Carr v Revenue and Customs (INCOME TAX/CORPORATION TAX : Appeal) [2017] UKFTT 863 (TC)
FTT-Tax
Carr v Revenue and Customs (INCOME TAX/CORPORATION TAX : Appeal)
[2017] UKFTT 863 (TC) · 2017-08-03
[35]In BPP Holdings v Revenue And Customs [2016] EWCA Civ 121 , the Court of Appeal addressed the question whether “ the stricter approach to compliance with rules and directions made under the CPR as set out in Mitchell v News Group Newspapers Ltd [2014] 1 WLR 795 and Denton v TH White Ltd [2014] 1 WLR 3926 applies to cases in the tax tribunals ”. Noting that there were conflicting decisions of the Upper Tribunal, the Senior President of Tribunals (with whom Richards and Moore-Bick LJJ agreed) said at [16] that “ the stricter approach is the right approach ”. 36. At [37]-[38] it was added that:[37]There is nothing in the wording of the relevant rules that justifies either a different or particular approach in the tax tribunals of FtT and the UT to compliance or the efficient conduct of litigation at a proportionate cost. To put it plainly, there is nothing in the wording of the overriding objective of the tax tribunal rules that is inconsistent with the general legal policy described in Mitchell and Denton . As to that policy, I can detect no justification for a more relaxed approach to compliance with rules and directions in the tribunals and while I might commend the Civil Procedure Rules Committee for setting out the policy in such clear terms, it need hardly be said that the terms of the overriding objective in the tribunal rules likewise incorporate proportionality, cost and timeliness. It should not need to be said that a tribunal’s orders, rules and practice directions are to be complied with in like manner to a court's. If it needs to be said, I have now said it . A more relaxed approach to compliance in tribunals would run the risk that non-compliance with all orders including final orders would have to be tolerated on some rational basis. That is the wrong starting point. The correct starting point is compliance unless there is good reason to the contrary which should, where possible, be put in advance to the tribunal. The interests of justice are not just in terms of the effect on the parties in a particular case but also the impact of the non-compliance on the wider system including the time expended by the tribunal in getting HMRC to comply with a procedural obligation. Flexibility of process does not mean a shoddy attitude to delay or compliance by any party. 37. In BPP Holdings , the Court of Appeal was dealing with the consequences of non-compliance with a direction of the Tribunal, rather than with non-compliance with the time limit for bringing an appeal. However, Romasave found that the principles from the former translated across to the latter: see paragraph 33 above, and see by way of analogy R (Hysaj) v Secretary of State for the Home Department [2014] EWCA Civ 1633 , [2015] 1 WLR 2472 at [34]. 38. The approach in Denton requires the court or tribunal to address the issue of relief from sanctions in the following three stages:(i) identify and assess the seriousness and significance of the failure to comply with any rule, practice direction or court order which engages rule 3.9(1);(ii) consider why the default occurred;(iii) evaluate all the circumstances of the case, so as to enable the court to deal justly with the application including the factors in sub-paragraphs (a) and (b). 39. Relevant factors identified in the pre-April 2013 version of rule 3.9(1) CPR are (a) the interests of the administration of justice; (b) whether the application for relief has been made promptly; (c) whether the failure to comply was intentional; (d) whether there is a good explanation for the failure; (e) the extent to which the party in default has complied with other rules, practice directions, court orders and any relevant pre-action protocol; (f) whether the failure to comply was caused by the party or his legal representative; (g) whether the trial date or the likely trial date can still be met if relief is granted; (h) the effect which the failure to comply had on each party; and (i) the effect which the granting of relief would have on each party. 40. The post-April 2013 version of rule 3.9(1) CPR requires consideration of “all the circumstances of the case, so as to enable [the court or tribunal] 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.” Application for permission to bring a late appeal: the Appellant’s submissions 41. The Appellant’s notices of appeal state the following, in support of the application for a late appeal:
“Original appeal made direct to investigating officer on 23-6-16. Reply letter from officer received on 3-8-16 directing that appeal should be made to tribunal directly”
. Application for permission to bring a late appeal: the HMRC submissions 42. The offer of review was made by a letter dated 29 June 2016. The last day for notifying the appeal to Tribunal was therefore 29 July 2016. The Appeals were notified to Tribunal on 1 September 2016. The notification was therefore 33 days late. 43. The purpose of time limits is to give the parties the right to infer finality. Time limits imposed by law should generally be respected. To allow appeals beyond that period without good reason simply encourages those who wish to frustrate and delay HMRC in its administration of the Taxes Acts. A delay of 33 days is serious; it exceeds the period of the time limit itself. 