the Tribunal to “regulate its own procedure”, and rule 5(2) authorises the Tribunal to “give a direction in relation to the conduct or disposal of proceedings”. Rule 5 as a whole therefore appears on its face to be concerned only with how a case is dealt with once an appeal has actually been validly made, rather than whether a late appeal should be allowed to start at all. However rule 20 of the Procedure Rules (headed “Starting appeal proceedings”) states (emphasis added):
“(1) Where an enactment provides for a person to make or notify an appeal to the Tribunal, the appellant must start proceedings by sending or delivering a notice of appeal to the Tribunal within any time limit imposed by that enactment.
....
(4) If the appellant provides the notice of appeal to the Tribunal later than the time required by paragraph (1) or by an extension of time allowed under rule 5(3)(a) (power to extend time) –
(a) the notice of appeal must include a request for an extension of time and the reason why the notice of appeal was not provided in time; and
(b) unless the Tribunal extends time for the notice of appeal under rule 5(3)(a) (power to extend time) the Tribunal must not admit the notice of appeal.”
The emboldened words clearly indicate an intention on the part of the draftsman that an extension of time for bringing an appeal could be granted under (and only under) the authority of rule 5(3)(a), irrespective of the presence (or indeed absence) of any discretion to extend the time limits contained in the relevant statute.
48. The position therefore appears to be that the apparent statutory discretion under s 49 TMA to permit notice of appeal to be given out of time (which was amended to its current “wide ranging” form by the Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009, which was made on 18 January 2009 and came into force on 1 April 2009) is in legal terms overlaid by the “extension of time” provisions of the Procedure Rules (which were made on 5 February 2009 and also came into force on 1 April 2009) and must be applied in accordance with the overriding objective set out in the Procedure Rules.
49. The Tribunal expressly leaves open the question (which does not arise in this case) whether the Procedure Rules could empower the Tribunal to permit an extension of time for giving notice of appeal in a situation where no such extension of time is allowed under the statutory provision which lays down the time limit for appealing.
Application of the Civil Procedure Rules 1998
50. The Tribunal was also referred to the case of Leilunga v HMRC [2010] UKFTT 229 (TC), in which a previous Tribunal referred to the overriding objective mentioned above, but also took into account the provisions of rule 3.9(1) of the Civil Procedure Rules 1998. This Tribunal declines to follow that approach; in a situation where the Tribunal’s own Procedure Rules set out a general obligation to deal with cases fairly and justly, and set out a number of general principles for interpreting what is “fair and just”, we do not consider it appropriate also to pay specific regard to entirely unrelated rules which set out a non-exhaustive list of circumstances to be considered by courts in other applications.
The exercise of the Tribunal’s discretion to give permission for late notice of appeal –approach adopted by the Tribunal
51. In the light of the above, the Tribunal has adopted the approach that its discretion in permitting any part of the present appeal to proceed “out of time” is to be applied purely in line with its obligation under rule 2(3) of the Procedure Rules to deal with cases “fairly and justly”. In doing so, it has taken into account:
(1) the guidance given in the case of Ogedegbe (mentioned at [44]);
(2) the factors listed in rule 2(2) of the Procedure Rules; and
(3) (where relevant) the fact that the rules at the time when the decisions were first appealable would have required the Appellant to show a reasonable excuse for the delay in appealing and no unreasonable delay in bringing the appeal after the excuse ceased.
Decision on “out of time” discretion matters
52. In relation to Item 3, HMRC have accepted that the appeal should be accepted out of time and therefore the Tribunal is prepared to exercise its discretion to that effect without further consideration. In relation to Items 5 and 7, the Tribunal takes the view that since it has not been satisfied on the evidence that the appeal is being brought out of time, no exercise of its discretion is called for. In relation Items 1, 2 and 6, the Tribunal proceeds to consider whether it should grant permission for any of those appeals to be brought out of time, in which case HMRC’s application to strike out for want of jurisdiction would fail.
53. The Appellant has deliberately embarked on a course of non-cooperation and obstruction so far as HMRC are concerned and this weighs heavily against him in the balance when he is asking the Tribunal to exercise its discretion in his favour.
54. He has refused to provide access to bank account details, so cannot now fairly and justly say that he should be permitted an extension of time to produce them in order to demonstrate his case.
55. The appeals which he made in 2008 against the specific September 2008 NIC determinations concerning himself and his wife are quite clearly directed only to those determinations and show that he was fully aware of the appeal rights set out in them. This undermines any claim that he was not aware of his rights of appeal generally.
56. Even without that specific occurrence, the Tribunal simply does not believe that the Appellant was unaware of his rights of appeal. He has chosen to follow a very specific and premeditated course of action which implies a high level of understanding of the tax system as a whole.
57. His assertion that he can demonstrate one very obvious error in the NIC and PAYE determinations that have been raised (in relation to a student short-term employee) does not convince the Tribunal. Given his lack of cooperation with HMRC in the past, the Tribunal does not consider this to be a bona fide claim with merit which deserves further investigation so long after the determination was first made, given that he has only made this assertion for the first time in submissions to the Tribunal, when the determinations in question were issued in September 2008, nearly two years ago.
58. As to the Appellant’s argument that refusal of permission to appeal out of time would violate his rights under the Human Rights Act, the Tribunal considers that the Appellant has had perfectly adequate rights of appeal available to him but has chosen not to avail himself of them. He does not come to the Tribunal seeking the exercise of its discretion as a result of innocent and understandable confusion but following a concerted and deliberate campaign of delay and obstruction.
