Preston Benson v The Commissioners for HMRC [2025] UKFTT 304 (TC)

[2025] UKFTT 00304 (TC)Case No TC09454
FIRST-TIER TRIBUNAL
TAX CHAMBER
Hearing Heard on: 2 December 2024Date Judgment date: 10 March 2025
By remote video hearing
Appeal reference: TC/2024/03141
LATE APPEAL – Notice to require security for PAYE and NICs – security unpaid - Appellant likely to be convicted of a criminal offence if leave to make a late appeal refused – the company continued to trade after security demanded, leaving revenues at risk – application refused.
Before
TRIBUNAL JUDGE MICHAELA SNELDERSGILL HUNTER
Between
PRESTON BENSONAppellantTHE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMSRespondentAparna Nathan KC, instructed by Francis Wilks & Jones for AppellantSiobhan Brown, litigator of HM Revenue and Customs’ Solicitor’s Office for RespondentsDECISION

Introduction

[1]With the consent of the parties, the form of the hearing was video using the Teams platform. A face to face hearing was not held because it was more expedient to use the video platform.[2]The documents to which we were referred are contained in a PDF bundle of documents of 711 pages and the Appellant’s skeleton argument of 25 pages. On the morning of the hearing we were also provided with the Notice of Appeal, Grounds of Appeal and an automated e-mail from the Tribunal dated 29 July 2024 relating to the appeal under Tribunal reference TC/2024/04241 together with the judgments in the cases of South Bucks District Council v Porter (No. 2) [2004] 1 WLR 1953 and R (on the application of Plantagenet Alliance Ltd) v Secretary of State for Justice and others [2014] EWHC 1662 (Admin).[3]The document bundle included a witness statement from the Appellant (Mr Benson) and Mr Benson gave oral evidence at the hearing, was cross examined by Ms Brown for the Respondents (HMRC) and answered questions from the panel.[4]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.[5]Mr Benson is applying for permission to submit a late appeal to HMRC against a notice of requirement (NOR) for Pay As You Earn income tax (PAYE) and National Insurance Contributions (NICs) issued to him on 10 August 2023 (the PAYE and NICs NOR).

Procedural background

[6]HMRC issued the PAYE and NICs NOR to Peckham Levels Limited (PLL) and Mr Benson as director of PLL, pursuant to regulations 97N- 97R of the Income Tax (Pay as You Earn) Regulations 2003 (the PAYE Regs) and paragraphs 29N – 29R of Schedule 4 to the Social Security (Contributions) Regulations 2001/1004 (the SSCR).[7]The PAYE and NICs NOR made PLL and Mr Benson jointly and severally liable to pay the security demanded of £165,725.46.[8]In addition to the application before us, PLL applied to the Tribunal on 24 May 2024 for permission to notify a late appeal to HMRC against the PAYE and NICs NOR and the Tribunal issued that application under reference TC/2024/04213 (PLL’s PAYE and NICs NOR Application).[9]A NOR for VAT was also issued to PLL on 10 August 2023 pursuant to paragraph 4 of Schedule 11 to the Value Added Tax Act 1994 (VATA 1994) (the VAT NOR). On 29 July 2024 PLL applied for permission to notify a late appeal to the Tribunal against the VAT NOR and the Tribunal issued that application under reference TC/2024/04241 (PLL’s VAT NOR Application).[10]On 23 August 2024 the Tribunal issued directions that included a direction that the application before us, PLL’s PAYE and NICs NOR Application and PLL’s VAT NOR Application “shall proceed together and be heard together”.[11]PLL entered administration on 27 August 2024 and Joint Administrators were appointed on that date. On 6 September 2024 the Joint Administrators of PLL notified the Tribunal and HMRC of PLL’s withdrawal from the appeals process in respect to the PAYE and NICs NOR and the VAT NOR.[12]The Tribunal wrote to the Joint Administrators on 17 September 2024, copying in HMRC, to inform them that the effect of withdrawing PLL’s appeals is that the appeals have failed. This letter also notified them that they had the right to apply in writing within 28 days from the date of the letter for reinstatement but if the Tribunal received nothing to the contrary within 28 days the files would be closed.[13]No further correspondence was received by the Tribunal about PLLs appeals.

