Tribunal Upholds Striking Out of Appeal in 99p Recycling Ltd v HMRC Due to Non-Compliance with 'Unless Order'

Citation: [2024] UKFTT 13 (TC)
Judgment on

Introduction

In the case of 99p Recycling Ltd v The Commissioners for HMRC, the First-tier Tribunal (Tax Chamber) assessed an application by 99p Recycling Ltd (“99P”) for the reinstatement of its appeal which had been previously struck out due to the company’s non-compliance with a Tribunal ‘Unless Order’. This article analyzes the Tribunal’s approach and the legal principles that the judge, Tribunal Judge Jeanette Zaman, applied in making the decision to keep the appeal struck out.

Key Facts

The case concerned an assessment issued by HMRC to 99P for customs duty regarding the import of face masks. 99P appealed but failed to comply with a fundamental requirement to either pay or secure the duty, or make a hardship application to HMRC. As a result, an ‘Unless Order’ was issued by the Tribunal, mandating 99P to confirm their intention to proceed with the appeal and provide proof of payment of the duty or a hardship application by a specified deadline. 99P did not comply, resulting in the appeal being struck out.

99P’s subsequent application to reinstate the appeal was delayed and did not include a satisfactory reason for their failure to adhere to the original order. Given this context, the Tribunal arrived at a decision after carefully analyzing the application against the established legal framework.

The legal principles applied in this case are noteworthy for their relevance to the procedural adherence by appellants within the UK Tribunal system. The Tribunal effectively utilized the following principles:

  1. Rule 8 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009: This Rule was crucial as the Tribunal must strike out proceedings if it lacks jurisdiction or if there is a failure to comply with a direction (such as an ‘Unless Order’) which explicitly states that non-compliance could lead to striking out of the proceedings.

  2. Martland v HMRC [2018] UKUT 178 (TCC): This legal principle provided a three-stage test used to assess applications for permission to appeal out of time. Firstly, determining the seriousness of the delay, secondly, establishing the reasons for the delay and thirdly, evaluating all circumstances of the case emphasizing efficient conduct of litigation and respecting time limits.

  3. Breen v HMRC [2023] UKUT 252 (TCC) and Chappell v The Pensions Regulator [2019] UKUT 2009: These cases provide further insight into the reinstatement of appeals following strike-out due to non-compliance with an ‘Unless Order’. They reinforce the importance of considering prior compliance breaches and limiting consideration of the underlying appeal’s merits when deciding on reinstatement.

  4. Overriding Objective (Rule 2): This principle requires the handling of cases fairly and justly, which underpins the application of discretion in both admitting the late application and deciding on reinstatement.

  5. Section 16(3) of the Finance Act 1994: This specific legislation mandates the requirement to pay or secure duty or make a hardship application before an appeal can be entertained, encompassing the jurisdictional aspect of the Tribunal.

Applying these legal principles, the Tribunal conducted a fine-grain analysis of the situation, scrutinizing the appellant’s past behavior, the reasons put forward for their non-compliance, and the subsequent consequences on both the appellant and the respondent (HMRC).

Outcomes

The Tribunal admitted the Reinstatement Application despite it being made out of time, attributing the delay to the short period (six days) and recognizing that the CEO was on holiday, although skepticism was cast at the genuineness of the reason provided.

However, the Tribunal ultimately refused to reinstate the appeal. It placed substantial weight on the importance of adhering to Tribunal directions and the undue prejudice that reinstatement would entail for HMRC. The merits of 99P’s reasons for non-compliance with the ‘Unless Order’, such as the financial inability to pay the duty or the alleged costliness of making a hardship application, were not considered sufficient to justify reinstatement, especially where no effort had been shown to comply with the Tribunal or HMRC’s repeated instructions.

Conclusion

In 99p Recycling Ltd v The Commissioners for HMRC, the Tribunal rigorously applied the rules governing the statutory time limits and procedures for appeals, and the principles emphasizing the necessity for litigants to adhere strictly to procedural directions and orders. The refusal to reinstate the appeal underscores the Tribunal’s commitment to the overriding objective to deal fairly and justly and sends a clear message about the expectations placed on appellants in the tax jurisdiction.