59. Any extension of time for commencing an appeal is, as the Tribunal has made clear in Ogedegbe, a departure from the normal rule. In a situation where an Appellant has deliberately embarked upon a course of delay and obstruction of HMRC, he can expect little sympathy from a Tribunal when he asks, so long after the strict deadline for appealing, for it to exercise its discretion in his favour.
60. Accordingly the Tribunal declines to exercise its discretion to permit a late notice of appeal in respect of the NIC and PAYE determinations (Items 1 and 2) or the late filing penalties (Item 6). It follows that the Tribunal has no jurisdiction to hear appeals in relation to these matters, and accordingly HMRC’s application to strike out the appeal, insofar as it relates to them, must succeed.
Summary of decision
61. The Appellant is granted permission to appeal out of time, insofar as his appeal relates to the decision issued on 30 September 2008 to register him compulsorily for VAT (Item 3). See [32] above.
62. It has not been established to the Tribunal’s satisfaction that the appeal has been notified out of time in relation to the following matters, the appeals of which are therefore to be entertained (subject to the condition specified in each case):
(1) the late filing penalties imposed in respect of the late filing of employer’s returns (P35/P14) for the years ended 5 April 2006, 2007 and 2008 (subject to the Appellant providing copies of all the disputed penalty notices and any covering letters detailing the reasons for their issue to HMRC and the Tribunal within 28 days of the date of release of this decision) (Item 5). See [33] above; and
(2) the penalty of £50 shown on HMRC’s self-assessment statement of the Appellant as created 17 March 2009 (subject to the Appellant providing a copy of the disputed penalty notice and any covering letter detailing the reasons for its issue to HMRC and the Tribunal within 28 days of the date of release of this decision) (Item 7). See [34] above.
63. The Appellant is refused permission to appeal out of time, insofar as his appeal relates to the following matters (see [60] above):
(1) The 11 Notices of Decision in respect of National Insurance Contributions issued to the Appellant and dated 19 September 2008 (two of which are superseded by the two amended Notices of Decision dated 12 January 2009) (Item 1);
(2) The three Notice of Regulation 80 Determinations issued to the Appellant and dated 19 September 2008 (Item 2); and
(3) The late filing penalties totalling £200 imposed in respect of the Appellant’s delay in submitting his self-assessment tax return for the year ended 5 April 2006 (Item 6).
64. HMRC’s application to strike out the various elements of the appeal is therefore determined as follows:
(1) NIC determinations dated 19 September 2008 /12 January 2009 (Item 1) – application to strike out the appeal granted, so far as the notice of appeal relates to this matter;
(2) PAYE Regulation 80 Determinations dated 19 September 2008 (Item 2) – application to strike out the appeal granted, so far as the notice of appeal relates to this matter;
(3) Decision to register the Appellant compulsorily for VAT (Item 3) – application to strike out the appeal refused by consent, permission to appeal out of time granted and notice of appeal therefore admitted insofar as it relates to this matter;
(4) VAT assessments (Item 4) – application to strike out the appeal granted on the basis that the Tribunal has no jurisdiction to hear an appeal against these assessments (however the assessments themselves are not to be enforced until such time as the appeal in relation to the compulsory VAT registration has been disposed of);
(5) late filing penalties imposed in respect of the late filing of employer’s returns (P35/P14) for the years ended 5 April 2006, 2007 and 2008 (Item 5) – application to strike out the appeal refused and notice of appeal therefore admitted insofar as it relates to this matter (subject to the Appellant providing copies of all the disputed penalty notices and any covering letters detailing the reasons for their issue to HMRC and the Tribunal within 28 days of the date of release of this decision);
(6) late filing penalties totalling £200 imposed in respect of the Appellant’s delay in submitting his self-assessment tax return for the year ended 5 April 2006 (Item 6) – application to strike out the appeal granted, so far as the notice of appeal relates to this matter;
(7) penalty of £50 dated 17 March 2009, apparently for non-compliance with an information or document production notice (Item 7) – application to strike out the appeal refused and notice of appeal therefore admitted insofar as it relates to this matter (subject to the Appellant providing a copy of the disputed penalty notice and any covering letter detailing the reasons for its issue to HMRC and the Tribunal within 28 days of the date of release of this decision);
(8) determination (in the sum of £4300) and related default surcharges (in the sum of £430) in respect of the Appellant’s self-assessment income tax liability for the year ended 5 April 2006 (Item 8) – application to strike out the appeal granted, so far as the notice of appeal relates to this matter, on the basis that the Tribunal has no jurisdiction to entertain such an appeal.
65. The appeal in relation to Item 3 may therefore proceed unconditionally, and the appeal in relation to Items 5 and 7 may proceed subject to the conditions stated respectively at [64(5)] and [64(7)]. All the remaining appeals are hereby struck out.
Directions
66. The Tribunal was asked to make some directions to facilitate the swift hearing of the remaining parts of the appeal. Accordingly, it directs as follows:
(1) The appeal is to be categorised as a standard case, covering Items 3, 5 and 7 together.
(2) HMRC will prepare their Statement of Case in relation to the outstanding matters and deliver a copy of it to the Appellant and the Tribunal so that it is received no later than 60 days after the date of release of this decision.
(3) Within 42 days after the date on which HMRC send their Statement of Case to the Appellant and the Tribunal, each party must send to the other party and to the Tribunal a list of documents comprising all documents upon which that party intends to rely or which that party intends to produce at the hearing and which that party either possesses, has the right to possess or has the right to take copies of.
(4) Upon receipt of the Statement of Case by the Tribunal, the appeal shall be referred back to a Tribunal Judge for further directions.
67. This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.