44. The Appellant cannot rely on the fact that he originally told HMRC that he wanted to appeal to the Tribunal and that a reply from HMRC saying the appeal should be sent directly to the Tribunal was received only on 3 August 2016. The appeal process was explained in Form HMRC1 which had been sent to the Appellant with the pre-assessment and pre-penalty letters and was referred to in the assessment notices issued. The Appellant was professionally represented, and must have been aware of the correct procedures as he had previously notified appeals to the Tribunal against excise and VAT assessments arising out of the same facts. Reliance was placed on Barett v Revenue & Customs [2015] UKFTT 329 (TC) . 45. The Appellant’s appeals against VAT and excise assessments arising out of the same factual background were struck out due to the Appellant’s failure to comply with directions; he thus has a history of failure to cooperate with the Tribunal. In the present case, the Appellant has already failed to comply with the direction requiring further and better particulars of the grounds of appeal. HMRC are not aware of the Appellant having replied to any correspondence from the Tribunal since the appeal was submitted. There is no reason to believe the Appellant is going to start cooperating with proceedings. 46. In a case such as the present, the assessments “are prima facie right and remain right until the taxpayer shows that they are wrong and also shows positively what corrections should be made in order to make the assessments right or more nearly right”: Bi-Flex Caribbean Ltd v Board of Inland Revenue (1990) 63 TC 515, 522-3. If the application is granted it is not known upon what basis the Appellant will dispute the assessments and penalties. As the Appellant has provided no evidence or indicated any intention to provide any evidence with which to dispute the assessments, his case must necessarily be very weak. There are no coherent grounds of appeal. Application for permission to bring a late appeal: the Tribunal’s findings 47. The Appellant has not in this appeal sought to justify a late appeal or to challenge his liability to any of the assessments or penalties on the basis that he was not properly notified or served with the decisions against which he appeals (compare the main issue in Romasave ). The Tribunal accordingly proceeds on the basis that these were validly notified or served on the Appellant. 48. At the outset, the Tribunal considers the seriousness of the failure to comply with the time limit. By the time the appeal was submitted to the Tribunal, it was some 33 days late. The Tribunal accepts that this means that the Appellant took just over double the normal 30 day time limit to file the appeal. Such a delay cannot be considered trivial or de minimis . On the other hand, there is no limit to how long after the time limit an Appellant can seek to bring a late appeal, and this is not a case where the Appellant is seeking to appeal many months or even years after the time limit has expired. 49. As to the reasons for the delay, the Tribunal notes as follows. The HMRC letters to the Appellant dated 13 May 2016 and 17 June 2016 both state that they are enclosing form HMRC1, which sets out the time limit for appealing to the Tribunal and the fact that appeals must be made directly to the Tribunal. Furthermore, it is also the case that the Appellant’s agent at the time, GP Boyle & Company Limited, state on their letterheads that they are chartered accountants, and they should therefore have known the time limit and procedure for appealing to the Tribunal. The Tribunal is satisfied that no good reason has been established why the Appellant and his agent should have been unaware of the requirement for the appeal to be made within 30 days directly to the Tribunal, or why they should have been under any misapprehension that the procedure was to notify HMRC of the intention to appeal to the Tribunal. 50. Having said that, the fact remains that the Appellant’s agent did inform HMRC within the 30 day time limit, by letter dated 25 July 2016, that the Appellant did intend to bring a Tribunal appeal. HMRC thus did have notice of this intention within the 30 days. This is a matter that the Tribunal can take into account in weighing the circumstances as a whole. 51. However, in a letter dated 3 August 2016, HMRC infirmed the Appellant’s agent of the requirement to make the appeal directly to the Tribunal within 30 days of the decision appealed against. By that time, the appeal was already out of time. The 3 August 2016 HMRC letter did not, and could not, extend the time limit so as to give the Appellant an additional 30 days. Clearly, the Appellant’s agent, and therefore the Appellant, were on notice at that point of the need to justify to the Tribunal the period of any delay, and consequently, the need to keep the period of any delay to a minimum. 52. Despite this, the appeals to the Tribunal were not filed until 1 September 2016. This is nearly a month after the date of the HMRC letter. The content of the notices of appeal are minimalistic. The grounds of appeal effectively state nothing other than that the Appellant disagrees with the decisions appealed against. The part of the notices of appeal dealing with the reasons for delay state in effect no more than that the letter from HMRC stating that the appeal had to be made directly to the Tribunal was received only on 3 August 2016. 53. The Tribunal places great weight on the amount at stake for the Appellant in this proposed appeal. All else being equal, the Tribunal would be reluctant to deprive the Appellant of an opportunity to appeal against HMRC decisions when so much is at stake for the Appellant, when the period of delay is some 33 days. 54. However, that consideration cuts both ways. With so much at stake for the Appellant, it is to be expected that he would be diligent in pursuing his appeals. In cases where an Appellant’s conduct of an appeal is minimalistic and/or lackadaisical despite so much being at stake for the Appellant, the conclusion might be drawn that the Appellant is not serious about pursuing the appeal, and has no serious case with which to challenge the HMRC decision, but is simply using the appellate procedure to delay the consequences of the HMRC decision. One of the reasons why time limits exist for the bringing of appeals is to avoid such situations. 