Hosie v Revenue and Customs (INCOME TAX - PROCEDURE - Appellant withdrew his Tribunal appeal) [2025] UKFTT 327 (TC) (13 March 2025)

	[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
	First-tier Tribunal (Tax)
You are here: BAILII >> Databases >> First-tier Tribunal (Tax) >> Hosie v Revenue and Customs (INCOME TAX - PROCEDURE - Appellant withdrew his Tribunal appeal) [2025] UKFTT 327 (TC) (13 March 2025) URL: http://www.bailii.org/uk/cases/UKFTT/TC/2025/TC09455.html Cite as: [2025] UKFTT 327 (TC)

DECISION

Introduction

1. This decision is in respect of the Appellant's application for reinstatement of an appeal that he withdrew 497 days earlier. In this decision, I set out the background to this application, consider the relevant legislation and then apply that legislation to the facts of this application to reach a decision about whether, as at the date of the application, the Tribunal still had the power to consider an application for reinstatement.

Outcome

2. As this is a long decision, I have set out the outcome first. I appreciate that this outcome will be upsetting for the Appellant and I am sorry that this will be the case.

3. However, my conclusion is that the effect of Section 54(4) of the Taxes Management Act 1970 is that this appeal was deemed to be settled on 11 November 2021. That means that when the Appellant applied on 15 March 2023 for reinstatement of this appeal, the Tribunal no longer had the power to grant the Appellant an extension of time to make that application.

4. Therefore, the Appellant's application for reinstatement is refused.

5. At the very end of this decision, I have set out what the Appellant should do if he wishes to ask for permission to appeal against my decision to the Upper Tribunal.

Background

6. My understanding of the background is limited by the fact that the Tribunal file for this appeal was destroyed in about November 2022, in accordance with the Tribunal's data retention policy. I am grateful to both parties for their detailed submissions which supplied much of the relevant background information.

The relevant appeal to the Tribunal

7. The appeal that the Appellant wishes to have reinstated was received by the Tribunal on 24 April 2020. This appeal was against a review decision, issued by HMRC on 26 March 2020, upholding an earlier decision to issue a closure notice to the Appellant, seeking repayment from the Appellant following a false claim to Enterprise Investment Scheme ("EIS") relief made in the Appellant's Self Assessment tax return for the tax year 2016/17. The Appellant accepted that he was not entitled to EIS relief but explained that his tax return had been submitted by an agent who had advised him that he was entitled to make an EIS claim. After HMRC opened their enquiry into the Appellant's return, the Appellant came to believe that he had been the victim of a crime committed by that agent, and he should not be responsible for repaying HMRC the tax relief that had been claimed in the return, and paid out by HMRC.

The progress of the Appellant's appeal before the Tribunal

8. Once the Tribunal had received the Appellant's appeal, HMRC were directed to file and serve a Statement of Case. On 31 July 2020, HMRC filed their Statement of Case with the Tribunal and served a copy on the Appellant. The Tribunal issued case management directions to both parties, to enable the parties to prepare their case for a hearing.

9. On 10 September 2020, the Appellant's new agent provided the Tribunal and HMRC with the Appellant's List of Documents, and asked for this appeal to be stayed. On 15 September 2020, HMRC opposed this stay application, and asked the Appellant's agent to provide them with copies of specific documents on the Appellant's List of Documents.

10. On 16 March 2021, the Appellant's agent made further submissions in support of the application for a stay, including asking for this appeal to be stayed behind a group of other appeals which concerned other appellants in a similar situation. HMRC again objected, and again asked to be provided with the missing documents on the Appellant's List of Documents.

11. The Appellant's application for a stay was refused by the Tribunal on 17 June 2021. On 7 July 2021, the Tribunal issued further directions which included the requirement that the Appellant's witness evidence be filed by 18 August 2021. On 4 August 2021, the Appellant's agent referred to the Appellant's wish to call a new witness, not previously notified. However, the Appellant did not file his witness evidence by the 18 August 2021 deadline.

