David Morgan v The Commissioners for HMRC [2026] UKFTT 1063 (TC)

[2026] UKFTT 01063 (TC)

Case No TC 09960

FIRST-TIER TRIBUNAL

TAX CHAMBER

Hearing Heard on: 9 July 2026

Date Judgment date: 16 July 2026

Determined on papers

Appeal reference: TC/2025/02397

National Insurance Contributions – personal liability penalty – reinstatement application after appeal automatically struck out following non-compliance with unless order – application refused

Before

TRIBUNAL JUDGE MATTHEW DONMALL

Between

DAVID MORGANAppellant

THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMSRespondent

Decided on the papers

DECISION

Introduction

[1]This is an application to reinstate the Appellant’s appeal (the Reinstatement Application), the appeal having been automatically struck out under rule 8(1) of The Tribunal Procedure (First-tier Tribunal) (Tax Chamber) 2009 (FTTTC Rules) for failure to comply with an unless order dated 12 March 2026.

Legislation and Legal principles

[2]Rules 2 and 8 of the FTTTC Rules provide as follows: Rule 2(1) The overriding objective of these Rules is to enable the Tribunal to deal with cases fairly and justly.

(2) Dealing with a case fairly and justly includes— (a) dealing with the case in ways which are proportionate to the importance of the case, the complexity of the issues, the anticipated costs and the resources of the parties; (b) avoiding unnecessary formality and seeking flexibility in the proceedings; (c) ensuring, so far as practicable, that the parties are able to participate fully in the proceedings; (d) using any special expertise of the Tribunal effectively; and (e) avoiding delay, so far as compatible with proper consideration of the issues.

(3) The Tribunal must seek to give effect to the overriding objective when it - (a) exercises any power under these Rules; or (b) interprets any rule or practice direction. … Rule 8 (1) The proceedings, or the appropriate part of them, will automatically be struck out if the appellant has failed to comply with a direction that stated that failure by a party to comply with the direction would lead to the striking out of the proceedings or that part of them. … (3) The Tribunal may strike out the whole or a part of the proceedings if - (a) the appellant has failed to comply with a direction which stated that failure by the appellant to comply with the direction could lead to the striking out of the proceedings or part of them; … (c) the Tribunal considers there is no reasonable prospect of the appellant's case, or part of it, succeeding.

(4) The Tribunal may not strike out the whole or a part of the proceedings under paragraphs (2) or (3)(b) or (c) without first giving the appellant an opportunity to make representations in relation to the proposed striking out.

(5) If the proceedings, or part of them, have been struck out under paragraphs (1) or (3)(a), the appellant may apply for the proceedings, or part of them, to be reinstated.

(6) An application under paragraph (5) must be made in writing and received by the Tribunal within 28 days after the date that the Tribunal sent notification of the striking out to the appellant.

(7) This rule applies to a respondent as it applies to an appellant except that— (a) a reference to the striking out of the proceedings must be read as a reference to the barring of the respondent from taking further part in the proceedings; and (b) a reference to an application for the reinstatement of proceedings which have been struck out must be read as a reference to an application for the lifting of the bar on the respondent taking further part in the proceedings.

[3]In Chappell v The Pensions Regulator

[2019] UKUT 0209 (TCC)

, the Upper Tribunal considered the principles applicable to an application for reinstatement under Rule 8(5) of The Tribunal Procedure (Upper Tribunal) Rules 2008, following an automatic strike out for failure to comply with an unless order under Rule 8(1) of those rules. Those provisions are materially identical for relevant purposes to those in Rule 8 of the FTTTC Rules with which we are here concerned. In Carbon Six Engineering Limited v HMRC

[2026] UKFTT 00177 (TC)

at [104], Judge Amanda Brown KC held that the FTT is bound to follow the approach set out in Chappell when considering whether to set aside a barring order under rule 8. It applies equally to an application for reinstatement of proceedings which have been struck out, as here.

[4]In Carbon Six, the relevant legal principles identified in Chappell were summarised at [81] as follows:(1) The Tribunal must have regard to the overriding objective and must consider flexibility, participation, and avoidance of delay, and the duty of parties to cooperate.

(2) Although the CPR does not apply directly, the Tribunal must adopt the same approach to sanctions as articulated by the Supreme Court in BPP SC. BPP Holdings Limited v HMRC

[2017] UKSC 55

(3) BPP SC confirms that the three-stage Denton Denton v White Ltd

[2014] 1 WLR 3926

approach applies in the Tribunal context, including reinstatement applications following unless orders.