Application to be substituted or added as appellant in pll’s vat nor appeal

[14]Mr Benson applied to us at the opening of the hearing to be added or substituted as the Appellant in PLL’s VAT NOR Appeal, pursuant to rule 9 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (“FTT Rules”).[15]Rule 9 provides: “(1) The Tribunal may give a direction substituting a party if—(a) the wrong person has been named as a party; or(b) the substitution has become necessary because of a change in circumstances since the start of proceedings. (2) The Tribunal may give a direction adding a person to the proceedings as a respondent. (3) A person who is not a party to proceedings may make an application to be added as a party under this rule. (4) If the Tribunal refuses an application under paragraph (3) it must consider whether to permit the person who made the application to provide submissions or evidence to the Tribunal. (5) If the Tribunal gives a direction under paragraph (1) or (2) it may give such consequential directions as it considers appropriate.” (b) the substitution has become necessary because of a change in circumstances since the start of proceedings.[16]Mr Benson’s grounds for substituting or adding himself as an appellant in PLL’s VAT NOR Appeal are set out by Counsel for Mr Benson in her skeleton argument as follows:
“8. On 29 July 2024 Mr Benson filed a separate Notice of Appeal in respect of the VAT NOR as requested and included the same Grounds of appeal as were filed in respect of the PAYE/NICs decision….. 9. However, the FTT wrongly appears to have assumed, despite the contents of the Grounds of appeal, that the Appeal was only against the VAT NOR imposed on Peckham. In fact the appeal was made against both the VAT NOR imposed on Peckham and Mr Benson. Accordingly should there be any question about this, Mr Benson invites the FTT to find that the Appeal is also in respect of the VAT NOR and is also in respect of Mr Benson as well as Peckham….. 10. …, as Mr Benson is jointly and severally liable on precisely the same basis, and the Respondents’ position is that the same arguments apply both to Peckham and Mr Benson, it is in the interests of justice to permit Mr Benson to be substituted. In the alternative, the FTT is invited to add him as party to the proceedings for the reasons set out above.”

Discussion

[17]The VAT NOR was copied to Mr Benson on the same date that it was issued to PLL, but it was not issued to Mr Benson and it does not make Mr Benson jointly or severally liable with PLL for the VAT NOR.[18]The VAT NOR states; “we require Peckham Levels Limited to give us security for the VAT amounts shown below.”[19]The letter to Mr Benson dated 10 August 2023 enclosing a copy of the VAT NOR states; “The Notice of Requirement is a legal requirement for Peckham Levels Limited to give us security for VAT.”[20]Paragraph 4(2)(a) of Schedule 11 to VATA 1994 gives HMRC the power to issue a NOR for VAT as follows:
“(2) If they think it necessary for the protection of the revenue, the Commissioners may require a taxable person, as a condition of his supplying or being supplied with goods or services under a taxable supply, to give security, or further security, for the payment of any VAT that is or may become due from— (a) the taxable person, or (b) any person by or to whom relevant goods or services are supplied.”
[21]Section 3 of VATA 1994 defines a taxable person as follows:
“3.— Taxable persons and registration. A person is a taxable person for the purposes of this Act while he is, or is required to be, registered under this Act.”
[22]PLL was required to be registered for the purposes of VATA 1994 and was therefore the taxable person on whom HMRC could issue a NOR for VAT.[23]Mr Benson was the director of PLL and was not a taxable person. Consequently HMRC did not have the power to issue a NOR for VAT on Mr Benson in his capacity as director of PLL or to make him jointly and severally liable for the VAT NOR.

