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	First-tier Tribunal (Tax)
You are here: BAILII >> Databases >> First-tier Tribunal (Tax) >> Zaidi v Revenue and Customs (INCOME TAX - closure notices - late appeal - application for permission to make a late appeal) [2025] UKFTT 527 (TC) (09 May 2025) URL: https://www.bailii.org/uk/cases/UKFTT/TC/2025/TC09517.html Cite as: [2025] UKFTT 527 (TC)

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FIRST-TIER TRIBUNAL
TAX CHAMBER

		In public by remote video hearing
		Heard On: 30 April 2025 Judgment Date: 9 May 2025

INCOME TAX – closure notices – late appeal – application for permission to make a late appeal – application rejected – permission refused

DECISION

INTRODUCTION

1. This decision deals with an application ("the application") by the appellant for permission to bring an appeal against HMRC's decision contained in two closure notices for the tax years 2011/2012 and 2012/2013, which were issued on 9 August 2017 ("the closure notices"). The closure notices increase the amount of tax due for the 2011/2012 tax year by £13,388.77, and for the 2012/2013 tax year, by £13,267.77.
2. The appellant appealed to HMRC against the closure notices on 22 September 2017, which although late, was accepted as a valid appeal by HMRC.
3. However, the appeal was not notified to the tribunal until 26 February 2024. This was, in HMRC's view, over four years and nine months late. In her notification to the tribunal, the appellant sought permission to bring the appeal out of time. HMRC oppose the application.
4. For the reasons given later in this decision, I reject the application and refuse permission for the appellant to bring her appeal out of time.

THE LAW

5. Following receipt of a closure notice, a taxpayer has 30 days to appeal to HMRC against the conclusion in that notice.
6. Following that appeal, a taxpayer may ask HMRC for a statutory review, HMRC may offer the taxpayer a review, or the taxpayer may notify the appeal to the tribunal.
7. If HMRC notify the taxpayer of an offer to review, they must also notify the taxpayer of HMRC's view of the matter in question.
8. The taxpayer then has 30 days to do one of two things. It can take up that offer. Alternatively, it can notify the appeal to the tribunal. In the absence of either, HMRC's view of the matter in question is treated as if it were contained in a section 54 agreement.
9. If HMRC have offered to review the matter but the taxpayer has not accepted the offer within 30 days, then the taxpayer may notify the appeal to the tribunal but only if the tribunal gives permission.
10. Under Rule 2 of the First-tier Tribunal (Tax Chamber) Rules 2009 (as amended):

"Overriding objective and parties' obligation to co-operate with the Tribunal

(1) The overriding objective of these Rules is to enable the Tribunal to deal with cases fairly and justly.

(2) Dealing with a case fairly and justly includes—

(a) dealing with the case in ways which are proportionate to the importance of the case, the complexity of the issues, the anticipated costs and the resources of the parties;

(b) avoiding unnecessary formality and seeking flexibility in the proceedings;

(c) ensuring, so far as practicable, that the parties are able to participate fully in the proceedings;

(d) using any special expertise of the Tribunal effectively; and

(e) avoiding delay, so far as compatible with proper consideration of the issues.

(3) The Tribunal must seek to give effect to the overriding objective when it—

(a) exercises any power under these Rules; or

(b) interprets any rule or practice direction.

(4) Parties must—

(a) help the Tribunal to further the overriding objective; and

(b) co-operate with the Tribunal generally".

11. When deciding whether to give permission, the tribunal is exercising judicial discretion, and the principles which I should follow when considering that discretion are set out in Martland v HMRC [2018] UKUT 178 (TCC), ("Martland") in which the Upper Tribunal considered an appellant's appeal against the FTT's decision to refuse his application to bring a late appeal against an assessment of excise duty and a penalty. The Upper Tribunal said:

"44. When the FTT is considering applications for permission to appeal out of time, therefore, it must be remembered that the starting point is that permission should not be granted unless the FTT is satisfied on balance that it should be. In considering that question, we consider the FTT can usefully follow the three-stage process set out in Denton:

(1) Establish the length of the delay. If it was very short (which would, in the absence of unusual circumstances, equate to the breach being "neither serious nor significant"), then the FTT "is unlikely to need to spend much time on the second and third stages" - though this should not be taken to mean that applications can be granted for very short delays without even moving on to a consideration of those stages.

(2) The reason (or reasons) why the default occurred should be established.

(3) The FTT can then move onto its evaluation of "all the circumstances of the case". This will involve a balancing exercise which will essentially assess the merits of the reason(s) given for the delay and the prejudice which would be caused to both parties by granting or refusing permission.

45. That balancing exercise should take into account the particular importance of the need for litigation to be conducted efficiently and at proportionate cost, and for statutory time limits to be respected. By approaching matters in this way, it can readily be seen that, to the extent they are relevant in the circumstances of the particular case, all the factors raised in Aberdeen and Data Select will be covered, without the need to refer back explicitly to those cases and attempt to structure the FTT's deliberations artificially by reference to those factors. The FTT's role is to exercise judicial discretion taking account of all relevant factors, not to follow a checklist.

