Shoeb Choudhury v The Commissioners for HMRC [2025] UKFTT 1274 (TC)

[2025] UKFTT 01274 (TC)Case No TC09675
FIRST-TIER TRIBUNAL
TAX CHAMBER
Hearing Heard on: 23 April 2025Date Judgment date: 24 October 2025
By remote video hearing
Appeal reference: TC/2023/09962
Application for permission to make a late appeal to the Tribunal pursuant to section 83G(6) of the Value Added Tax Act 1994 – three stage approach in Martland applied – Katib applied – Medpro approach to weight to be given to ‘compliance’ factors taken stricter Martland approach undertaken as a cross-check – permission refused
Before
TRIBUNAL JUDGE ROSA PETTIFER
Between
SHOEB CHOUDHURYAppellantTHE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMSRespondentMr Huw Shepheard of counsel, instructed by H Accountancy Ltd for AppellantMrs Heather Sercombe litigator of HM Revenue and Customs’ Solicitor’s Office for RespondentsDECISION

Introduction

[1]With the consent of the parties, the hearing was held remotely by video over Microsoft Teams. A face to face hearing was not held because it was more practical for the parties to attend remotely. I was referred to an electronic hearing bundle of 306 pages that contained the Notice of Appeal, HMRC’s Notice of Objection to Late Appeal, correspondence, documents, legislation and authorities.[2]Prior notice of the hearing had been published on the gov.uk website, with information about how representatives of the media or members of the public could apply to join the hearing remotely in order to observe the proceedings. As such, the hearing was held in public.[3]St Hendericks Recycling Ltd (the ‘Company’) was issued with a s69C Value Added Tax Act 1994 (‘s69C’) penalty on 20 September 2021 of £127, 806.30 (the ‘Company Penalty’). On 14 February 2022 HMRC’s statutory review upheld various decisions including the Company Penalty (the ‘Company Review’).[4]The Appellant was issued with a s69D Value Added Tax Act 1994 (‘s69D’) penalty of £127,806.30 to his home address on 26 January 2022 (the ‘Director Penalty’). On 7 March 2022 HMRC’s statutory review upheld the Director Penalty (the ‘Director Penalty Review’).[5]This decision concerns an application by the Appellant for permission to make a late appeal against the Director Penalty Review.[6]For the reasons set out below, the Appellant’s application is refused.

preliminary issue

[7]At the start of the hearing there was some uncertainty about whether the hearing was to consider permission to make a late appeal in relation to the Director Penalty Review only or both the Director Penalty Review and the part of the Company Review that related to the Company Penalty. Mr Shepheard explained that the Company was in liquidation and was not represented by anybody at the hearing. It was also not clear whether the Company’s liquidator had had notice of the hearing. Consequently, with agreement of the parties, I proceeded to hear the Appellant’s application for permission to make a late appeal in relation to the Director Penalty Review only.