(4) Martland Martland v HMRC

[2018] UKUT 178 (TCC)

provides a structured adaptation of the Denton test for tribunals, including assessment of delay, reasons, and prejudice, with limited consideration of the strength of the underlying case.

(5) Consideration of underlying merits is generally irrelevant in case‑management decisions following default, save where the applicant’s case is so strong as to be analogous to a summary judgment scenario: Global Torch Ltd v Apex Global Management Ltd

[2014] 1 WLR 4495

(Global Torch).

(6) Breaches of unless orders require assessment of the underlying breach as well as the final breach, because the unless order represents a ‘second chance’: British Gas Trading Ltd v Oak Cash & Carry Ltd

[2016] 1 WLR 4530

(7) Where multiple failures led to the unless order, the entire sequence constitutes the underlying breach: Khandanpour v Chambers

[2019] EWCA Civ 570

(8) Applying these principles, the Tribunal must evaluate seriousness, reasons, prejudice, and the overarching need for procedural discipline, considering merits only to the limited Global Torch extent.

[5]While Martland concerned the question as to whether the Tribunal should allow the taxpayer’s application to bring an appeal out of time, as held in Chappell the approach also represents the relevant test to be applied when considering a reinstatement application. In summary:(1) It must be remembered that the starting point is that permission should not be granted unless the Tribunal is satisfied on balance that it should be.

(2) In considering that question, the Tribunal can usefully follow a three-stage process. (i) 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 Tribunal 'is unlikely to need to spend much time on the second and third stages'. (ii) Establish the reason (or reasons) why the default occurred; and (iii) Evaluate '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.

(3) The balancing exercise 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. This approach has recently been confirmed as correct by the Court of Appeal in HMRC v Medpro Healthcare Ltd

[2026] EWCA Civ 14

[6]As regards the first stage in Martland, in the context of a reinstatement application rather than an application to allow a late appeal, the first stage is to consider the seriousness and significance of the breach of the unless order, considering in so doing the underlying breach which had necessitated the issue of the unless order.

[7]In Katib v HMRC

[2019] UKUT 189 (TCC)

at [49], the UT accepted as a general point that in most cases, when considering an application for permission to make a late appeal, failings by a litigant’s advisers should be regarded as failings of the litigant. Further, as regards the consequences of Mr Katib not being able to appeal, which the FTT had concluded would mean he would lose his home, the UT observed that: We have considered this factor anxiously for ourselves. However, again, when properly analysed, we do not think that this factor is as weighty as the FTT said it was. The core point is that (on the evidence available to the FTT) Mr Katib would suffer hardship if he (in effect) lost the appeal for procedural reasons. However, that again is a common feature which could be propounded by large numbers of appellants, and in the circumstances we do not give it sufficient weight to overcome the difficulties posed by the fact that the delays were very significant, and there was no good reason for them.

Factual background

[8]On 8 May 2024, HMRC sent the Appellant a letter stating that a formal decision had been made to issue him with a Personal Liability Notice (PLN) in the sum of £44,223.08 plus interest in respect of an underpayment of National Insurance Contributions (NICs) in that amount in the tax years 2019/20 to 2022/23 by Peter Morgan Contracts Ltd (the Company), that was due to neglect on his part as the sole director of the Company.

[9]That decision was subsequently the subject of a statutory review, which concluded on 28 March 2025, upholding the PLN.

[10]On 25 April 2025, an appeal was lodged with the Tribunal on the Appellant’s behalf by his representatives, McNamee McDonnell Solicitors. The grounds of appeal contended that in the circumstances of the Appellant’s health during the currency of the Covid epidemic and his considerable chronic health problems it could not be found that he had by neglect caused the failure of the Company to pay the NICs. It also challenged “the proportion of the [NICs] this Appellant should be fixed with”.

[11]On 11 June 2025, the Tribunal wrote to the parties acknowledging the appeal registration, assigning it to the standard category, and directing HMRC to provide their statement of case within 60 days, and then the Appellant was to provide a list of documents within 42 days thereafter.

[12]On 4 August 2025, HMRC filed their statement of case resisting the appeal.

[13]On 22 September 2025, HMRC filed their list of documents. No list of documents was filed by the Appellant.

[14]On 20 October 2025, the Tribunal issued directions (the October Directions), requiring that the parties deliver a list of documents by 5 December 2025 and, in respect of witness statements: Not later than 02 January 2026 each party shall send or deliver to the other party statements from all witnesses on whose evidence they intend to rely at the hearing setting out what that evidence will be and shall notify the Tribunal that they have done so.

