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Lloyd v Revenue and Customs (PROCEDURE - HMRC application to extend time for filing statement of case) [2025] UKFTT 563 (TC) (22 May 2025)
URL: http://www.bailii.org/uk/cases/UKFTT/TC/2025/TC09527.html
Cite as:
[2025] UKFTT 563 (TC)
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Neutral Citation Number: [2025] UKFTT 563 (TC) |
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Case Number: TC09527
Appeal reference: TC/2024/04202 |
FIRST-TIER TRIBUNAL
TAX CHAMBER
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In public by remote video hearing
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Heard On: 13 May 2025 Judgment Date: 22 May 2025 |
B e f o r e :
TRIBUNAL JUDGE NIGEL POPPLEWELL
____________________
Between:
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SIMON LLOYD
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Appellant
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- and -
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THE COMMISSIONERS FOR HIS MAJESTY'S REVENUE AND CUSTOMS
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Respondents
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____________________
Representation:
For the Appellant: In person
For the Respondents: Miss Rose Grainger litigator of HM Revenue and Customs' Solicitor's Office
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HTML VERSION OF DECISION
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Crown Copyright ©
PROCEDURE – HMRC application to extend time for filing statement of case – application granted
DECISION
INTRODUCTION
- This decision deals with a case management application made by HMRC on 21 February 2025 for a 14 day extension of time to provide their statement of case ("the application").
BACKGROUND FACTS
- On 25 July 2024, the appellant submitted a notice of appeal against decisions made by HMRC in relation to the tax years 2019/2020-2021/2022 by which they issued closure notices (the first and third years) and a discovery assessment (the second year) assessing the appellant to an additional amount to income tax in a total amount of approximately £84,000. These were issued by HMRC to remove trade loss relief claimed by the appellant in relation to his participation in Tectona syndicates.
- The appeal was allocated to the standard category and in a letter dated 25 October 2024, the tribunal directed HMRC to provide their statement of case within 60 days from that date.
- During November 2024 the parties exchanged correspondence and had a meeting. Discussions were had about whether the appellant's appeal should be stayed behind other similar appeals. The appellant expressed the view that he wanted his case to be dealt with expeditiously. He also said that he wanted to send HMRC further information which was relevant to his case and agreed to do so via the Secure Data Exchange System ("SDES").
- The appellant had difficulty signing up to SDES.
- On 11 December 2024, HMRC emailed the appellant seeking a 60 day extension to the deadline by when they had to submit their statement of case.
- In an email dated 17 December 2024, the appellant confirmed that he consented to HMRC's application for an extension of time until 22 February 2025 to submit their statement of case.
- On 18 December 2024, HMRC made a formal application for such an extension to the tribunal. No response was received from the tribunal by either party.
- Between 13 January 2025 and 20 January 2025, the appellant uploaded documents onto the SDES system. More than 70 documents were received by HMRC in this way.
- On 29 January 2025, HMRC sent instructions to counsel to advise and to draft the statement of case. The draft statement of case was received by HMRC on 18 February 2025 which included additional advice. It was HMRC's view that this required input from their internal policy technical team.
- It seemed clear to HMRC that further time was required and so on 21 February 2025, HMRC made the application. The application was for a 14 day extension to the previous deadline, thus requiring them to submit their statement of case by 10 March 2025.
- HMRC sent a copy of their statement of case to the tribunal and to the appellant on 4 March 2025.
- In a letter dated 24 February 2025 to the tribunal, the appellant objected to the application.
- On 14 April 2025, HMRC sent their list of documents to the tribunal and to the appellant.
RULE 2
- The overriding objective in rule 2 ("rule 2") of the FTT Rules ("the rules" each a "rule") is to enable the tribunal to deal with cases fairly and justly. This 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.
DISCUSSION
Submissions
- In summary Miss Grainger submitted as follows:
(a) Given the agreed extension of time to which the appellant had originally consented, the statement of case had to be submitted by 24 February 2025. The application was made on 21 February 2025. It was therefore made in time so this is not a relief from sanctions case.
(b) The relevant principles are set out in the case of Transports Tresserras v HMRC [2024] UKFTT 538.
(c) In the alternative, if this is a relief from sanctions case, the principles are set out in the case of William Martland v HMRC [2018] UKUT 178 ("Martland").
(d) In either case however, it is both in the interests of justice, and in accordance with the overriding objective in rule 2, to grant the application. There are good reasons for the need for the further extension. It was only once the appellant uploaded the relevant evidence onto the SDES system that HMRC were able to fully understand, and deal head-on with the appellant's case. This needed to be reflected in the statement of case and instructions to draft this was sent to counsel on 29 January 2025. This was very shortly after the appellant's documents had been received, the last of these being on 20 January 2025.
(e) It is in the interests of the smooth running of this appeal that the statement of case dealt fully with all aspects of the appellant's case, and that was not possible until HMRC had received all of the appellant's evidence.