12. On 24 August 2021, HMRC applied to the Tribunal for an Unless Order to be issued to the Appellant as they still had not been provided with the missing documents on the Appellant's List of Documents. There was no response from the Tribunal to this application.

The Appellant's withdrawal

13. On 3 November 2021, the Appellant withdrew his appeal. It appears the Tribunal acknowledged this withdrawal and formally notified the withdrawal to both parties on 11 November 2021. The Tribunal file was then closed.

Subsequent events

14. On 12 April 2022 the Tribunal issued its decision in McCumiskey v HMRC [2022] UKFTT 128 (TC); on 14 April 2022, the Tribunal issued its decision in Huntly v HMRC [2022] UKFTT 135 (TC). Both of these decisions concern false EIS claims made by an agent.

The Appellant's contact with HMRC

15. It seems that on 6 June 2022, the Appellant emailed HMRC to ask if he could have his appeal re-opened. No copy of this email correspondence has been provided to the Tribunal but, given that the Appellant's request to HMRC came relatively soon after the two decisions were issued, it seems at least possible that it was news of the two Tribunal decisions that prompted the Appellant to email HMRC. HMRC report that, on about 17 June 2022, they replied to the Appellant to tell him that he would need to contact the Tribunal if he wished to have his appeal reinstated. The Tribunal was unaware of this email correspondence at the time, and did not hear receive any correspondence from either party at this point.

Destruction of the Tribunal file

16. In or about November 2022, approximately a year after the Tribunal file for this appeal had been closed, the Tribunal file was destroyed.

17. On 1 March 2023, the Tribunal issued its decision in Robson v HMRC [2023] UKFTT 226 (TC), a further case concerning a false EIS claim made by an agent. The agent involved in all three of McCumiskey, Huntly and Robson, was the same person who filed the Appellant's 2016/17 tax return. (The Appellant also referred to one other appeal, but I have not been able to identify any published tax decision involving a person of the name quoted.)

The Appellant's application for reinstatement

18. On 15 March 2023, the Appellant emailed a letter to the Tribunal, asking that it be forwarded to the HMRC litigator who had been representing HMRC in 2021. In his letter, the Appellant wrote:

In November 2021 I case (sic) forced to concede my appeal against HMRC and concede my position to prevent further risk of additional costs at a tribunal which my circumstances could not sustain and in addition there had at that time been no cases ruled upon, effectively I was backed into a corner by HMRC and forced to remove my appeal and feel this was extremely unfair and not treated in a fairly manner. There has now been a number of cases ruled upon involving [the person who filed the Appellant's tax return] which are identical to my case involving fraudulent claims being submitted in individuals names.

I have listed below the cases as outlined above.

...

Given there is now cases being ruled upon which mirror my case I would like to apply to the tribunal to have my case reopened in order to proceed to tribunal in order to reverse HMRC decision against me.

19. The Appellant then set out the arguments he wished to rely upon at a hearing, and concluded:

I believe this is more than sufficient grounds to reopen my case at tribunal due to the exact instigator ... being present in all the cases above and the fact that they are very similar if not identical cases of identities being used as a vehicle to commit fraud.

I would like this appeal request to be forwarded to the below representative from HMRC who is familiar with my case.

...

Once my case is reopened I can proceed to provide evidence to support my case and successfully defend myself.

20. There then followed a period of delay by the Tribunal for which neither party is to blame. Unfortunately, it was not until 30 October 2023 that HMRC were asked to comment on the Appellant's application for reinstatement of his appeal.

HMRC's objection to reinstatement

21. On 10 November 2023, HMRC filed their response, objecting to reinstatement. The basis of HMRC's objection was that the Appellant had waited too long to make his application, and there was no good reason for delay of this length. HMRC also reported that they had closed their appeal file on 9 December 2021, which is 28 days after the Tribunal's formal notification of the withdrawal.