Status of PLL’s VAT NOR Appeal

[24]PLL wrote to the Tribunal and HMRC withdrawing its VAT NOR Appeal on 6 September 2024. Pursuant to rule 17 of the FTT Rules this is sufficient to withdraw the appeal. Rule 17 also provides that the Tribunal must notify each party to the appeal in writing of its receipt of a withdrawal, which it did on 17 September 2024.[25]Rule 17 is “subject to any provision in an enactment relating to withdrawal or settlement of particular proceedings.” The effect of a withdrawal of an appeal in cases relating to VAT is therefore governed by section 85(4) of VATA. Section 85 provides as follows:
“85.— Settling appeals by agreement. (1) Subject to the provisions of this section, where a person gives notice of appeal under section 83 and, before the appeal is determined by a tribunal, HMRC and the appellant come to an agreement (whether in writing or otherwise) under the terms of which the decision under appeal is to be treated— (a) as upheld without variation, or (b) as varied in a particular manner, or (c) as discharged or cancelled, the like consequences shall ensue for all purposes as would have ensued if, at the time when the agreement was come to, a tribunal had determined the appeal in accordance with the terms of the agreement. (2) Subsection (1) above shall not apply where, within 30 days from the date when the agreement was come to, the appellant gives notice in writing to HMRC that he desires to repudiate or resile for the agreement. (3) Where an agreement is not in writing— (a) the preceding provisions of this section shall not apply unless the fact that an agreement was come to, and the terms agreed, are confirmed by notice in writing given by HMRC to the appellant or by the appellant to HMRC, and (b) references in those provisions to the time when the agreement was come to shall be construed as references to the time of the giving of that notice of confirmation. (4) Where— (a) a person who has given a notice of appeal notifies HMRC, whether orally or in writing, that he desires not to proceed with the appeal; and (b) 30 days have elapsed since the giving of the notification without HMRC giving to the appellant notice in writing indicating that they are unwilling that the appeal should be treated as withdrawn, the preceding provisions of this section shall have effect as if, at the date of the appellant’s notification, the appellant and HMRC had come to an agreement, orally or in writing, as the case may be, that the decision under appeal should be upheld without variation. (5) References in this section to an agreement being come to with an appellant and the giving of notice or notification to or by an appellant include references to an agreement being come to with, and the giving of notice or notification to or by, a person acting on behalf of the appellant in relation to the appeal.”
[26]HMRC did not object to PLL’s withdrawal of its VAT NOR Appeal, so the parties are treated as having come to an agreement that will have the same effect as if the Tribunal had determined that HMRC’s decision to issue the VAT NOR to PLL is upheld without variation.[27]Rule 17(3) and (4) provides that a party who has withdrawn its appeal may apply to the Tribunal in writing to have it reinstated within 28 days of the notice to withdraw. PLL has not made such an application within 28 days of its notice to withdraw or at all.[28]PLL’s VAT NOR Appeal has been withdrawn and Mr Benson cannot therefore make an application to be substituted or added as the Appellant in that Appeal and the Tribunal does not have jurisdiction to grant such an application.[29]For all the reasons above we refuse Mr Benson’s application to be substituted or added as a party to PLL’s VAT NOR Appeal.[30]Mr Benson has the right to appeal to HMRC against the PAYE and NICs NOR, pursuant to paragraph 97V of the PAYE Regs and Paragraph 29V of Schedule 4 to the SSCR. The appeal must be made within 30 days of the NOR being given (see regulation 97V(3) of the PAYE Regs and paragraph 29V(3) of Schedule 4 to the SSCR). Part 5 of the Taxes Management Act 1970 (TMA) applies in relation to such appeals.[31]Section 49 of TMA provides that notice of an appeal may be given to HMRC after the 30 day time limit if HMRC agrees or, where HMRC do not agree, the Tribunal gives permission. Section 49 further provides that HMRC must agree to accept late notice of an appeal where they are satisfied that Mr Benson had a reasonable excuse for the delay and that the request was made without unreasonable delay once the reasonable excuse ceased.[32]Mr Benson made a written request to make a late appeal to HMRC on 22 April 2024. As the PAYE and NICs NOR was issued to Mr Benson on 10 August 2023, the appeal to HMRC was over 7 months late.[33]By letter dated 25 April 2024 HMRC rejected Mr Benson’s request to make a late appeal because they were not satisfied that Mr Benson had a reasonable excuse for submitting his appeal late.[34]Mr Benson applied to the Tribunal on 24 May 2024 for permission to submit his appeal to HMRC late.

