Michael Krishnan v The Commissioners for HMRC [2026] UKFTT 622 (TC)

[2026] UKFTT 00622 (TC)Case No TC 09856
FIRST-TIER TRIBUNAL
TAX CHAMBER
Hearing Heard on: 20 April 2026Date Judgment date: 23 April 2026
Taylor House, 88 Rosebery Avenue, London EC1R 4QU
Appeal reference: TC/2024/05445
VAT-Application for permission to make a late appeal – Personal Liability Notice – VAT penalty, 100% allocated to Appellant – appeal notified out of time – Martland applied – application refused
Before
TRIBUNAL JUDGE MARILYN MCKEEVERTRIBUNAL JUDGE SHOSHANA STAPENHURSTDR COLIN BOYD
Between
MICHAEL KRISHNANAppellantTHE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMSRespondentThe Appellant did not attend the hearing and was not represented. for AppellantMs Heather Sercombe, litigator of HM Revenue and Customs’ Solicitor’s Office for RespondentsDECISION

Introduction

[1]This decision concerns an application for permission to notify a late appeal to the Tribunal in respect of a Personal Liability Notice issued to the Appellant on 6 June 2017 (the “2017 PLN”). By that notice, HMRC seek to hold the Appellant personally liable for 100% of a penalty in the sum of £42,707.70 imposed on MHM Construction Ltd (“MHM”). The penalty relates to an alleged under-declaration of VAT for the VAT accounting period ending April 2014. The Appellant was the sole shareholder and director of MHM, which has now been liquidated.[2]The Appellant now seeks to appeal against the 2017 PLN, notifying his appeal to the Tribunal on 11 October 2024. The appeal was notified 2653 days (just over 87 months) after the statutory appeal period ended.[3]The Appellant did not attend the hearing. Having made enquiries of the Tribunal administration, we were satisfied, in accordance with Rule 33 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, that reasonable steps had been taken to notify the Appellant of the time and place of the hearing, and we decided that it was in the interests of justice to proceed in his absence.[4]After the conclusion of the hearing, we were informed that the Appellant had telephoned the Tribunal to state that he had not received the Notice of Hearing and that his representative was engaged in another hearing that day. The Appellant also sent an email at 11:14, copying his representative, Mr Simpson, in which he stated: ‘I have just became aware of hearing I was due to attend today at Taylor House. I'm sorry Mr Simpson or I do not recall having any notification to attend court today. I would kindly like to ask can the hearing be reconvened to another date please’(sic)[5]It is noted that the email address from which this message was sent, and the email address used to copy in the Appellant’s representative, are identical to the addresses to which the Notice of Hearing was sent.[6]In all the circumstances, we remain satisfied that our assessment under Rule 33 was correct. Reasonable steps had been taken to notify the Appellant (and his representative) of the hearing and it was in the interests of justice to proceed. The post-hearing communications do not alter that conclusion.[7]We have been provided with a bundle of 167 pages, which included the Appellant’s Notice of Appeal dated 11 October 2024 with an appended letter of reasons dated 6 October 2024, and the Notice of Objection from HMRC dated 5 February 2025 (but filed with the Tribunal on 17 February 2025). The bundle also contained, what appears to be a skeleton argument in respect of bankruptcy proceedings relating to the Appellant in the County Court at Taunton (“Bankruptcy Skeleton”). The documents referred to in that skeleton argument have not been provided to the Tribunal.[8]The Tribunal has carefully considered the documentary evidence contained in the hearing bundle of 167 pages and, in the Appellant’s absence, has relied on the material contained within that bundle insofar as it relates to the Appellant’s reasons for bringing the appeal out of time.