22. HMRC's objection was copied to the Appellant. On 29 January 2024, the Tribunal sent a further copy of HMRC's objection to the Appellant and asked him to comment in response to HMRC's objection. However, it does not seem likely that this Tribunal email reached the Appellant as the Tribunal officer mis-spelled the Appellant's email address. The Tribunal later received a bounce-back notification that the email to the Appellant could not be delivered but it seems no action was taken.

23. On 28 February 2024, the Tribunal issued its decision in Wardrop v HMRC [2024] UKFTT 178 (TC). This was a further case concerning a false EIS claim made by the same agent who filed the Appellant's 2016/17 tax return. However, in this decision the Tribunal refused to admit Mr Wardrop's late appeal for consideration because the Tribunal decided that Mr Wardrop's appeal to the Tribunal in 2023 was made too long after HMRC's 2019 decisions. In reaching this decision, Judge Scott commented:

In this instance the appellant decided that there was no point in lodging an appeal [in time] and opted for bankruptcy. That was his right. He cannot now change his mind.

The Appellant's further comments

24. On 5 April 2024, the Appellant emailed a three page letter to the Tribunal. This letter began:

I am writing to formally appeal for the reopening of my case regarding a fraudulent EIS/SEIS claim, which was submitted by [the prior agent] which I never signed or seen prior them submitting. This claim, processed by HMRC, has resulted in significant financial detriment to me due to the fraudulent actions of [the agent].

The basis for my appeal rests on several legal considerations, including but not limited to, the Bills of Exchange Act, SAM121260, and Section 29 of relevant legislation. The fraudulent activity perpetrated by [the agent] has not only resulted in financial loss but also raises serious concerns regarding the integrity of the tax assessment process.

25. The Appellant set out those arguments in some detail, before concluding:

I want to emphasize that I am not a dupe nor a conspirator in any fraudulent activities and have been a victim of deliberate fraud by [the agent]. I have cooperated fully with HMRC and have always acted in good faith and want to work with HMRC on this matter. I was unaware of any fraudulent actions carried out by the third-party agent, and I have provided all necessary information and evidence to assist HMRC in its investigation and find it astonishing that they clearly have enough supporting evidence to take action and the large scale of individuals who all have synergy and timelines with [the agent].

It is my sincere belief that I have been a victim of fraud perpetrated by the third-party agent, and I am committed to clearing my name and seeking justice in this matter. I trust that HMRC will recognise my innocence and take appropriate action against the responsible parties.

Considering the above, I respectfully request the HMRC Tribunal to reopen my case to thoroughly investigate the fraudulent activities of [the agent] and to ensure that justice is served. I stand ready to provide any additional information or evidence necessary to support my appeal at any tribunal hearing and to demonstrate my innocence in this matter.

Thank you for your attention to this important matter and taking the time to consider my appeal. I trust that the Tribunal will act swiftly and decisively to address the injustices I have faced.

26. On 3 May 2024, a copy of this letter was forwarded to HMRC. The Tribunal then informed both parties that the application for reinstatement would be decided at a paper hearing unless, within 14 days, either party asked for an oral hearing at which they could make submissions. Neither party responded.

27. After some further Tribunal delay, on 15 November 2024, the Appellant's application for reinstatement of his appeal was referred to me to decide. However, from the submissions made by both parties, it was clear that neither party had considered or addressed the impact of Section 54 Taxes Management Act 1970 ("TMA 1970") upon a late reinstatement application. Therefore, I directed both parties were directed to make their submissions upon this legislation, and upon the case of Hussain t/a Nisa Local v HMRC [2023] 00040 (TC), no later than 31 December 2024.

The parties' comments on Section 54 TMA 1970

28. On 14 January 2025, the Appellant filed his comments with the Tribunal. Perhaps understandably, the Appellant's main focus was what he understood to be the merits of his appeal, with less focus on the specific legislation and case that he had been asked to comment upon. Nevertheless, in respect of Section 54 TMA 1970 and Hussain t/a Nisa Local v HMRC [2023] 00040 (TC), the Appellant submitted:

2. Successful Defences Against HMRC in EIS/SEIS Cases:

Concerning the defence of EIS/SEIS claims, several successful appeals have demonstrated that taxpayers can successfully challenge HMRC's position when fraud or misrepresentation is involved. These defences often centre on the following principles:

• Lack of Knowledge or Intent: ...