Test to be applied by the Tribunal

[35]Where HMRC do not agree to accept a late appeal, section 49(2) TMA provides that the Tribunal may give permission to an appellant to make a late appeal to HMRC. When considering such an application the tribunal is, unlike HMRC, not limited to considering whether the appellant had a reasonable excuse for giving notice of his appeal to HMRC late. This was set out in the decision in R (oao Browallia Cal Ltd v General Commissioners of Income Tax [2004] STC 296 where the Administrative Court stated:
“[12] It is submitted before me by the taxpayer that s 49, when properly construed, confers upon the General Commissioners, on reference to them of an application to an inspector for permission to lodge an appeal out of time, a wider discretion than that which the Inspector himself had. That discretion is not confined, as the Inspector's discretion is confined, to determining whether there was a reasonable excuse for the failure to lodge the appeal within time but would also embrace such considerations as the lack of any prejudice to the Commissioners as a result of failing to lodge an appeal in time, and demonstrable injustice to the taxpayer if such an appeal is not permitted to be lodged out of time. [13] I accept that submission. It seems to me that this is a proper construction of the Act. It is apparent from sub-s (1) of s 49 that it contemplates two stages, the first stage being an application to the Inspector who can, if he can discern a reasonable excuse, properly allow an appeal to be lodged out of time thus saving the necessity of reference to General Commissioners for that permission to be granted; but that if he does not find that there was reasonable excuse, the second stage then arises, which is a reference of the application by the Inspector to the General Commissioners for them to determine. [14] The section does not purport to guide the General Commissioners in any way as to how that discretion to permit appeals to be lodged out of time should be exercised. It seems to me, therefore, to follow that the General Commissioner's discretion is at large and they can consider the sort of matters which I have referred to which an Inspector of Taxes had no power to take into account.”
[36]The decision of the Upper Tribunal in Martland v HMRC [2018] UKUT 0178 (TCC) (Martland) sets out how the Tribunal should exercise its discretion in deciding whether to allow an appellant to submit an appeal to HMRC out of time. Paragraph 44 of that decision reads as follows:
“When the [First-tier Tribunal] FTT is considering an 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.” 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 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.”

