Late appeal denied: director could have done more

In Shafique Uddin & Kazitula Limited v HMRC [2023] UKUT99, the Upper Tribunal (UT) confirmed denial of a late appeal against VAT and Corporation Tax assessments. It agreed that the taxpayer had been misled by his advisors however he had not acted reasonably and should have been more proactive in dealing with the appeals.

• Mr Uddin was the sole director shareholder of Kazitula Limited (Kazitula), a restaurant business.
• In April 2017, HMRC notified Kazitula of VAT and Corporation Tax assessments.
• On 13 April, Kazitual was placed into Creditor's Voluntary Liquidation (CVL).
• In June, HMRC issued Penalties for Deliberate inaccuracies.
• On 16 and 30 June. Personal Liability Notices were issued to Mr Uddin.
• Mr Uddin Appealed the Assessments and Penalties to the First Tier Tribunal (FTT) in November 2018. He had no authority to file an appeal for Kazitula as it was in liquidation.
• The liquidator agreed to authorise Mr Uddin to act on behalf of the company for the appeal in November 2020.
• The FTT dismissed the Late appeals.
• The taxpayers appealed to the UT.

The UT found that:

• The FTT was correct to establish that the length of the delay in appealing, 16 months after the deadline, was serious and significant.
• The FTT had considered the relevant reasons for the delay, including the complications of liquidation.
• It evaluated those reasons appropriately in denying the late appeal which included that:
  • Mr Uddin had been misled by his advisors.
  • He was reliant on his advisors to deal with the issue at hand and reliant on what he was told about dealing with that issue.       
  • While relying on his advisors Mr Uddin had not acted in the way a reasonable taxpayer in his position would as:
    • He demonstrated only a cursory interest in how the advisor was dealing with the enquiries.
    • He had not asked for a copy of the appeal he believed was filed.
    • He had not asked what steps were being taken.
    • There was no adequate reason for the 4 month delay in appealing to the tribunal after realising something was wrong.

The appeal was dismissed.

Useful guides on this topic

Liquidation
How do you wind up (liquidate) a company? What types of liquidation are there? What are the formalities and the tax consequences of liquidation?

Penalties: Deliberate Behaviour
What penalties apply to deliberate behaviour? What is deliberate behaviour?

Penalties: Errors in Returns and Documents
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?

Personal Liability Notices
A Personal Liability Notice (PLN) may be issued by HMRC in the event of a company's or a Limited Liability Partnership's (LLP's) failure to pay its tax debts or tax penalties to HMRC. A PLN will transfer the liability to pay the debt to one of its officers.

How to appeal an HMRC decision
Disagree with an HMRC decision? How to appeal, what type of decision can you appeal and what are your different options when you disagree with HMRC? What are the key steps in making an appeal?

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

How to appeal a tax penalty
What are the steps in making an appeal? What should your appeal cover? What does recent case law say on this topic?

Accountant and liquidator failure not reasonable excuses for late appeal
In Kazitula Limited (in liquidation) v HMRC [2021] TC0476, the First Tier Tribunal (FTT) dismissed the appellant's request to lodge an out-of-time appeal against assessments and penalties for Corporation Tax and VAT on the basis that there was no reasonable excuse for the extended delay.

External links

Shafique Uddin & Kazitula Limited v HMRC [2023] UKUT99