Refusal of Late Appeal in Janch Limited v HMRC Demonstrates Importance of Adhering to Statutory Deadlines

Citation: [2023] UKFTT 990 (TC)
Judgment on

Introduction

In the case of Janch Limited v The Commissioners for HMRC, the First-tier Tribunal (Tax Chamber) was confronted with an appeal by Janch Limited against decisions concerning underpaid import duty and VAT. The appellant sought permission to appeal out of time, invoking the procedural framework established for such circumstances. This case analysis explores the key topics discussed and legal principles applied, with direct references to the provided case summary.

Key Facts

Janch Limited, the appellant, imported clothes from China and exported them to another company in France and Spain. HMRC raised concerns over the underpayment of import duty and VAT due to alleged undervaluation of goods and questioned the conditions for Onward Supply Relief (OSR) from VAT. HMRC’s initial correspondence with Janch Limited began in 2019, leading to decisions in April 2022 requiring payment of substantial sums. The appellant, after a 30-day delay post the deadline for appeal, sought permission to appeal out of time. The tribunal considered the application following the procedural criteria established in previous case law.

The legal principles in this case revolve around the right to appeal out of time and hinge on the ‘Martland’ test, arising from the case of Martland v HMRC [2018] UKUT 178 (TCC). The test includes three stages:

  1. Assessing the length of the delay.
  2. Establishing the reasons for a default.
  3. Evaluating all circumstances of the case, involving a balancing exercise of the merits of reasons for delay against prejudicial impact on both parties.

Length of the Delay

Any delay beyond the specified period by law is significant, and a 30-day delay was deemed considerable, especially in the context of a 30-day time limit. Notably, The Secretary of State for the Home Department v SS (Congo) [2015] ECWCA Civ 387 provided authority that breaching a 28-day time limit by 24 days constitutes a significant lapse.

Reasons for Delay

The tribunal scrutinized the reasons provided for the delay, drawing upon the principles elaborated in HMRC v Katib [2019] UKUT 0189 (TCC). An appellant’s inability to render an acceptable rationale for lateness can impact the tribunal’s judgment. Failings by the appellant’s advisers were seen as their own, following the established principle in Hytec Information Systems v Coventry City Council [1997] 1 WLR 666.

Evaluation of All Circumstances

Regarding evaluating all circumstances, the tribunal considered the case of Advocate General for Scotland v General Commissioners for Aberdeen City [2006] STC 1218, which stresses that statutory time limits must be adhered to. Furthermore, Rose v HMRC [209] UKFTT 189 (TCC) emphasized the public interest in maintaining statutory deadlines.

Outcomes

The appeal of Janch Limited was 30 days late with no convincing reasons for the delay. The tribunal refused permission to appeal, highlighting Janch Limited’s failure to engage with the matter adequately and the risk of ongoing inefficiency and disproportionate cost in conducting litigation. The financial hardship the appellant might suffer due to the dismissal was not given significant weight, reinforcing the discretion allowed by the tribunal in such cases.

Conclusion

In concluding Janch Limited’s application for late appeal, the tribunal underscored the sanctity of statutory deadlines and the obligation of litigants to respect them. It found no compelling reasons for the delay, underscoring the importance of conducting litigation efficiently and at proportionate cost. The case demonstrates the criticality of adhering to procedural rules and the tribunals’ unwillingness to tolerate delays without valid justification, which ultimately serves to maintain the integrity and smooth operation of the legal system.

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