Background and facts

[37]We have set out below the relevant background and our findings of fact.[38]Peckham Levels Limited (PLL) was incorporated on 16 November 2015. It operated out of an old carpark in South London. The landlord was Southwark Council (Southwark). PLL employed 28 staff and sublet premises in the carpark to over 100 tenants many of whom were charity organisations and community groups.[39]Mr Benson was appointed as director of PLL by its secured lender, Gravis Capital (Gravis), on 4 November 2021. Mr Benson was appointed by Gravis to help restructure PLL following the accrual of £8M debt by the founding shareholder, Makeshift Community, over three different sites. Gravis had approached Mr Benson to do this because Mr Benson had set up a successful company with similar objectives to PLL. His role was to work out a refunding package for PLL.[40]Under the terms of his employment contract Mr Benson was required to report to Gravis as his manager. From September 2023 Gravis required Mr Benson to consult with it on all decisions and communications with HMRC.[41]Between the period of Mr Benson's appointment to December 2022 two of the sites were sold to new owners. However, it proved more difficult to sell PLL because of what Mr Benson described as mismanagement by Southwark of adjacent tenants and a large utility bill arising out of the nature of the building (i.e. an 80,000 square foot carpark).[42]These difficulties resulted in further significant trading losses and increasing debts.[43]On 3 November 2022, HMRC sent a security warning letter to PLL because it had failed to pay all the PAYE and NICs due. The letter explained that if PLL did not pay the full amount of PAYE and NICs due by 13 November 2022, it would be issued with a NOR and required to pay security for PAYE and NICs. Based on the information held at that time, HMRC stated in this letter that a security deposit of £87,871.23 would be required if it issued a NOR to PLL.[44]On 15 November 2022, HMRC contacted Mr Benson who confirmed that he had received the security warning letter. Mr Benson said contact would be made to arrange for a time to pay (‘TTP’) to be set up. Mr Benson was reminded that if the debt was not addressed then a NOR may be issued requiring a security to be paid, and if that security was not paid, it could lead to criminal prosecution.[45]HMRC subsequently agreed a TTP with PLL on 15 November 2022 for £103,436.76 (VAT and PAYE/NIC debt).[46]On 13 January 2023, HMRC tried to contact Mr Benson because the TTP arrangement was failing as the amounts due under the TTP were not being paid in full and on time.[47]On 16 January 2023, HMRC spoke to Mr Benson and confirmed that, although payments had been made in compliance with the TTP, the 12/22 full payment submission (‘FPS’) was outstanding and that this could cause the TTP to fail. Mr Benson was reminded that as director of the company it was his responsibility to ensure that payments are made in full and on time and that if these payments were not made in full and on time this could cause the TTP to fail and NOR action to resume.[48]On 3 February 2023, HMRC issued an Instalment Arrangement (‘IA’) letter, regarding the TTP, to Mr Benson as the 11/22, 12/22 and 01/23 FPS returns were part paid or outstanding.[49]On 3 March 2023, HMRC issued an IA cancellation letter, cancelling the TTP.[50]On 8 March 2023, HMRC agreed a new TTP for £91,176.54 (VAT and PAYE/NIC debt).[51]On 2 May 2023, HMRC spoke to Mr Benson and confirmed that the 04/23 FPS had not been paid in full and he was warned that the TTP can be cancelled if liabilities are not paid on time.[52]On 19 May 2023, HMRC issued another IA letter to Mr Benson, regarding the TTP, as the 03/23 VAT return was outstanding and an assessment had been issued and the 02/23, 03/23 and 04/23 FPS returns were part paid or outstanding.[53]On 15 June 2023, an IA cancellation letter was issued, cancelling the TTP.[54]Mr Benson approached Gravis in July 2023 with a view to appointing administrators. However, Southwark asked PLL not to take any action until a longer-term plan could be adopted.[55]On 13 July 2023, after failed attempts to contact Mr Benson and other representatives of PLL, HMRC spoke to Bespoke HR Ltd (‘the agent’). HMRC advised the agent that the payment plan that had been in place had been cancelled because the current liabilities had not been paid. They were also advised that the debt would need to be addressed and if it was not addressed a NOR may be issued. The agent said they would get in touch with Mr Benson and inform him of this.[56]On 17 July 2023, a further request for a TTP was made but HMRC rejected it due to previous failed plans and a lack of payments in the interim to clear the debt. HMRC advised PLL that it should still make payments.[57]Mr Benson took a sabbatical from late July 2023 to mid-September 2023. Mr Benson needed a break due to the stress of dealing with PLL’s financial issues since November 2021. He had assumed that the PLL management team would deal with the PLL post in his absence but this did not happen.[58]On 10 August 2023, HMRC issued the PAYE and NICs NOR to Peckham Levels Ltd and Mr Benson to provide security for PAYE and NICs in the amount of £165,725.46. The PAYE and NICs NOR made them both jointly and severally liable to pay the full amount of the security. This amount was calculated by reference to PLL’s existing PAYE and NICs arrears at that time of £109,462.46 and an estimate of its future liabilities for the next 4 months of £56,263.[59]Between 23 August 2023 and 7 September 2023, HMRC tried to contact Mr Benson without success.