Ashraf v Revenue and Customs (INCOME TAX/CORPORATION TAX : Appeal) [2016] UKFTT 453 (TC)
FTT-Tax
Ashraf v Revenue and Customs (INCOME TAX/CORPORATION TAX : Appeal)
[2016] UKFTT 453 (TC) · 2016-03-04
[6]“ 6. It is clear that there must be some request to HMRC for it to agree to a late appeal. The jurisdiction of the tribunal to give permission under Section 49(2)(b) only arises where HMRC does not agree. ” 38. On the facts of that case I was satisfied that there had been an oral request to HMRC for their agreement for the taxpayer to give a late appeal. A similar issue arose before the First-tier Tribunal (Judge Anne Redston and Ms Helen Myerscough) in Mathew v Commissioners for HM Revenue & Customs [2015] UKFTT 1397 (TC) , where the Tribunal stated as follows:[46]“ 46. We explained to the parties that the Tribunal had no jurisdiction to hear an appeal made by way of a direct application to the Tribunal. We could only hear an appeal which had been first made to HMRC. The parties asked for a short adjournment which we granted.[47]After the adjournment, the parties informed us that Mr Mathew had made an oral appeal to [the Revenue Officer]. Although the statute provided that the appeal be in writing, HMRC had used their care and management powers to accept the oral appeal. They had also accepted that Mr Mathew had a reasonable excuse for making the appeals late. ” 39. The position in the present case is that Mr Ashraf has lodged a notice of appeal to the Tribunal. In box 6 he has requested permission to make or notify the appeal outside the relevant time limit. The Tribunal in accordance with its ordinary procedures notified HMRC that it had received the notice of appeal and asked whether they objected to the application for permission to make a late appeal. HMRC did object to the merits of that application and as a result the present hearing was listed to determine that application. 40. There is no evidence that Mr Ashraf or Mr Ahmad made any request to HMRC, whether orally or in writing, for HMRC’s agreement to a late notice of appeal prior to submitting the notice of appeal to the tribunal on 1 December 2015. In those circumstances I accept that the Tribunal does not have jurisdiction to grant permission for Mr Ashraf to notify a late appeal to HMRC. 41. The cases referred to above were not cited to me during the hearing and no consideration was given to whether HMRC would be prepared to accept an oral request during the course of the hearing to cure the issues relating to jurisdiction, as appears to have happened in Mathew v HM Revenue & Customs. HMRC have made it clear that they would not agree to any such request but at least the jurisdiction of the Tribunal would have been engaged. 42. It seems to me that the only way forward would involve Mr Ashraf now making a request to HMRC for their agreement to him bringing a late appeal which would no doubt be refused. Mr Ashraf would then be entitled to make his application to the Tribunal and there would be a re-hearing of the merits of that application before the Tribunal. 43. I have heard all the arguments in relation to the merits of Mr Ashraf’s application and so I do not propose to let the matter rest there. In case I am wrong in relation to jurisdiction I will set out my decision on the merits of Mr Ashraf’s application to the Tribunal for permission to give a late appeal to HMRC. 44. The approach to applications to extend time was considered by the Upper Tribunal in Data Select Ltd v HMRC [2012] UKUT 187 (TCC) where Morgan J stated as follows: “34. … Applications for extensions of time limits of various kinds are commonplace and the approach to be adopted is well established. 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. 35. The Court of Appeal has held that, when considering an application for an extension of time for an appeal to the Court of Appeal, it will usually be helpful to consider the overriding objective in CPR r 1.1 and the checklist of matters set out in CPR r 3.9: see Sayers v Clarke Walker [2002] 1 WLR 3095 ; Smith v Brough [2005] EWCA Civ 261 . That approach has been adopted in relation to an application for an extension of the time to appeal from the VAT & Duties Tribunal to the High Court: see Revenue and Customs Commissioners v Church of Scientology Religious Education College Inc [2007] STC 1196 . 36. I was also shown a number of decisions of the FTT which have adopted the same approach of considering the overriding objective and the matters listed in CPR r 3.9. Some tribunals have also applied the helpful general guidance given by Lord Drummond Young in Advocate General for Scotland v General Commissioners for Aberdeen City [2006] STC 1218 at [23]-[24] which is in line with what I have said above. 37. In my judgment, the approach of considering the overriding objective and all the circumstances of the case, including the matters listed in CPR r 3.9, is the correct approach to adopt in relation to an application to extend time pursuant to section 83G(6) of VATA. The general comments in the above cases will also be found helpful in many other cases. Some of the above cases stress the importance of finality in litigation. Those remarks are of particular relevance where the application concerns an intended appeal against a judicial decision. The particular comments about finality in litigation are not directly applicable where the application concerns an intended appeal against a determination by HMRC, where there has been no judicial decision as to the position. Nonetheless, those comments stress the desirability of not re-opening matters after a lengthy interval where one or both parties were entitled to assume that matters had been finally fixed and settled and that point applies to an appeal against a determination by HMRC as it does to appeals against a judicial decision. 