55. It is with that in mind that the Tribunal places particular weight on the failure of the Appellant to comply with the 8 October 2016 direction of the Tribunal, requiring the Appellant “to provide further and fuller grounds of appeal by no later than 28 days from the date of this Direction”. Given the very minimalistic statement of grounds of appeal in the notices of appeal, the issuing of this direction is understandable. In any event, it is a direction of the Tribunal that has been issued, and with which the Appellant is bound to comply. Not only did the Appellant not comply with it within the 28 day time limit set in the directions, but the Appellant has even today not complied with it by giving fuller grounds of appeal. Nor has the Appellant given reasons for failing to comply with it, let alone reasons for failing to comply with it within the time limit set by the Tribunal. Nor has the Appellant ever applied for an extension of time for complying with it, or indicated when the Appellant will be in a position to comply with it. As matters stand even today, no indication has been given of the detail of the Appellant’s proposed ground of appeal beyond the minimalist statement in his original notices of appeal. 56. There is has been no suggestion by the Appellant of any particular reasons why he could not have complied with the 8 October 2016 direction within the stipulated time limit. Nor has there been any suggestion by the Appellant of any particular reasons why he still could not have complied with the 8 October 2016 direction even after the stipulated time limit. 57. The Tribunal must view such a disregard of its directions very seriously. It must also view such a disregard of directions of this nature as pertinent to the application for permission to bring a late appeal. HMRC are entitled to notice of the grounds on which its decision are challenged, and these are required to be provided in the notice of appeal. Although the notices of appeal themselves may have been filed only 33 days late, the grounds of appeal have still not been provided. The period of delay in providing grounds of appeal is therefore a far more serious delay than just 33 days. The Tribunal finds that no good reason has been provided for the delay. 58. The Appellant has known since 16 November 2016 that HMRC was applying for a hearing to consider HMRC’s opposition to the late appeal, or alternatively, an HMRC application to strike out the appeal. Given this knowledge, and given the amount at stake, it would have been expected that the Appellant, if serious about these proceedings, would have responded to show that he has an arguable appeal, and to seek to persuade the Tribunal that despite the initial delay in filing the appeal, he proposes to engage diligently with the appeal process. This is all the more to be expected, given that he has been represented professionally. 59. HMRC have also drawn the Tribunal’s attention to Tribunal appeal numbers TC/2011/01839 and TC/2011/03025. These were appeals by the Appellant against assessments to VAT and excise duty. According to HMRC, the assessments in that case arose out of the same facts as the assessments appealed against in the present case, namely the discovery by HMRC of an illegal fuel laundering operation. A reading of a decision of the Tribunal released on 24 November 2016 appears to bear that out. In that decision, the Tribunal struck those appeals out, finding that there was “a complete lack of cogent reasons for the delay or failure to engage with HMRC or the Tribunal … and more particularly failure to comply with very clear Directions”. The Tribunal also found that there was “such a shoddy attitude to delay and compliance with a very clear direction of this Tribunal”. 60. The assessments appealed against in those other appeals totalled over £500,000, such that the stakes for the Appellant in those other appeals were also very high. 61. In all the circumstances, the Tribunal is led to conclude in the present case that the Appellant has not demonstrated that he has a serious case to bring by way of challenge to the HMRC decisions to which the present appeal relates, or that he intends to engage seriously in substantive appellate proceedings. Given that the burden is on the Appellant to establish grounds for a late appeal, the Tribunal concludes that the Appellant does not have a serious case, and does not intend to engage diligently with the proceedings. 62. The Tribunal takes into account that there is no evidence of any specific prejudice to HMRC if the application were granted, beyond the inevitable consequence that they will have to litigate a matter that it would otherwise be entitled to regard as closed. There has been no suggestion, for instance, that the conduct of these proceedings would take longer or cost more as a result of the delay. 63. In all the circumstances, justification for a late appeal has not been established. The HMRC application to strike out the appeal 64. Given the Tribunal’s conclusion above, the HMRC application to strike out the appeals does not arise for consideration. Conclusion 65. Having regard to all the circumstances and the case law referred to in paragraph above, the Tribunal finds that this application for permission to bring a late appeal should be refused. 66. 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. DR CHRISTOPHER STAKER TRIBUNAL JUDGE RELEASE DATE: 05 DECEMBER 2017