[15]On 5 December 2025, HMRC re-served the list of documents originally served on 22 September 2025. No list of documents was served by the Appellant, and no in-time application for an extension of time was made.

[16]On 31 December 2025, HMRC made an in-time application for the extension of time for service of a witness statement, until 16 February 2026, because the existing litigator had gone on sick leave and the case had been reallocated to a new litigator.

[17]The Appellant did not serve any witness evidence on or before 2 January 2026, and no in-time application for an extension of time was made.

[18]On 8 January 2026, the Tribunal wrote to the Appellant’s solicitors as follows: The Tribunal refers to the Directions sent on 20 October 2025, a copy of which is enclosed. The Tribunal does not appear to have received your List of Documents in compliance with Direction 1, which was due on 5 December 2025, nor does the Tribunal appear to have received notice that you have served your witness statement(s) in compliance with Direction 2, which was due on 2 January 2026. It is important that each party to an appeal discloses in advance to the other party the documents and the evidence of the witnesses on which they rely, so that both parties can properly prepare for the hearing. If, therefore, you do not comply within 14 days with the directions to provide your list of documents and to provide statements by your witnesses, a Judge may issue a direction which may lead to the striking out of the appeal on the basis that your failure to disclose the documents and/or evidence on which you rely is unfair to the other party. Please remember that where an appellant intends to rely on his or her own evidence, a witness statement by the appellant must still be provided. You should now immediately provide (with an application for them to be admitted out of time) your list of documents and your witness statement(s) or tell the Tribunal if there are no documents nor witnesses on which you rely.

[19]No response from the Appellant or his solicitors having been received, on 21 January 2026, the Tribunal (Judge John Brooks) issued an unless order (the January Unless Order) in the following terms:(1) UNLESS the Appellant no later than 5pm on 04 February 2026 confirms in writing to the Tribunal an intention to proceed with the appeal then these proceedings WILL be STRUCK OUT without further reference to the parties; and

(2) UNLESS the Appellant no later than the same date and time complies with the Directions issued on 20 October 2025 to provide its list of documents and its witness statements and, at the same time, makes an application for it to be permitted to comply out of time, then these proceedings MAY be STRUCK OUT without further reference to the parties.

[20]On the same date, the Tribunal allowed HMRC’s application for an extension of time for HMRC’s witness evidence to 16 February 2026, unless the Appellant objected within 14 days.

[21]On 22 January 2026, the Appellant’s solicitors wrote two emails to the Tribunal:(1) The first attached a list of documents, and stated as follows: Please accept our apologies. We understand that our client suffers from many serious medical issues and obtaining instructions from him is proving very difficult. We enclose herewith our List of Documents and advise that our client does wish to proceed with this appeal. In relation to “All interparty correspondence” found at point 3 – we advise that the Respondent will be in possession of same. We again apologise for any delay in relation to this matter.

(2) The second applied for an extension of time for the Appellant’s statement: The Appellant of course takes no issue with the Respondent’s application for an extension of time in this matter. We would also be obliged if the Tribunal would allow the Appellant until 16 February 2026 to exchange their statement. As previously advised our client is of ill-health and housebound, as such all instructions and advices must be taken via telephone. We are having difficulty obtaining full instructions from our client however shall endeavour to have our client’s statement drafted and served by 16 February 2026.

[22]On 8 February 2026, the Tribunal wrote to the parties consenting to the extension of time to provide witness evidence to 16 February 2026.

[23]On 16 February 2026, HMRC served a witness statement of Nigel Dillon. No witness statement was served by the Appellant, nor had any application for a further extension of time been made.

[24]On 12 March 2026, the Tribunal (Judge Michaela Snelders) issued a second unless order (the March Unless Order) in the following terms (cited as in original): The Appellant having failed to comply with the Directions issued on 21 January 2026 and having failed to reply to the letter from the Tribunal dated 08 February 2026 within the times stipulated therein or at all the Tribunal DIRECTS that UNLESS the Appellant no later than 5pm on and having failed to reply to the letter from the Tribunal dated 26 March 2026 confirms in writing to the Tribunal that he intends to proceed with the appeal then these proceedings WILL be STRUCK OUT without further reference to the parties.

[25]Pausing there, the March Unless Order contains an obvious drafting error, in that it repeats “and having failed to reply to the letter from the Tribunal dated” between “5pm on” and “26 March 2026”. However, there is no suggestion in the Reinstatement Application that the Appellant or his solicitors had any difficulty understanding its meaning, nor was there any correspondence with the Tribunal asking for clarification at the time. I therefore proceed in this decision on the basis that the effect of the March Unless Order was sufficiently clear, namely that the Appellant was required by 5pm on 26 March 2026 to confirm whether he intended to proceed with the appeal, failing which the appeal would be struck out.