• Vitiation of Consent: In cases where a taxpayer's consent to the claim was obtained through fraudulent means, HMRC's assessments have been successfully overturned. In Hussain t/a Nisa Local v HMRC (2023), the taxpayer successfully argued that the EIS/SEIS claims were invalid as they were made under fraudulent representations by the agent, thus vitiating consent. This defence was grounded in the principle that consent obtained by fraud does not bind the taxpayer, rendering the assessment null.

• Estoppel by Conduct: ...

3. Section 54 of the Taxes Management Act 1970:

Section 54 of the Taxes Management Act 1970 allows for the reopening of an appeal where there has been an agreement between the taxpayer and HMRC to settle an assessment or decision. Given the circumstances surrounding [the Appellant's] case—specifically, the fraudulent nature of the EIS/SEIS claim facilitated by an unscrupulous agent— [the Appellant] contends that the original assessment should be revisited and corrected under this provision. The reopening of the case is consistent with tax law principles, particularly where fraud has been identified. [The Appellant] submits that the assessments made against him, in light of the fraudulent conduct of the agent, should be annulled or varied to reflect the true position.

4. Taxpayer's Right to Rectification:

Tax law is clear in its protection of taxpayers from the consequences of fraud they did not commit. It is a well-established principle that where a taxpayer has been the victim of fraud, particularly in the context of third-party conduct, the assessment should be rectified. [The Appellant] is entitled to challenge the assessment, which was made in error, and rectify the situation under the applicable provisions, including Section 54.

29. HMRC's comments were filed on 22 January 2025. HMRC's comments can be summarised by setting out paragraph 9 of their submissions:

9. The Respondents contend the 03 November 2021 withdrawal (which was not rescinded within 30 days) produced a deemed settlement pursuant to Section 54(4) TMA and as HMRC did not object within 30 days the Tribunal does not have any power to reinstate the appeal after those 30 days have expired.

Decision

30. I start this part of the decision by acknowledging that I understand why, after seeing the successes of Mr McCumiskey, Mr Huntly and Mr Robson, the Appellant believed that he too would be successful in demonstrating to the Tribunal that he was a victim of fraud and so should not have to pay the large amount that had been in dispute. No doubt, the Appellant felt some regret about withdrawing his appeal in November 2021. I can also appreciate that the dispute with HMRC has been a long and stressful period for the Appellant.

31. However, the Tribunal is a statutory body and it can only act in accordance with legislation. The Appellant's application for reinstatement was not made within the time specified in the Tribunal Rules (as I explain below). Therefore, the reinstatement application can only be considered if I have the power to grant the Appellant an extension of time to make his reinstatement application, and if I decide to exercise that power if favour of the Appellant. If I no longer have the power to grant an extension of time, then the consequence is that I will not be able to consider the merits of the reinstatement application, and (irrespective of the underlying merits) the appeal cannot be reinstated.

32. To decide whether I still have the power to grant an extension of time and to consider reinstatement, it is necessary to consider the Tribunal Rules and the relevant legislation.

Tribunal Rules and the relevant legislation

33. I start by considering Rule 17 of the Tribunal Rules which is concerned with withdrawal.

17.— Withdrawal

(1) Subject to any provision in an enactment relating to withdrawal or settlement of particular proceedings, a party may give notice to the Tribunal of the withdrawal of the case made by it in the Tribunal proceedings, or any part of that case—

(a) by sending or delivering to the Tribunal a written notice of withdrawal; or

(b) orally at a hearing.

(2) The Tribunal must notify each party in writing of its receipt of a withdrawal under this rule.

(3) A party who has withdrawn their case may apply to the Tribunal for the case to be reinstated.

(4) An application under paragraph (3) must be made in writing and be received by the Tribunal within 28 days after—

(a) the date that the Tribunal received the notice under paragraph (1)(a); or

(b) the date of the hearing at which the case was withdrawn orally under paragraph (1)(b).