[60]Mr Benson returned to work at PLL on 12 September 2023. On 15 September 2023 Mr Benson telephoned HMRC. In this conversation he explained PLLs predicament and that it could not afford to pay. HMRC advised Mr Benson in this call that it is a criminal offence not to pay the PAYE and NICs NOR by the due date of 19 September 2023 and so if it remained unpaid there was the risk of a criminal conviction. HMRC also advised Mr Benson that if he wished to appeal against the NOR, he would need to do so in writing and he agreed that he would do so.[61]Mr Benson accepted that this is what had been said on the call as the transcript showed this but he had no recollection. He explained that he was under a lot of stress at the time and the amount being demanded was impossible to pay. He felt that no-one cared about all the hard work going on behind the scenes and that HMRC were picking on the little guy. In oral evidence at the hearing Mr Benson explained that he was in a bad place at this time. He had taken a sabbatical due to the stress of dealing with PLL’s financial problems and then returned to these demands from HMRC. As a result he was not thinking very clearly and probably did not fully understand everything that had been said to him in the call.[62]On 21 September 2023 HMRC issued a letter to Mr Benson stating that he was required to immediately pay the PAYE and NICs NOR in the sum of £165,725.46 and that failure to do so is a criminal offence and that he may face prosecution.[63]On 11 October 2023 HMRC issued a letter to Mr Benson stating that he was required to immediately pay the PAYE and NICs NOR in the sum of £165,725.46 and that failure to do so is a criminal offence and that he may face prosecution.[64]On 7 November 2023 HMRC wrote to Mr Benson about the PAYE and NICs NOR. In this letter they stated “The security required, remains unpaid. PAYE Security: Failure to comply with a requirement to give security under paragraph 29N of schedule 4 to the Social Security (Contributions) Regulations 2001, is a criminal offence, contrary to Section 684 (4a) of the Income Tax (Earnings and Pensions) Act 2003. …. It is my intention to refer these matters to the Crown Prosecution Service for them to consider prosecution proceedings. If you wish to make further representations, for consideration by myself and/ or the CPS, you must do this no later than 8th December 2023. Please e-mail me directly at marie.gilbert@hmrc.gov.uk or alternatively you can write to me at the address above.”[65]On 1 December 2023 Mr Benson provided further representations to HMRC outlining again the difficulties that PLL has faced as a result of the covid pandemic, that he came in as a director when the business had significant debt to stabilise the business. He concluded:
“Since taking over the operation, we have done our best to keep the business operating through extremely challenging circumstances. Our main lender has continued to lend to Peckham Levels Limited to ensure the business remained solvent. When I took over, the business had an approximate net current assets balance of -£500k. Due to difficult trading conditions, this balance has largely remained unchanged. In mid 2023, our lender confirmed that they were no longer willing to put money into the business, putting the business at risk of insolvency. … However, given the challenging circumstances the business is currently in, neither myself nor Peckham Levels Ltd are in a financial position to pay any security to the HMRC. I want to assure you again that my focus is on a structured solution with regards to all creditors including HMRC.”
[66]HMRC acknowledged receipt of this letter by e-mail on 4 December 2023 stating “Thank you for your email, the contents of which has been noted”[67]Mr Benson understood the 4 December 2023 e-mail from HMRC to mean that his further representations were being considered and that HMRC understood and accepted the situation and Mr Benson’s plan to find a structured solution to PLLs financial issues. This gave Mr Benson the confidence to seek more funding from Gravis.[68]He thought “noted” meant, “we’ve put this on your file and will be in touch again if needed”.[69]In late December 2023, Gravis committed further funding which would have helped reduce PLL’s arrears. However that offer was withdrawn in February 2024 when Southwark agreed to buy the business by late April 2024. That completion date was subsequently moved to July 2024 when the UK general election was called.[70]Mr Benson did not hear anything further about the PAYE and NICs NOR until receipt of a Requisition issued on 11 March 2024 to appear before Westminster Magistrates Court on 14 March 2024 regarding the non-payment of the PAYE and NICs NOR.[71]Upon receipt of this requisition Mr Benson immediately instructed FRP Advisory. However Mr Benson considered that FRP did not grasp the seriousness of the matter and so he changed representatives and instructed Francis Wilks & Jones law firm (FWJ) shortly afterwards. FWJ carried out an onboarding process and Mr Benson formally instructed FWJ on 08 April 2024.[72]On 19 April 2024, FWJ wrote to HMRC seeking permission for a late review of the decision to issue the NORs.[73]On 25 April 2024, HMRC rejected the request for a late review because they were not satisfied that Mr Benson had a reasonable excuse for making a late appeal.[74]On 24 May 2024, FWJ notified an appeal to the Tribunal on behalf of Mr Benson requesting that he be granted permission to make a late appeal to HMRC.[75]In June 2024 as part of the sale process of PLL to Southwark, Mr Benson disclosed the criminal proceedings relating to the PAYE and NICs NOR. A few days later Southwark withdrew its offer to purchase PLL. Mr Benson believes that Southwark withdrew its offer to purchase PLL because it was concerned about the reputational risk of the criminal proceedings.[76]On 27 August 2024 Simon Baggs and Geoff Rowley of FRP were appointed as Joint Administrators of PLL and on 28 August 2024 Mr Benson resigned as a director of PLL. Applying the legal test to the facts Stage 1 – Length of the delay