background

[8]I was not provided with any written evidence, nor did I hear any oral evidence from either party. Consequently, the following finding of facts are made from the documents provided in the hearing bundle.[9]The Company’s effective date of VAT registration was 20 November 2019. The Company’s business activity was described as: …trading and recycling metals plastics and other materials.[10]Both the Company and the Appellant corresponded with HMRC, predominantly during 2020 and 2022, about numerous issues to do with the Company’s VAT registration, supply chains, VAT returns and the Company’s entitlement to deduct input tax. For present purposes the relevant facts are:(1) The Company was de-registered for VAT from 30 March 2021(2) On 10 September 2021 HMRC wrote to the Company issuing a VAT assessment of £176,489 for the period 07/20 and £254,159 (later amended to £249,532) for the period 10/20 (the ‘Company Assessment’).(3) On 20 September 2021 HMRC wrote to the Company issuing the Company Penalty. The amount of the Company Penalty is £127,806.30.(4) HMRC wrote to the Company on 25 October 2021, explaining that it had sent notice of a penalty to the Appellant pursuant to s69D. On 26 January 2022 HMRC also wrote to the Appellant’s home address enclosing a ‘Company officer liability decision notice’, setting out that the Appellant was being issued with a penalty equal to the Company Penalty (£127,806.30) pursuant to s69D. The hearing bundle did not contain any letter dated 25 October 2021 to the Appellant at his home address, and HMRC did not explain why the 26 January 2022 letter had also been sent. Based on the information before me I consider that the 26 January 2022 letter to the Appellant is the notification of the s69D penalty (that is why above I have defined this letter as the Director Penalty).(5) Following a request from the Company dated 13 December 2021, on 14 February 2022 the Company Review upheld: the deregistration of the Company; the Company Assessment and the Company Penalty.(6) On 7 March 2022 the Director Penalty Review upheld the Director Penalty. The Director Penalty Review says that it was undertaken in response to an email dated 1 February 2022 from the Appellant (a copy of that email was not in the bundle either). However, there was nothing before me nor did either party suggest that the request for the statutory review of the Director Penalty was late.(7) The Director Penalty review was sent to the Appellant’s home address. The Director Penalty Review relevantly provides: If you do not agree with my conclusion you can ask an Independent tribunal to decide the matter. The statutory appeal period is 30 days from the date of this letter. You can find out how to do this on the tribunals service website https://www.gov.uk/tax-trlbunal/appea/-tcrtribunal or you can telephone them on 0300 123 1024 (8:30am - 5:00pm). If you choose to appeal to HM Courts and Tribunal Service, you will need to attach a copy of this letter with your appeal. If you do not, then they may reject your appeal. You can find further information about appeals and reviews on the GOV.UK website at https://www.gov.uk/tax-appeals. You can apply for Alternative Dispute Resolution, or ADR. ADR may help to clarify the issues and resolve the dispute without the need for further litigation. You would need to make an application for ADR, which should include any further information that you do not think has been taken into account so far, and this would be considered by a panel who would decide whether this approach Is appropriate in your case. I enclose HM RC's factsheet FS21 which tells you about this process and you can find further details online at: https://www.gov.uk/guidance/tax-disputes-alternatlve-dispute-resolution-adr Including how to apply for ADR. Your statutory appeal rights are not affected by an application for ADR; however, if you do decide to apply you must still notify your appeal to the tribunal within the time limit mentioned above. This is essential to ensure that your appeal remains open. When notifying your appeal to the tribunal, you should tell them that you have applied to HMRC for ADR.(8) HMRC’s ADR team wrote to the Company on 31 May 2023, that letter: (a) Refers to an application for ADR dated 4 May 2023 (this application was not included in the hearing bundle). (b) Explains that ADR could not proceed as there had not been an appeal made to the Tribunal.[11]The Notice of Appeal is dated 11 September 2023, it sets out the reasons why the appeal was late as follows: I used NXG accountants and I was certain that they applied to the first tier tax tier tribunal [sic] and they applied for an alternate dispute resolution. Sometime had passed then I used H Accountancy as I had no response. They also applied for an ADR under the assumption an application had been sent to the first tier tax tribunal. On phoning HMRC on the 25th August 2023 I realised an application had not been received. I am resubmitting the application I believe it is late however I believe I have a 100% success rate in challenging the section69C and section 69D penalties. I truly hope the judge allows this application to be successful as I worked on a monthly basis with HMRC who guided me every step of the way only to disallow my input VAT and have been very unfair with me.[12]HMRC’S notice of objection explains that there is no record of the phone call of 25 August 2023 but does not dispute that it occurred.[13]None of the correspondence in the hearing bundle (including the Notice of Appeal) is from NXG Accountants (‘NXG’) or H Accountancy Ltd (‘H Accountancy’).[14]Mr Shepheard confirmed the Appellant’s home address during the hearing. the law Legislation – time limits for appealing

the law

[15]s83(1)(nb) Value Added Tax Act 1994 (‘VATA’) provides a right of appeal against a s69D penalty.[16]s83G(3)(b) VATA provides that where a statutory review is undertaken pursuant to s83A and s83C VATA (as it was in this case) an appeal must be made within 30 days of the date of the document notifying the conclusions of the review (here the Director Penalty Review).[17]s83G(6) permits an appeal to be brought after the 30 day time limit in s83G(3)(b) if the tribunal gives permission to do so. This is a broad discretion. Case law on permission for late appeals Martland v HMRC [2018] UKUT 178 (TCC)