34. As can be seen, Rule 17(4)(a) sets a 28 day deadline for a party to make an application for reinstatement. As the withdrawal was notified to the Tribunal on 3 November 2021, the deadline for the Appellant to make an in-time reinstatement application was 1 December 2021.

35. The Appellant's application for reinstatement was made on 15 March 2023. That is 497 days (or one year, 4 months and 12 days) after the Appellant withdrew his appeal, and so the reinstatement application was made 469 days (or more than 15 months) late.

36. Therefore, the first application the Appellant must make is an application for an extension of time (to make his reinstatement application). The Tribunal does have the power to extend time, but it cannot extend time in all circumstances.

37. Tribunal Rule 5 provides:

5.— Case management powers

(1) Subject to the provisions of the 2007 Act and any other enactment, the Tribunal may regulate its own procedure.

(2) The Tribunal may give a direction in relation to the conduct or disposal of proceedings at any time, including a direction amending, suspending or setting aside an earlier direction.

(3) In particular, and without restricting the general powers in paragraphs (1) and (2), the Tribunal may by direction—

(a) extend or shorten the time for complying with any rule, practice direction or direction, unless such extension or shortening would conflict with a provision of another enactment setting down a time limit;

38. Therefore, provided there is no other enactment which specifies a conflicting time limit, the Tribunal has the power to exercise its discretion about whether to grant an extension of time. However, the Tribunal cannot grant an extension of time if that would conflict with a deadline or time limit in other legislation. This is confirmed in Hussain t/a Nisa Local v HMRC [2023] 00040 (TC) where the Tribunal considered whether it had the power to grant an extension of time where an appellant had made a late application for reinstatement of a withdrawn appeal. Judge Redston considered Tribunal Rules 17 and 5 (set out above) and concluded that these two rules, taken together, give:

... the Tribunal the discretion to allow a late application to reinstate which is made after the 28 days set out in Rule 17(4), but only if that would not conflict with another statutory provision which prevents the Tribunal exercising such a discretion.

39. In his January 2025 submissions, the Appellant argued that Hussain t/a Nisa Local v HMRC [2023] 00040 (TC) concerned fraudulent EIS claims. That is not correct. The underlying tax dispute in Hussain t/a Nisa Local v HMRC [2023] 00040 (TC) concerned VAT assessments and VAT penalties. The issue the Tribunal had to consider in Hussain t/a Nisa Local v HMRC [2023] 00040 (TC) was whether it still had jurisdiction to consider a reinstatement application once the deadline for seeking reinstatement had passed. That is the same issue that I have to consider here.

40. As the underlying tax in Hussain t/a Nisa Local v HMRC [2023] 00040 (TC) was VAT, Judge Redston considered Section 85 Value Added Tax Act 1994 and the effect of that section. When, as here, the underlying tax in dispute is income tax, the equivalent legislation is Section 54 TMA 1970.

41. Section 54 TMA 1970 makes provision for what happens to direct tax appeals that are settled by agreement or withdrawn by an appellant. Section 54 TMA 1970 provides:

54.— Settling of appeals by agreement.

(1) Subject to the provisions of this section, where a person gives notice of appeal and, before the appeal is determined by the tribunal, the inspector or other proper officer of the Crown and the appellant come to an agreement, whether in writing or otherwise, that the assessment or decision under appeal should be treated as upheld without variation, or as varied in a particular manner or as discharged or cancelled, the like consequences shall ensue for all purposes as would have ensued if, at the time when the agreement was come to, the tribunal had determined the appeal and had upheld the assessment or decision without variation, had varied it in that manner or had discharged or cancelled it, as the case may be.

(2) Subsection (1) of this section shall not apply where, within thirty days from the date when the agreement was come to, the appellant gives notice in writing to the inspector or other proper officer of the Crown that he desires to repudiate or resile from the agreement.

...