(f) Counsel did not respond until 18 February 2025. The advice which accompanied the draft statement of case required further input from HMRC's technical division. This too was required to finalise the statement of case.
(g) Accordingly, in HMRC's view a further extension was required. The application was made on 21 February 2025.
(h) The statement of case was actually served on 4 March 2025. The appellant would not be prejudiced if the application is granted. HMRC would be severely prejudiced.
- In summary Mr Lloyd submitted as follows:
(1) He was happy to grant the first extension of time, but he thought the second extension of time reflected in the application was unjustifiable. This was particularly the case in light of a telephone conversation he had had on 13 February 2025, with Miss Grainger who had told him that HMRC were on track to meet the 24 February 2025 deadline.
(2) He does not want any further delay. His teak business is just one of his businesses. He wants to conclude the dispute with HMRC as quickly as possible and concentrate on running his businesses. He does not want to be part of any class action.
(3) He also wants clarity on the current timetable for this appeal.
My view
- I agree with Miss Grainger that this is not a relief from sanctions case. Case law shows that the application for an extension of time to take any particular step in litigation is not an application for relief from sanctions provided that the applicant files his application notice before expiry of the permitted time period. Here the original 60 day time period had been extended by agreement until 24 February 2025 (the additional 60 days consensual stay expired on that date as the 60 days strictly expired on 22 February 2025 which was a Saturday, and the tribunal rules provide that the deadline date is the next working day, namely 24 February 2025).
- Under rule 2, I must deal with the application fairly and justly. It is clear to me that there has been no culpable delay on the part of HMRC. It was proper and sensible for them to await the appellant's evidence before drafting their statement of case. This was finally submitted to them via SDES on 20 January 2025. HMRC instructed counsel within nine days. Counsel's response on 18 February 2025 meant that further internal advice needed to be taken before the statement of case could be finalised.
- It seems wholly appropriate to me that HMRC sought a further short extension of 14 days to cater for this.
- And as things turned out, they were able to serve their statement of case on the appellant on 4 March 2025.
- It is important for the smooth running of an appeal that the parties are able to participate fully in proceedings. A crucial element of that is that each party should understand the other parties' case. Without a properly drafted and comprehensive statement of case, the appellant would not be able to understand the basis on which HMRC have made their decisions to assess him for a substantial amount of additional income tax, and the reasons for that. Having received the statement of case, he is now absolutely clear what HMRC's position is and is able to deal with it in a comprehensive manner.
- I do not believe he is prejudiced by receiving the statement of case on 4 March 2025 rather than on 24 February 2025.
- And it would certainly not be fair and just to sanction HMRC by, for example, barring them from further participation in this appeal, because they have submitted their statement of case on the former date rather than the latter.
- As Mr Lloyd colourfully described it, this is a foot fault by HMRC and does not warrant a draconian sanction.
- Indeed, if I were to allow the application and permit the appeal to continue without the benefit to both the appellant and the tribunal, of a comprehensive statement of case, not only would the smooth conduct of the appeal be seriously jeopardised, but the appellant will be prejudiced in that he would not fully understand the case which HMRC are levelling against him. And would therefore be unable to prepare his case to oppose it.
- I can understand the appellant's irritation in being told by Miss Grainger on 13 February that HMRC anticipated that they should be able to make the agreed deadline, and then being told shortly before the deadline expired that they were not able to do so. But in fairness to Miss Grainger, at that stage it was an honestly made and reasonable comment. At that time, she was not to know that when counsel responded, that response would include advice that required further internal consideration by HMRC.
- Even if this was a relief from sanctions case, I would still allow the application. The first stage of the Martland test is to determine the length of the delay. This is the difference between 24 February 2025 and 4 March 2025, some 5 working days. I do not believe this to be serious or substantial, but I still move on to consider the reasons for it. I have recorded those above.
- Finally, I need to conduct an evaluation of all the circumstances balancing those reasons with the prejudice caused to either party by granting or refusing the application. When doing this I must take into account that litigation should be conducted efficiently and at proportionate cost and that time limits should be respected.
- The balance of prejudice clearly weighs in favour of granting the application. The appellant is not, and has not been, prejudiced. HMRC will be considerably prejudiced if I was to deny the application. The tribunal, too, will be prejudiced as it will be considerably more difficult to deal with the appeal in accordance with rule 2. The reasons given by HMRC are good ones, and the delay was short.
- I fully appreciate the appellant's position. Indeed, I discussed this with him at the hearing. He wants to resolve this dispute as quickly as possible. He does not want his appeal to be lumped in with other users of the syndicates. He wants his appeal to be determined on his particular facts and does not want to be part of any class action. He also wants to understand the timetable for the further conduct of this appeal.
- I will therefore give directions for the further conduct of his appeal under separate cover.
DECISION
- I allow the application.
RIGHT TO APPLY FOR PERMISSION TO APPEAL
- 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.
Release date: 22nd May 2025