Case law on permission for late appeals

[18]The Upper Tribunal provided guidance on the correct test for the First-tier Tribunal to apply when considering an application for a permission to make a late appeal in Martland v HMRC [2018] UKUT 178 (TCC) at [23] – [47] (‘Martland’). The key passage is at [44] of Martland: When the FTT is considering applications for permission to appeal out of time, therefore, it must be remembered that the starting point is that permission should not be granted unless the FTT is satisfied on balance that it should be. In considering that question, we consider the FTT can usefully follow the three-stage process set out in Denton:(1) Establish the length of the delay. If it was very short (which would, in the absence of unusual circumstances, equate to the breach being “neither serious nor significant”), then the FTT “is unlikely to need to spend much time on the second and third stages” – though this should not be taken to mean that applications can be granted for very short delays without even moving on to a consideration of those stages.(2) The reason (or reasons) why the default occurred should be established.(3) The FTT can then move onto its evaluation of “all the circumstances of the case”. This will involve a balancing exercise which will essentially assess the merits of the reason(s) given for the delay and the prejudice which would be caused to both parties by granting or refusing permission.[19]The Upper Tribunal goes on at paragraph [45] of Martland to highlight the need for the balancing exercise to take into account the particular importance of the need for litigation to be conducted efficiently and at proportionate cost, and for statutory time limits to be respected. In HMRC v Katib [2019] UKUT 189 (TCC) (‘Katib’) the Upper Tribunalat [17] emphasised that the need to respect statutory time limits is a matter of particular importance to the exercise of the First-tier Tribunal’s discretion as to whether to admit a late appeal. Although see further discussion below on this point.[20]The Upper Tribunal in Martland at [46] is discussing the role that the merits of an appeal may have when conducting the balancing act or ‘third stage’: In doing so, the FTT can have regard to any obvious strength or weakness of the applicant’s case; this goes to the question of prejudice – there is obviously much greater prejudice for an applicant to lose the opportunity of putting forward a really strong case than a very weak one. It is important however that this should not descend into a detailed analysis of the underlying merits of the appeal. In Hysaj, Moore-Bick LJ said this at [46]:
“If applications for extensions of time are allowed to develop into disputes about the merits of the substantive appeal, they will occupy a great deal of time and lead to the parties’ incurring substantial costs. In most cases the merits of the appeal will have little to do with whether it is appropriate to grant an extension of time. Only in those cases where the court can see without much investigation that the grounds of appeal are either very strong or very weak will the merits have a significant part to play when it comes to balancing the various factors that have to be considered at stage three of the process. In most cases the court should decline to embark on an investigation of the merits and firmly discourage argument directed to them.”
Hysaj was in fact three cases, all concerned with compliance with time limits laid down by rules of the court in the context of existing proceedings. It was therefore different in an important respect from the present appeal, which concerns an application for permission to notify an appeal out of time – permission which, if granted, founds the very jurisdiction of the FTT to consider the appeal (see [18] above). It is clear that if an applicant’s appeal is hopeless in any event, then it would not be in the interests of justice for permission to be granted so that the FTT’s time is then wasted on an appeal which is doomed to fail. However, that is rarely the case. More often, the appeal will have some merit. Where that is the case, it is important that the FTT at least considers in outline the arguments which the applicant wishes to put forward and the respondents’ reply to them. This is not so that it can carry out a detailed evaluation of the case, but so that it can form a general impression of its strength or weakness to weigh in the balance. To that limited extent, an applicant should be afforded the opportunity to persuade the FTT that the merits of the appeal are on the face of it overwhelmingly in his/her favour and the respondents the corresponding opportunity to point out the weakness of the applicant’s case. In considering this point, the FTT should be very wary of taking into account evidence which is in dispute and should not do so unless there are exceptional circumstances.