(4) Where—

(a) a person who has given a notice of appeal notifies the inspector or other proper officer of the Crown, whether orally or in writing, that he desires not to proceed with the appeal; and

(b) thirty days have elapsed since the giving of the notification without the inspector or other proper officer giving to the appellant notice in writing indicating that he is unwilling that the appeal should be treated as withdrawn,

the preceding provisions of this section shall have effect as if, at the date of the appellant's notification, the appellant and the inspector or other proper officer had come to an agreement, orally or in writing, as the case may be, that the assessment or decision under appeal should be upheld without variation.

(5) The references in this section to an agreement being come to with an appellant and the giving of notice or notification to or by an appellant include references to an agreement being come to with, and the giving of notice or notification to or by, a person acting on behalf of the appellant in relation to the appeal.

42. The effect of Sub-section 54(1) TMA 1970 is that where a person has made an appeal to the Tribunal but the parties then settle the dispute before the Tribunal issues a decision, the settlement that the parties have reached is treated as if it was a decision of the Tribunal. The Appellant is correct to submit that Section 54(2) TMA 1970 permits a taxpayer to resile from an agreement that has been reached in these circumstances, but the Appellant did not note that there is a strict time limit for a taxpayer to resile or repudiate the agreement. Any repudiation must be given in writing within 30 days of making the agreement. A taxpayer cannot resile from an agreement once more than 30 days have passed since the agreement was made.

43. Here, the parties did not reach an agreement. However, the effect of Sub-section 54(4) TMA 1970 is that where an appellant notifies HMRC that he is withdrawing his appeal from the Tribunal, and 30 days then pass without an HMRC officer indicating that he or she is unwilling for that appeal to be withdrawn, then the withdrawal is treated as if the parties had reached an agreement (and that agreement is that the decision under appeal should be upheld without variation). That deemed agreement is treated as if it was a decision of the Tribunal.

44. In this case, I do not know (because the Tribunal file has been destroyed) whether the Appellant notified the Tribunal and HMRC in the same email, or whether HMRC was notified only in the Tribunal's formal letter. I will assume (because it gives the Appellant the longest time frame) that HMRC were notified on 11 November 2021, and so HMRC would have had 30 days from 11 November 2021 to object to the withdrawal (if they wished to object).

45. On 11 December 2021, (i.e. once 30 days had passed without HMRC objecting to the Appellant withdrawing his appeal) the effect of Sub-section 54(4) TMA 1970 is that the parties are then treated as if they had entered into an agreement on 11 November 2021. The agreement that the parties are deemed to have reached is that the closure notice that was the subject of this appeal is upheld without variation. That means that the appeal that the Appellant made to the Tribunal was deemed to be settled in HMRC's favour, and the closure notice for 2016/17 is legally final and conclusive. This deemed agreement has the same legal consequences as if it was a decision of the Tribunal.

46. The Tribunal cannot grant an extension of time that would conflict with Section 54 TMA 1970. Therefore, since 11 December 2021, the Tribunal has no longer been able to grant the Appellant an extension of time to make his application for reinstatement of this appeal. It is not legally possible for the Tribunal to reinstate an appeal which is deemed already to have been decided by the Tribunal.

47. I appreciate that this will be an upsetting conclusion for the Appellant, particularly given there is a lot of money at stake and the Appellant believes he would be successful if his appeal resumes. However, none of the factors raised by the Appellant in his letters of 15 March 2023, 5 April 2024 or 14 January 2025 about the merits of his appeal can give back to the Tribunal a jurisdiction that it no longer has. Once an appeal is withdrawn from the Tribunal, there is only a limited time frame for a party to change their mind, and to seek reinstatement. Unfortunately for the Appellant, by 15 March 2023, it was too late to ask the Tribunal for his appeal to be reinstated.

Conclusion

48. Therefore, for the reasons explained above, the Appellant's application for reinstatement is refused.

Right to apply for permission to appeal

49. This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to "Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)" which accompanies and forms part of this decision notice.

JANE BAILEY

TRIBUNAL JUDGE

Release date: 13^th MARCH 2025

First-tier Tribunal (Tax)