Applying the legal test to the facts

[77]In the case of Romasave Property Services Ltd v Revenue & Customs Commissioners [2015] UKUT 254 (TCC) the Upper Tier held at paragraph 96 of its decision that “Time limits imposed by law should generally be respected. In the context of an appeal right which must be exercised within 30 days from the date of the document notifying the decision, a delay of more than three months cannot be described as anything but serious and significant.”[78]In Mr Benson’s case, the right to appeal should have been exercised by Mr Benson within 30 days of 10 August 2023 but he did not exercise it until 7 months later on 19 April 2024. Such a delay cannot be described as anything but serious and significant.

Stage 2 – Reasons for the delay

[79]One of the reasons put forward by Mr Benson for the delay is that he did not have the benefit of professional legal advice until April 2024. However as stated in the case of R (on the application of Hysaj) v Secretary of State for the Home Department [2015] 1 WLR 2472, at paragraph 44, Moore-Bick LJ states “being a litigant in person with no previous experience of legal proceedings is not a good reason for failing to comply with the rules’[80]This is expanded upon in Martland at paragraph 47 where it states:
“HMRCʼs appealable decisions generally include a statement of the relevant appeal rights in reasonably plain English and it is not a complicated process to notify an appeal to the FTT, even for a litigant in person.”
[81]The PAYE and NICs NOR, together with the factsheets that accompanied it, explained that if Mr Benson disagreed with the NOR he had to notify HMRC in writing within 30 days of the date of the NOR. The need for Mr Benson’s reasons to be put in writing was explained to him again in his telephone call with HMRC on 15 September 2023.[82]We find therefore that lack of legal support and knowledge is not a good reason for Mr Benson’s failure to submit his appeal to HMRC prior to receiving legal advice in April 2024.[83]A further reason put forward by Mr Benson was that he was on sabbatical when the PAYE and NICs NOR was issued. Mr Benson hadn’t anticipated that he would receive communications from HMRC to his personal address in his absence and the processes that he had set up to deal with PLL post in his absence had failed. Mr Benson contacted HMRC by telephone about the NOR shortly after his return to work and only a few days outside the 30 day time limit on 15 September 2023.[84]However while this reason for the appeal being made a few days outside of the statutory 30 days has some merit, it does not explain why Mr Benson then failed to submit his appeal in writing to HMRC shortly after that telephone conversation as he said that he would.[85]While we acknowledge that Mr Benson was under a huge amount of stress at this point, so that he had not appreciated the importance of making an appeal in writing to the Respondents, we do not accept that he thought at this stage that HMRC were reviewing their decision to issue the NOR. Even if his understanding from the phone call was that HMRC were reviewing their decision to issue the NOR in response to the representations he made in that phone call, he must have realised that this was not in fact the position when he received the subsequent letters from HMRC dated 21 September 2023 and 11 October 2023 in which he was informed that he was committing a criminal offence by not paying the security.[86]It follows that we find that there was little or no merit to Mr Benson’s reason for not submitting his appeal to HMRC in the period from 16 September 2023 to 7 November 2023.[87]We do find that the letter from HMRC dated 7 November 2023 inviting him to make further representations in writing by 8 December 2023, which he did on 1 December 2023, and the acknowledgment of those representations by email dated 4 December 2023 are ambiguous. We consider that it was reasonable for Mr Preston to have believed that the representations that he was invited to make by 8 December 2023 would be considered and could influence HMRC’s decision to continue to pursue the PAYE and NICs NOR. We also consider that it was reasonable for Mr Benson to expect explicit confirmation from HMRC as to the outcome of their consideration of his representations and that the e-mail from HMRC of 4 December 2023 was simply an acknowledgment of receipt of his letter of 1 December 2023 and a fuller response would be made once HMRC had properly considered his representations.[88]We therefore find that it was reasonable for Mr Benson to conclude from the 4 December 2023 acknowledgment that his representations were being considered by HMRC and that the next step would be for HMRC to notify him of the outcome of those considerations.[89]However it was not reasonable for Mr Benson to believe that the NOR issue had completely gone away as a result of his letter of 1 December 2023 and he should have followed his letter up with HMRC when he did not receive a response within a reasonable period of time.[90]Consequently we find that there is some merit in Mr Benson’s reason for the delay in submitting his appeal to HMRC in the period between the 7 November 2023 letter from HMRC and early January 2024. However from early January 2024 it was incumbent on Mr Benson to contact HMRC to find out the outcome of their consideration of his 1 December 2023 letter.[91]The delay between 11 March 2024 and 19 April 2024 when Mr Benson’s appeal was finally submitted in writing to HMRC is again explained by Mr Benson’s need to secure suitable legal advice. However for the same reasons as set out above we do not consider that lack of legal advice or support is a good reason for this delay.