[26]The Appellant did not provide written confirmation of his intention to proceed with the appeal by 5pm on 26 March 2026.

[27]On 1 May 2026, the Tribunal wrote to the Appellant’s solicitors, to the effect that as he did not comply with the March Unless Order the appeal was automatically struck out on 27 March 2026. The Appellant was informed that he had the right to apply for reinstatement, and any such application should be received within 28 days of this letter, supported by reasons including an explanation of why the direction was not complied with.

[28]On 12 May 2026, the Appellant’s solicitors made the Reinstatement Application in the following terms: Please accept our apologies in relation to the non-compliance of directions. We advise that we had been attempting to contact the client however had understood hat he was in very poor health. We have since been provided with the attached medical report from our client’s GP. We would be obliged if this strike out application could be vacated. We will endeavour to have our client provide instructions remotely in relation to this ongoing appeal. Our client apologises for this non-compliance however his health has been debilitating – he does however now realise the importance of complying with all directions set by the Tribunal. We await hearing from you.

[29]The attached medical evidence is a letter from a general practitioner dated 12 May 2026 as follows: The above patient attended me on 12/05/2026. He has been attending me over the past year for advice on management of his Class 3 obesity. From my own observations and assessments, alongside evidence from the medical records he has shared with me, I have a good understanding of the complex medical issues that David suffers with, many of which are connected with or complications of his Obesity. He has a long history of suffering from Chronic Stress, Anxiety and Depression. He also has a history of Pulmonary embolism, Pre-diabetes, Obstructive sleep apnoea, lipoedema and Chronic Joint pains. Due to the severity of his Obesity (BMI >85; weight 261Kg), he is at a high risk of severe health problems (for example, Diabetes, Heart disease, Stroke, Heart failure). He reports his anxiety is particularly severe in social contexts, and is keen to avoid crowds and strangers. I would agree that he is currently unfit for work due to his underlying medical conditions and would encourage him to avoid and take action to reduce stressors. Thanks for taking this information into consideration

[30]On 20 May 2026, the Tribunal asked HMRC for their representations on the Reinstatement Application.

[31]On 15 June 2026, HMRC responded objecting to the Reinstatement Application. HMRC submit that the Appellant has been in breach of the Tribunal’s directions more than once, and the medical evidence provided by the Appellant was weak.

Discussion

[32]I approach the Reinstatement Application in line with the principles identified in Martland, Chappell and Katib set out above.

[33]First, as regards the significance and seriousness of the breach of the March Unless Order, I find that it was a serious and significant breach. The March Unless Order was the culmination of a sequence of breaches on the part of the Appellant. There was no compliance with the requirement in the October Directions to provide the Appellant’s list of documents by 5 December 2025. There was then no service of witness evidence by 2 January 2026. There was then no response to the Tribunal’s letter of 8 January 2026. Against those failures, the January Unless Order was issued by Judge Brooks. The Appellant thereafter did provide a list of documents and made an application for extension of time to 16 February 2026 for the service of his witness statement, which was granted by the Tribunal. But the Appellant then breached that order by not providing his witness statement by 16 February 2026. Nor was there any in-time application for a further extension of time made, nor was any out of time application made thereafter. Against that background, the March Unless Order was made. All that was required to comply with that order was to confirm in writing to the Tribunal by 26 March 2026 that he intends to proceed with the appeal. The Appellant failed to do so. In all the circumstances, I find that is a serious and significant breach, against a history of repeated breaches.

[34]Second, I must consider the reason or reasons why the default occurred. As to this, at all relevant times the Appellant was represented by solicitors. There is no suggestion that any of the orders and correspondence from the Tribunal did not reach these solicitors. Rather, the brief explanation provided in the Reinstatement Application is “We advise that we had been attempting to contact the client however had understood that he was in very poor health. We have since been provided with the attached medical report from our client’s GP… Our client apologises for this non-compliance however his health has been debilitating – he does however now realise the importance of complying with all directions set by the Tribunal.” This explanation is to be read alongside the medical evidence provided.

[35]Addressing the points here raised:(1) The suggestion that the Appellant “now” realises the importance of compliance suggests that he did not realise that importance before. In my judgment, the importance of compliance should have been reasonably apparent at the latest from 8 January 2026, when the Tribunal warned that failure to comply may result in a direction that may lead to the striking out of the appeal, and certainly from the date of the January Unless Order of 21 January 2026, which stated that in the event of non-compliance the proceedings “WILL be STRUCK OUT”. Further, the March Unless Order itself made it explicit that if the Appellant did not confirm his intent to proceed with the appeal, then it “WILL be STRUCK OUT”. At all times, the Appellant had professional representation of his solicitors. Any failure to realise the importance of compliance is not a good reason for the repeated breaches.