The rule in HMRC v Katib [2019] UKUT 189

[21]In PBS Wholesale Limited and others v HMRC [2025] UKFTT 210 (TC) (‘PBS’) Judge Sinfield relevantly discussed and applied the Upper Tribunal’s decision in HMRC v Katib [2019] UKUT 189 (TCC) (‘Katib’): 19. First, as recognised by Mr White, I am bound by the UT's decision in HMRC v Katib [2019] UKUT 189 ('Katib'). At [49], the UT stated (emphasis in original):
"We accept HMRC's general point that, in most cases, when the FTT is considering an application for permission to make a late appeal, failings by a litigant's advisers should be regarded as failings of the litigant … Therefore, in most cases, a litigant seeking permission to make a late appeal on the grounds that previous advisers were deficient will face an uphill task and should expect to provide a full account of exchanges and communications with those advisers. It will often be impossible to give the requisite full account without waiving privilege." [49] 20. The UT stated in [54] that "when considering applications for permission to make a late appeal, failures by a litigant's adviser should generally be treated as failures by the litigant"
. In Katib, the UT had to consider the extent to which reliance on an adviser was a justifiable reason for failing to make an appeal in time. In that case, the adviser did not provide competent advice to Mr Katib, misled him as to what steps were being taken to appeal and failed to appeal on Mr Katib's behalf. On the facts of the case, the UT concluded that failings by the appellant's agent could not be relied upon by the appellant at any stage in the Martland analysis. The UT observed at [56] that: "… the correct approach in this case is to start with the general rule that the failure of [the adviser] to advise Mr Katib of the deadlines for making appeals, or to submit timely appeals on Mr Katib's behalf, is unlikely to amount to a 'good reason' for missing those deadlines when considering the second stage of the evaluation required by Martland. However, when considering the third stage of the evaluation required by Martland, we should recognise that exceptions to the general rule are possible and that, if Mr Katib was misled by his advisers, that is a relevant consideration." 21. In [58] and [59], the UT said: "… the core of Mr Katib's complaint is that [the adviser] was incompetent, did not give proper advice, failed to appeal on time and told Mr Katib that matters were in hand when they were not. In other words, he did not do his job. That core complaint is, unfortunately, not as uncommon as it should be. It may be that the nature of the incompetence is rather more striking, if not spectacular, than one normally sees, but that makes no difference in these circumstances. It cannot be the case that a greater degree of adviser incompetence improves one's chances of an appeal, either by enabling the client to distance himself from the activity or otherwise." 59. [Counsel for Mr Katib] urged us to give particular weight to the FTT's finding, at [15], that Mr Katib did not have the expertise to deal with the dispute with HMRC himself, but that does not weigh greatly in the balance since most people who instruct a representative to deal with litigation do so because of their own lack of expertise in this arena. We do not consider that, given the particular importance of respecting statutory time limits, Mr Katib's complaints against [the adviser] or his own lack of experience in tax matters are sufficient to displace the general rule that Mr Katib should bear the consequences of [the adviser's] failings and, if he wishes, pursue a claim in damages against him or [the adviser's firm] for any loss he suffers as a result." 22. Following Katib, if the failure to appeal within the time limits were due to KMB not carrying out instructions (and I make no finding as to that), that would not constitute a good reason for the delay in appealing. That is because I would have expected the Appellants, notwithstanding that English is not their first language, to have taken steps, either themselves or through their tax adviser, to assure themselves that all the assessments, penalties and liability notices were being properly challenged. In his witness statement, Mr Baczmaga says that the sums of money that are the subject of the late appeals are, in his view, incredibly large and the Appellants do not have those amounts to pay HMRC. In that case, it is inexplicable, and to my mind not credible, that the Appellants did not monitor carefully what KMB was doing but were content to take a 'hands off' approach to the appeals. I was not shown what communications there were between the Appellants and KMB and, of course, those were almost certainly privileged as noted in Katib, but it would probably not have made any difference. If the Appellants did not monitor what KMB were doing then that would, in my view, be blameworthy and not a good reason for the failure to appeal in time. If the Appellants did regularly check what KMB were doing then they should have known that the appeals had not been made and done something about it. It would only be in the unlikely event that KMB actively misled the Appellants about the state of the proceedings that the Appellants might establish that they had a good reason for the delay. There is, however, no evidence to support that in this case and, for that reason, I do not consider the possibility further when weighing up all the circumstances of the case in the third stage of the Martland approach.

