No reasonable excuse for delay in appeals

In Martin Clarke West v HMRC [2023] TC08705, the First Tier Tribunal (FTT) found that a late appeal against HMRC assessments, closure notices and penalties was not permitted. There was no good reason for the serious and significant delays, which exceeded 1,000 days. 

• Mr West was self-employed and owned a number of let properties.
• In January 2016, HMRC requested various items of information in respect of the 2013-14 tax year.
  • These included sales invoices, details of how sales and purchases were calculated, rental income accounts, and bank statements.
• Mr West failed to respond to this request and a subsequent Schedule 36 Information Notice which was issued by HMRC.
• Penalties were charged in 2017 for failing to comply with the Schedule 36 Notice.
• In 2018, HMRC raised assessments for the years 2009-10 to 2012-13, and 2017-18, and issued Closure notices for 2013-14 to 2015-16. A penalty under Schedule 24 Finance Act 2007 was also charged for errors in Mr West's returns.
• Following non-payment, HMRC petitioned for Mr West’s bankruptcy in 2019.
• Mr West appointed a new accountant in 2021 and subsequently submitted tax returns for 2009-10 to 2017-18.
  • These were rejected as being out of time.
• In March 2022, Mr West filed Late appeals to the First Tier Tribunal (FTT).

In considering Mr West’s application to make late appeals, the FTT applied the three-stage approach established in the Martland case:

• The length of the delays in making the appeals was between 1,315 and 1,108 days.
  • This was very serious and significant.
• The reasons for the delays were Mr West’s reliance on his advisers, his own ill health and his caring responsibilities for his mother.
  • The Katib decision indicates that reliance on an adviser is not normally a good reason for a delay.
  • Mr West’s advisers had filed returns showing no self-employment and rental income as Mr West had not provided the relevant information to them, having not kept records.
  • Mr West was aware of HMRC's proceedings as he had been copied in on all assessments, closure notices and penalties and had spoken to HMRC.
  • There was no causative link between Mr West’s health conditions or his caring responsibilities and the late filing of his appeals. He could have filed appeals himself or instructed an accountant to do so on a timely basis.
  • It followed that there was no good reason for Mr West’s failure to make his appeals within the statutory time limits.
• On balance, and considering all the circumstances:
  • The length of the delays, with no good reason, weighed heavily against Mr West.
  • Mr West’s reliance on his advisers weighed in favour of allowing late appeals, but could be given little weight compared to the importance of respecting statutory time limits, of which Mr West was aware.
  • The merits of Mr West’s appeals against the assessments, closure notices and Schedule 24 penalties were extremely weak, and, in the case of the penalties relating to the Schedule 36 notice, hopeless.
  • It was not in the interests of justice to give permission to make late appeals. 

Permission to make late appeals was refused.

Useful guides on this topic

Appeals: Late
When can you make a late tax appeal? What conditions must be met?

Sch 36 Information Notices
What is a Schedule 36 Information Notice? When can HMRC issue one? What rights does the taxpayer have when an information notice is issued?

Closure notices
When does HMRC issue a Closure Notice? Can a taxpayer demand one? Are there appeal rights? 

Penalties: Errors in Returns and Documents (subscriber version)
What penalties apply if you make an error or mistake? Is there a penalty if you fail to tell HMRC about an under-assessment? How are penalties calculated? How do you check penalties? What can you do if you receive a penalty?

Appeals: Grounds for Appeal Toolkit
What grounds are there to appeal a tax penalty? How should you word a tax appeal? Can you appeal HMRC errors? What is a reasonable excuse? 

External link

Martin Clarke West v HMRC [2023] TC08705