facts

[9]On 17 November 2016, HM Revenue and Customs (“HMRC”) wrote to MHM at its business address at Connaught Avenue, Grays, Essex to notify the business of a proposed compliance visit to inspect its VAT records. The visit was scheduled for 6 December 2016 at 10:00 am. The letter explained that the visit had been arranged following an unsuccessful attempt by HMRC to contact the business by telephone and requested that specified VAT records be made available to HMRC officers.[10]On 28 November 2016, HMRC sent a further letter to MHM at the same address, advising that the visit had been rearranged from 6 December 2016 at 10:00 am to 20 December 2016 at 10:00 am. A duplicate copy of this letter was subsequently sent on 5 December 2016 to MHM at the Appellant’s personal address also in Gray’s, Essex.[11]On 20 December 2016, HMRC officers attended the Appellant’s address for the rearranged visit. There was no response at the address and, as a result, the visit was aborted.[12]HMRC had, as a creditor, petitioned the High Court to wind up MHM on 18 October 2016 and a winding up Order was made on 5 December 2016. The Official Receiver was appointed as the liquidator.[13]On 17 January 2017, HMRC issued an assessment letter to MHM in respect of the VAT period 04/2014. The letter stated that, based on information held on HMRC’s Construction Industry Scheme records, MHM had received payments totalling £338,953 during the relevant period. HMRC concluded that these receipts indicated an under-declaration of taxable supplies, with associated output tax of £67,790. HMRC noted that a nil VAT return had been submitted for the period. An allowance of 10 per cent was made for input tax, resulting in a net VAT under-declaration assessed at £61,011.[14]On 5 May 2017, HMRC issued a Penalty Explanation Letter to MHM, notifying it of HMRC’s intention to impose a penalty in the sum of £42,707.70. The letter set out the basis on which the penalty had been calculated and invited MHM to provide any additional relevant information by 4 June 2017.[15]On 6 June 2017, HMRC issued a notice of penalty assessment to MHM.[16]The above correspondence was addressed to the Official Receiver as liquidator of MHM.[17]Also on 6 June 2017, HMRC issued the 2017 PLN to the Appellant, the sole director of MHM, at his personal address. The notice stated that HMRC considered the Appellant to be personally liable for the penalty on the basis that he had personally gained, or attempted to gain, from the inaccuracy in MHM’s VAT return. The PLN enclosed copies of the penalty assessment and penalty explanation sent to the company and set out the Appellant’s rights of appeal.[18]On 27 May 2022, a request for £51,208.05 was sent by an officer in HMRC’s Targeted Enforcement Recovery Unit (“TERU”) to the Appellant. This amount comprised the original penalty of £42,707.70 plus interest. That letter referred to earlier correspondence dated 21 January 2020 which had requested that the Appellant pay his outstanding HMRC debt.[19]Also on 27 May 2022 a ‘Warning of bankruptcy for £51,208.05’ letter was sent to the Appellant. In that letter HMRC stated that if the Appellant did not pay or contact HMRC by 7 June 2022, HMRC would apply for a bankruptcy order against him for the debt and would continue to charge interest until the amount was paid in full.[20]A further letter was sent by HMRC’s TERU on 22 June 2022 requesting payment. A further warning of bankruptcy was sent on the same date.[21]In his Notice of Appeal dated 11 October 2024 and the attached letter dated 6 October 2024, the Appellant contends that he has ‘asked HMRC to send him the documents that they allege he sent them that make him responsible, but they refuse to do so’. The Appellant further submitted that ‘he requested the case officer allow him to appeal to the Tribunal but this was denied as being out of time in 2018 and HMRC was dealing directly with the official receiver at the time of the companies liquidation’. HMRC’s Notice of Objection states that they can find no correspondence relating to the alleged request.[22]In the Appellant’s Bankruptcy Skeleton provided contained in the bundle, it is stated that the Appellant only became aware of the VAT Penalty (assumed to be the 2017 PLN) by a letter dated 25 October 2018. The bundle did not contain this letter.