Recent cases discussing the third (balancing) stage in Martland

[22]As set out above the Upper Tribunal in Martland stated that the third (balancing) stage should take into account the particular importance of the need for litigation to be conducted efficiently and at proportionate cost, and for statutory time limits to be respected. However, the more recent decisions of the Upper Tribunal in Medpro Healthcare Ltd v HMRC [2025] UKUT 255 (TCC) (‘Medpro’) at [93] – [98] followed by Pawar v HMRC [2025] UKUT 309 (TCC) (‘Pawar’) at [84] – [94] concluded that no extra weight should be given to these ‘compliance’ factors. In Lands Luo Ltd v HMRC[2025] UKFTT 1207 (TC) (‘Lands Luo Limited’), released after Medpro and Pawar, the First-tier Tribunal at [53] – [71] (which included Lord Justice Dingemans, the Senior President of Tribunals as member of the panel) agreed with the approach in Martland. Lands Luo Limited considered Medpro but not Pawar. Medpro, Pawar and Lands Luo Limited all confirm that the three stage test in Martland should be applied.[23]At [70] in Lands Luo Limited the First-tier Tribunal observed that often the difference in approach to the test to be applied (ie the weight to be given to the ‘compliance’ factors) when considering whether to grant permission to bring a late appeal between Martland and Medpro would not yield a different result. I shall consider the Medpro test first and then the Martland test and if the results are different it will be necessary to discuss which approach will determine the application and why.

the arguments

[24]The arguments by both parties were very succinctly put.

The Appellant’s arguments

[25]The Appellant conceded that there was a serious and significant delay.[26]Insofar as the reason for the delay Mr Shepheard’s submissions on behalf of the Appellant reflected the reasons provided by the Appellant in his Notice of Appeal: he had relied on his accountants, first NXG and then after receiving no response H Accountancy. Therefore, the Appellant had a good reason for the delay.[27]In relation to any other circumstances to take into account, Mr Shepheard submitted the Appellant had sought to conduct the affairs of the Company per HMRC guidance, and therefore he should not be penalised for the wrongs of others, and in particular others forming part of the Company’s supply chain. Mr Shepheard acknowledged that whether or not this was the case was a matter for evidence before the First-tier Tribunal.

HMRC’s arguments

[28]HMRC said that the delay of 523 days was serious and significant.[29]Mrs Sercombe submitted that no good reason had been provided for the delay.[30]In relation to all the circumstances HMRC:(1) Highlighted the need for litigation to be conducted efficiently and at proportionate cost and for statutory deadlines to be respected, relying on Martland and Katib.;(2) Submitted that they would be prejudiced if the appeal was allowed to proceed as they would have to divert resources to defend an appeal which they were entitled to consider closed.(3) Said simply that the Appellant had a weak case.(4) Initially sought to rely on the 31 May 2023 letter to the Company rejecting its ADR application on the basis that there was no appeal before the First-tier Tribunal, as evidence of further material delay by the Appellant in bringing his appeal. However, HMRC later accepted that the Appellant was not aware that he did not have an appeal before the First-tier Tribunal until he spoke to HMRC on 25 August 2025 and did not pursue this point further.

