Lalji Vekaria v The Commissioners for HMRC
[2023] UKFTT 288 (TC)
Rizwan Butt v The Commissioners for HMRC
9 March 2023
[2023] UKFTT 295 (TC)
First-tier Tribunal
Mr. Butt was late appealing a big tax penalty. The judge said he was too late and didn't have a good enough excuse. But the judge let him appeal another, similar penalty because that one was almost on time.
Key Facts
- •Mr. Rizwan Butt received three penalty notices from HMRC totaling £115,060.91 for his role as director in Trade Lynx (London) Ltd and Quantum London Ltd.
- •Appeals against two penalty notices (25 Nov 2021 and 9 March 2022) were filed late, but one was within the time limit.
- •The appeal against the earliest penalty notice (31 March 2021, £61,019) was 327 days late.
- •Mr. Butt's representative argued that the delay was due to HMRC's refusal to provide sufficient information to formulate grounds for appeal.
- •HMRC argued that the delay was significant and without good reason, causing prejudice.
- •Additional reasons for delay (marital breakdown, health issues, caregiving responsibilities) were provided after the hearing and not considered.
Legal Principles
Appeals must be made within 30 days under section 83G of the Value Added Tax Act 1994 (VATA94).
Value Added Tax Act 1994
Late appeals may be permitted if the Tribunal grants permission (section 83G(6) VATA94).
Value Added Tax Act 1994
The Tribunal considers the length of delay, reason for delay, and prejudice to parties when deciding whether to allow a late appeal (Martland v HMRC [2018] UKUT 178 (TCC)).
Martland v HMRC [2018] UKUT 178 (TCC)
The three-stage Denton test is used to evaluate late appeals: (1) Length of delay; (2) Reason for delay; (3) All circumstances of the case, balancing reasons and prejudice (Denton v TH White Ltd [2014] EWCA Civ 906).
Denton v TH White Ltd [2014] EWCA Civ 906
Outcomes
Appeal against the 31 March 2021 penalty notice (£61,019) was refused.
The 327-day delay was serious and significant; the reason given (lack of information from HMRC) was unsatisfactory; admitting the appeal would prejudice HMRC and the efficient conduct of litigation.
Appeal against the 25 November 2021 penalty notice was admitted.
HMRC did not object as the facts were similar to a timely appeal against a penalty notice dated 9 March 2022.