the law

[23]The statutory framework governing the time limits for appealing penalty assessments is contained in section 83G of the Value Added Tax Act 1994 (“VATA 1994”). The provisions relevant to this appeal are set out below. “83G— Bringing of appeals (1) An appeal under section 83 is to be made to the tribunal before— (a) the end of the period of 30 days beginning with— (i) in a case where P is the appellant, the date of the document notifying the decision to which the appeal relates,… (6) An appeal may be made after the end of the period specified in subsection (1), … if the tribunal gives permission to do so. (a) the end of the period of 30 days beginning with— (i) in a case where P is the appellant, the date of the document notifying the decision to which the appeal relates,…[24]In general, where a taxable person wishes to appeal on a question relating to VAT, the “appeal is to be made” before the end of the period 30 days from the date of notification of the relevant decision.[25]However, s83G(6) confers a discretion on the Tribunal to determine whether or not to allow late appeals.[26]The applicable guidance on the exercise of this discretion was established by the Upper Tribunal in Martland v HMRC [2018] UKUT 178 (TCC) (“Martland”) at [44] and [45]:
“44. 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. That 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. By approaching matters in this way, it can readily be seen that, to the extent they are relevant in the circumstances of the particular case, all the factors raised in Aberdeen and Data Select will be covered, without the need to refer back explicitly to those cases and attempt to structure the FTT’s deliberations artificially by reference to those factors. The FTT’s role is to exercise judicial discretion taking account of all relevant factors, not to follow a checklist.”[27]The Martland test has recently been confirmed by the Court of Appeal in HMRC v Medpro Healthcare Ltd [2026] EWCA Civ 14 (Medpro). The Court of Appeal confirmed that the Martland three-stage approach continues to apply and that, at the third stage of that approach, the Tribunal is required to give special weight to the need for litigation to be conducted efficiently and at proportionate cost and to the need for statutory time limits to be respected.

discussion

[28]We are grateful for the submissions made by Ms Sercombe on behalf of HMRC in respect of the application of the three-stage approach set out in Martland.[29]Applying stage one of the Martland approach, we agree with HMRC that the delay was both serious and significant. The Notice of Appeal was lodged 2,653 days (just over 87 months) after the expiry of the statutory appeal period. It is not necessary for us to determine whether we accept the Appellant’s submission in the Bankruptcy Skeleton that he only became aware of the 2017 PLN on 25 October 2018. Even if we were to accept that submission, the delay thereafter was in excess of 71 months, which is plainly serious and significant.

The reason (or reasons) why the default occurred

[30]The Appellant has not provided any cogent explanation for the delay in notifying his appeal to the Tribunal. He has produced no evidence as to what advice, if any, he was given, what communications he had with HMRC, or what he understood to be HMRC’s position regarding his appeal rights. He has not explained why, having on his own account been aware from late 2018 that he could appeal the 2017 PLN to the Tribunal, he took no steps to do so for a further period of almost six years. There is no explanation before us which accounts for the delay, whether in whole or in any material part.

Evaluation of “all the circumstances of the case”

[31]In Medpro, the Court of Appeal confirmed that, at the third stage of the approach set out in Martland (as amplified in HMRC v Katib [2019] UKUT 189 (TCC), [2019] STC 2106), the Tribunal must evaluate all the circumstances of the case, giving particular weight to the need for litigation to be conducted efficiently and at proportionate cost, and to the importance of compliance with statutory time limits.[32]In the present case, there has been very significant non-compliance with the statutory time limits and no convincing explanation has been advanced for the default. Whilst we have not undertaken any substantive evaluation of the merits of the appeal, there is nothing in the evidence before us that points to an obviously strong case in favour of the Appellant. Taking all the circumstances of the case into account and having conducted the required balancing exercise, we conclude that it would not be just to grant permission for the appeal to be brought out of time.

disposal

[33]The application for permission to notify a late appeal to the Tribunal is therefore REFUSED. In consequence, the substantive appeal may not proceed.

Right to apply for permission to appeal

[34]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: 23 April 2026