Stage 3 – Overall circumstances

[92]When considering the overall circumstances of a case it is necessary to consider the prejudice to both parties of granting or refusing the permission.[93]As stated in the Martland decision at paragraph 46 “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.”[94]From a brief consideration of the grounds for appeal against the NOR provided, we could not conclude that either party’s case was obviously really strong or very weak.[95]A further consideration that we must take into account is the importance of meeting time limits in litigation. As stated in Martland at paragraph 34:
“…the purpose of the time limit is to bring finality, and that is a matter of public interest, both from the point of view of the taxpayer in question and that of the wider body of taxpayers.”
[96]Further in HMRC v Hafeez Katib [2019] 0189 UKUT (TCC) (“Katib”), the Upper tribunal held at paragraph 17, that the First tier Tax Tribunal had made an error of law “in failing to...give proper force to the position that, as a matter of principle, the need for statutory time limits to be respected was a matter of particular importance to the exercise of its discretion.”[50]The Court of Appeal in BPP Holdings Limited v HMRC [2016] EWCA Civ 121 also found that compliance ought to be expected unless there was “good reason to the contrary.”[97]Further, as stated by the FTT in Quadragina Limited and Charles Horder [2019] UKFTT 397, at paragraph 112:
“Compliance with time limits is very important; time limits for appeals with NORs are particularly important because NORs are there to protect revenues. NORs are intended to prevent companies continuing to trade without paying over the tax they collect on HMRC’s behalf (in this case, PAYE and NIC). 113. Where a company’s response to a NOR is to cease trading, then time may not be quite so much of the essence. But that is not the situation that existed here.”
[98]That is also not the situation that existed in Mr Benson’s case. In this case Mr Benson knew that neither he nor PLL could pay the security and he continued trading while trying to secure more funding or a buyer for PLL. This resulted in PLL’s PAYE and NICs arrears rising even further, thereby completely undermining the statutory purpose of the NOR to protect revenue and prevent businesses from building up further arrears.[99]Section 684(4A) of the Income Tax (Earnings and Pension) Act 2003 makes it a criminal offence subject to a fine if a person served with a PAYE NOR does not pay it within the time limit stated in the notice. Paragraph 29X of Schedule 4 to the Social Security (Contributions) Regulations 2001/1004 makes it a criminal offence for failure to pay a NICs NOR on time.[100]The prejudice to Mr Benson if he is not allowed to make a late appeal to HMRC therefore is that he will very likely be convicted of a criminal offence. This is undoubtedly a very severe prejudice to Mr Benson but that is in part simply because that is the statutory position and Parliament’s intention. Further, allowing Mr Benson to make a late appeal to HMRC will not in itself avoid Mr Benson receiving a criminal conviction. Mr Benson would still need to be ultimately successful in that appeal and as stated above his grounds of appeal are not obviously strong or weak.[101]Further in Charles Horder v HMRC [2023] UKUT 00106 (TCC) the UT endorsed the FTT decision that even where allowing the late appeal would avoid a criminal conviction, this was not sufficient to outweigh the importance of meeting statutory time limits.[102]We also note that granting Mr Benson permission to make a late appeal to HMRC is likely to result in further litigation in this Tribunal, delay to the related Magistrates’ Court proceedings and further resource demand on HMRC when they reasonably considered that this matter had been concluded.

conclusion

[103]We find therefore that, overall, the significant prejudice that Mr Benson will suffer if we do not grant him permission to submit his appeal to HMRC late, is outweighed by the importance of statutory time limits being respected, the need for litigation to be conducted efficiently and at proportionate cost and the lack of merit in Mr Benson’s reasons for a large part of the significant and serious delay in him submitting his appeal to HMRC.[104]For all the reasons above we refuse the application.[105]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: 10th MARCH 2025