45. Rule 3.9 of the Civil Procedure Rules (“CPR”) has since been amended and now reads as follows: “ (1) On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need – (a) For litigation to be conducted efficiently and at proportionate cost; and (b) To enforce compliance with rules, practice directions and orders. ” 46. Data Select is a decision of the Upper Tribunal and it is binding upon me. I must take into account all the circumstances including the overriding objective of dealing with cases fairly and justly and ask myself: (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? (5) What will be the consequences for the parties of a refusal to extend time? 47. I also have regard to the decision of the Court of Appeal in BPP Holdings Limited v Commissioners for HM Revenue & Customs [2016] EWCA Civ 121 which was concerned with the approach of this Tribunal to non-compliance with Tribunal Rules and directions. It referred to the application by analogy of CPR 3.9 in Data Select although it did not consider the Upper Tribunal’s decision in detail. (i) Purpose of the Time Limit 48. The purpose of the time limit of 30 days is clearly to promote finality. I note that the 30 day time limit is relatively short. I infer that is because in most cases, including the present case, the decision does not come out of the blue. The Assessments and the Penalties followed detailed enquiries over a period of nearly 2 years. 49. Morgan J in Data Select stressed the desirability of not re-opening matters after a lengthy interval where one or both parties were entitled to assume that matters had been finally fixed and settled. In the present case I am satisfied that HMRC were entitled to assume after 14 November 2013 that the Assessments and the Penalties had become final. (ii) The period of delay 50. The period of the delay in the present case is from November 2013, when the time for appealing the second set of penalties expired, to December 2015. That is a period of over 2 years which on any view is an extremely long delay. Even if the relevant period of delay is November 2013 to July 2015 the delay is still extremely long. (iii) Explanation for the Delay 51. Mr Ashraf told me that he did not understand the documents that he had been sent by HMRC and that he had had to read them again and again. He was referring to the calculation of the liability. I do not accept that was the case in relation to appeal rights. He is an intelligent man who had accountants acting for him. However I do accept that throughout the period of 2 years he was struggling to work and deal with various family issues as described above. It is likely and I find as a fact that the pressure of work and family issues meant that Mr Ashraf did not give the Assessments and the Penalties the priority which they demanded. Essentially he buried his head in the sand. 52. Mr Ashraf told me that he had asked Mr Ahmad to attend the tribunal hearing of this application but Mr Ahmad told him that he should just go on his own. Whether or not that is a fair reflection of discussions between Mr Ashraf and Mr Ahmad I am left in the position that there is no explanation for the period of delay between November 2013 and December 2015. I do not accept that Mr Ashraf was entitled to proceed on the basis that the original notice of appeal had been re-submitted. He ought to have sought confirmation from the Tribunal that his appeal had been accepted by the Tribunal or least discussed the position with Mr Ahmad. 53. Even taking into account that a notice of appeal was lodged with the Tribunal in July 2015 there was a delay of some 18 months, and no explanation as to what happened between July 2015 and December 2015. Nor was there any explanation as to why the notice of appeal lodged with the Tribunal in September 2013 was not re-submitted. (iv) Consequences for the Parties of Extending Time 54. If I give permission for Mr Ashraf to notify the appeal to HMRC then HMRC will lose the finality which from November 2013 onwards they were entitled to expect. Mr Jones did not rely on any specific prejudice to HMRC beyond that. In particular he did not suggest that the evidence, documentary or oral, would have been affected by the period of delay. Having said that it is not in dispute that HMRC instigated debt recovery procedures to enforce the debt. 55. If permission is granted then the Appellant will have the opportunity to pursue his arguments. The issues would be determined on their merits. The sum in dispute is very significant to Mr Ashraf. (v) Consequences for the Parties of Refusing to Extend Time 56. The effect of refusing permission would be that Mr Ashraf would lose the opportunity to pursue his appeal on the merits. Whilst Mr Ahmad had told HMRC that he could not dispute the position set out by HMRC in the Assessments, Mr Ashraf maintained that the Assessments were highly excessive. I am not in a position to readily assess the merits of Mr Ashraf’s proposed appeal, but I do take into account Mr Ahmad’s view of the merits. Having said that I shall assume that Mr Ashraf has at least some prospect of success and would lose the opportunity to challenge the Assessments and the Penalties if time is not extended. (vi) Generally 57. I must balance all the factors set out above, in the context of the circumstances as a whole. Having done so, I am not persuaded that the time for appealing the Assessments and the Penalties should be extended. In particular the length of the delay and the absence of any good reason for that delay outweigh the other factors described above. In my view the overriding objective is served by refusing the application. Conclusion 58. For the reasons given above, both in relation to jurisdiction and on the merits, I refuse Mr Ashraf’s application for permission to notify a late appeal. In the circumstances I must strike out the appeal. 59. 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. JONATHAN CANNAN TRIBUNAL JUDGE RELEASE DATE: 27 JUNE 2016