(2) Any suggestion that the Appellant’s health has been so debilitating that he was unable to give instructions to his solicitors confirming that he wished to pursue the appeal within the 14 day period allowed by the March Unless Order is not made out on the evidence. There is no witness evidence from the Appellant to that effect. There is no express statement from the solicitors to that effect. There is no basis in the disclosed medical evidence on which to make a finding that the Appellant was not able to provide such an instruction. The medical evidence indicates that he has a number of health problems including chronic stress, anxiety and depression, and his anxiety is particularly severe in social contexts, however his solicitors clearly have been able to take instructions on occasion, in initially issuing the appeal in April 2025, in providing a list of documents in January 2026, and the second email of 22 January 2026 stated that the solicitors were able to take instructions over the telephone and anticipated a statement drafted and served by 16 February 2026. Further, the medical evidence does not state that there has been a particular acute deterioration in the Appellant’s condition, on the contrary it refers to his “long history” of chronic stress, anxiety and depression.

(3) If it is being suggested that the Appellant’s solicitors were not able to contact him to take instructions, I do not find that is sufficiently made out on the evidence before me to find that as a fact. It is not entirely clear what is meant by “We advise that we had been attempting to contact the client however had understood that he was in very poor health.”, in particular as to whether that is a reference to attempts to obtain instructions on his witness statement, or reference to attempts to obtain instructions on the question of whether he intended to proceed with the appeal. I do not consider that there is sufficient evidence to find as a fact that the Appellant’s solicitors were unable to contact him to take instructions following the March Unless Order. There is no further detail in the Reinstatement Application on the point, nor any witness statement or similar the solicitors explaining precisely what steps were taken by them following receipt of the March Unless Order, nor from the Appellant. In making the Reinstatement Application, the burden falls on the Appellant to provide a proper explanation for the breach. None has been forthcoming. In any case, I would not consider that difficulty in taking instructions would be a good reason, because that would raise the question of why the solicitors did not contact the Tribunal within the period for compliance with the March Unless Order explaining the position.

(4) Further, as regards the underlying failure to serve a witness statement, that failure cannot be seen in isolation from the repeated failures to make in-time applications for an extension of time to do so. The Appellant has known since the October directions that if he wished to rely on a witness statement, he must serve one. It is evident that he does wish to rely on one, hence the application of 22 January 2026 for an extension of time. I am not satisfied that there is sufficient evidence – medical or otherwise – to explain why he has not been able to serve a witness statement by 2 January 2026, the original date, nor 16 February 2026. But even if there were reasons of ill health that prevented that, those reasons would not preclude the making by his solicitors of an in-time application for an extension of time. Rather, the procedural history of the appeal gives the impression of a failure on the part of the Appellant to engage with it properly, hence why the March Unless Order requiring him to confirm his intention to proceed was made.

[36]For these reasons, I am unable to find that there was any good or acceptable reason for the failure to comply with the March Unless Order.

[37]I turn then to the third stage, the balancing exercise. In approaching this exercise, I do not consider the merits of the Appellant’s underlying case, because there is no evidence or submissions put before me from which I could conclude that the appeal is so strong as to be analogous to a summary judgment scenario.

[38]In my judgment, in all the circumstances of this case, the balance is against allowing the Reinstatement Application, in particular because:(1) The Appellant’s breach of the March Unless Order, coming as a culmination of a sequence of breaches on the part of the Appellant, was serious and significant.

(2) While acknowledging that the Appellant has numerous significant medical conditions, for the reasons set out above, I do not consider that there is a good or acceptable reason for the breach of the March Unless Order, nor the breaches leading up to it.

(3) The need for litigation to be conducted efficiently and at proportionate cost and to enforce compliance with rules, practice directions and orders. As a matter of principle, the need for directions to be respected is a matter of particular importance to the exercise of my discretion.

[39]I do acknowledge that the Appellant will suffer significant prejudice if the Reinstatement Application is not allowed, as he will lose the opportunity to challenge the PLN, which is a significant amount of money. However, the fact that an appellant would lose the ability to appeal is common to any reinstatement application, and this factor is not, of itself, sufficient in my judgment to outweigh the countervailing factors identified above.

Right to apply for permission to appeal

[40]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: 16 July 2026