discussion and findings

[31]The issue to be determined is whether the Appellant should be given permission to bring a late appeal ie to notify an appeal on 11 September 2023 523 days after the 30 day time limit for appealing had expired.[32]Applying the three-stage approach required by Martland, I first consider the seriousness and significance of the failure to comply with the original time limit. The relevant time limit is 30 days from the date of the Director Penalty Review. In this case, the appeal was 523 days late which was significantly outside the 30-day time limit. In my view, such a delay cannot be described as anything other than serious and significant which Mr Shepheard rightly accepted.[33]The second stage of Martland is to consider the reason why the time limit was not respected. The Appellant’s reason is that he was reliant on NXG to make an appeal to the First-tier Tribunal and he was certain that he they had done so. Further H Accountancy, his subsequent accountants, had applied for ADR on the assumption that an appeal had been made to the First-tier Tribunal.[34]Like Judge Sinfield in PBS following the general rule (about advisers) in Katib (see above), I take the view that if the failure to appeal the Director Penalty Review within the time limits was due to NXG or H Accountancy not following instructions and/or H Accountancy not identifying that an appeal of the Director Penalty Review had not been made (and given the lack of evidence I make no findings as to these facts), that would not constitute a good reason for the delay in appealing the Director Penalty Review. Further, even if the Appellant did establish these facts, I am not satisfied that there would be any reason to disapply the general rule in Katib in this case. In particular, in light of the amount involved (£127,806.30), I would expect the Appellant to have taken at least minimal steps to satisfy himself that the Director Penalty Review had been challenged by way of appeal (regardless of whether ADR was sought or not). Particularly given the reason for changing accountant: the lack of responsiveness on the part of NXG. Further, the steps to be taken (or to be checked whether were taken) were not complicated or difficult and were clearly set out in the Director Penalty Review which was sent to the Appellant’s home address. If the Appellant did check what NXG and H Accountancy were doing, or even what the state of play was when he stopped instructing NXG, then he should have known that an appeal of the Director Penalty Review had not been made and taken action resulting in an appeal to the Tribunal. There was no evidence that the Appellant had taken any of these steps nor any to suggest that NXG or H Accountancy had actively misled the Appellant about the existence of any appeal against the Director Penalty Review.[35]The third stage is to consider all the circumstances of the case. I must balance the merits of the reason(s) given for the delay and the prejudice which would be caused to both parties by granting or refusing permission to make a late appeal. I have considered all the relevant factors, and set out those of particular relevance as follows:(1) There was a serious and significant delay for which there was no good reason offered. I set out above why I am not satisfied that there should be an exception to the general rule in Katib. As the First-tier Tribunal in Lands Luo Limited set out at [74]: Time limits are there to be complied with. Delays prevent tribunal proceedings being conducted efficiently and at proportionate cost. HMRC make the point, which I also accept, that they are entitled to consider a matter closed once the relevant time limits has passed, this reflects the principle of finality in tax proceedings. These factors, even without placing additional weight on them (ie following the Medpro approach), militate against granting permission to make a late appeal.(2) Insofar as the merits of the appeal, both parties made simple statements: the Appellant said he had very strong grounds and HMRC said that the Appellant had weak grounds. Reviewing the Appellant’s (and Company’s) Grounds for Appeal, they focussed on the honesty and integrity of the Appellant (and the Company), the following of HMRC’s advice and the due diligence undertaken in respect of the Company’s supply chains. The Appellant’s challenge to the Director Penalty Review is built upon a challenge to the Company Penalty. Proceeding on the basis that such an approach is permissible the Appellant’s appeal will require and turn on the evidence of the Appellant. No such evidence was before me and no submissions were made on it (and in any event evidence should only be considered in this balancing exercise exceptionally). Consequently, I have no basis on which to conclude that the Appellant’s case was particularly strong or weak and therefore the merits of the Appellant’s challenge to the Director Penalty does not militate in favour of the granting or refusing to give permission to make a late appeal.(3) There is obvious prejudice to the Appellant if I refuse to grant him permission to make the appeal late because he will be unable to put forward his case at a hearing and, if successful, no longer be subject to the Director Penalty which is a substantial sum of money.[36]In balancing all of the relevant factors, I have concluded that following the Medpro approach that the Appellant ought not to be permitted to make an appeal out of time. I reach the same conclusion following the stricter approach set out in Martland. The hearing of this application was before the release of the decision in Medpro, Pawar and Lands Luo Limited. Given that I have reached the same conclusion under both the Medpro and Martland approaches to the ‘compliance’ factors I did not consider it necessary to seek further representations from the parties.

conclusion

[37]For the reasons given I refuse the Appellant’s application for permission to make a late appeal.

Right to apply for permission to appeal

[38]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: 24th OCTOBER 2025