46. In doing so, the FTT can have regard to any obvious strength or weakness of the applicant's case; this goes to the question of prejudice - there is obviously much greater prejudice for an applicant to lose the opportunity of putting forward a really strong case than a very weak one. It is important however that this should not descend into a detailed analysis of the underlying merits of the appeal".

12. Also relevant to this decision are the principles set out in HMRC v Katib [2019] UKUT 189 ("Katib") where the Upper Tribunal had to consider the extent to which reliance on an agent was a justifiable reason for failing to make a timely appeal. In Katib, the Upper Tribunal concluded that failings by an agent are deemed to be failings by the taxpayer and so failings to meet a time limit, by that agent, could not be a "good" reason when considering the second part of the Martland evaluation.

THE EVIDENCE AND THE FACTS

13. I was provided with a substantial bundle of documents. The appellant's husband who was present in the room along with her representative, Mr Salam, made some muttered off-camera comments which I have largely ignored save to the extent that they were reiterated to me, by Mr Salam by way of additional submissions. From this evidence I make the following findings:

(1) HMRC opened an enquiry into the appellant's tax returns on 14 October 2014 and subsequently sought further information regarding those returns from the appellant.

(2) In her letter of 25 November 2016 sent to the appellant, Officer Hutchings explained that in the absence of the requested information, she proposed to progress the enquiry by making amendments to the appellant's 2011/2012 and 2012/2013 tax returns by assessing unidentified credits in the appellant's bank accounts as being additional business income.

(3) The closure notices were issued on 9 August 2017 by Officer Hutchings who had opened an enquiry into the appellant's tax returns for the two years in question. She concluded that there were unidentified credits in the appellant's bank statements which should be treated as undeclared business income.

(4) A late appeal was made by the appellant's agent on 22 September 2017, which was accepted, in a letter dated 17 October 2017 by Officer Hutchings, as a late appeal. She asked for the appellant to provide information which, on 9 November 2017, was sent by the appellant's agent to Officer Hutchings. That information included bank statements and a schedule of transactions relating to a Standard Chartered bank account held by the appellant's husband.

(5) Between January 2018 and December 2018 Officer Hutchings and the appellant's agent exchanged emails and information. However, in Officer Hutchings' view, this information was insufficient to displace the conclusion that she had come to in the closure notices.

(6) On 9 April 2019, Officer Hutchings issued her view of the matter letter to both the appellant and her agent ("the view of the matter letter"). That letter explained that the appeals had remained open for the appellant and her agent to provide information and documentation to settle the appeals. Her view was as stated in her letter dated 25 November 2016 and told the recipients that if they did not agree with her view, they could either ask to have the decision reviewed or they should notify an appeal to an independent tribunal, but in both cases that must be done within 30 days of the date of "this letter". It went on to say that the deadline was 9 May 2019 written in size 16 font.

(7) In the absence of any reply to this letter, on 14 June 2019, Officer Hutchings issued a letter to the appellant advising her that the appeals would now be considered settled by agreement under section 54(1) TMA 1970. A copy of this letter was sent to the agent.

(8) Letters sent by Officer Hutchings to the appellant were sent to the address which was on HMRC's records as being her correspondence address.

(9) On 17 June 2019, in a letter from the agent to Officer Hutchings, the agent advised that he had not received the view of the matter letter and asked for a reconsideration of the evidence previously provided.

(10) Subsequent correspondence then took place between Officer Hutchings, and the appellant's agent, in which the agent indicated on a number of occasions that he had not received copies of letters which Officer Hutchings had purportedly sent him.

(11) In an email dated 13 February 2020 from Officer Hutchings to the agent, Officer Hutchings attached a copy of her letter dated 17 June 2019 and a copy of the covering letter sent by her to the agent with a copy of the view of the matter letter which she had sent to the agent on 9 April 2019. The agent responded to this email on 11 October 2021 requesting a further copy of the view of the matter letter.

(12) On 18 February 2020 the appellant telephoned HMRC who, having been told that the liability was approximately £34,000, wanted to know where it was coming from.

(13) On 9 November 2021, Officer Hutchings wrote to the appellant enclosing copies of: her letter dated 25 November 2016; the view of the matter letter; her appeal settlement letter dated 14 June 2019; her letter to the agent dated 27 June 2019; and a letter to the agent dated 9 November 2021.

(14) On the same date, Officer Hutchings wrote to the agent enclosing copies of the same correspondence, including her letter to the appellant of even date.

(15) In her letter to the agent, Officer Hutchings said that "As there [has] been a lapse in correspondence via email, I am required to obtain your client's written authority that we may continue to correspond via email".

(16) In a letter dated 16 November 2021 to Officer Hutchings, the appellant stated that she "gives full permission to AS Associates to communicate with HMRC regarding my case and other tax affairs via email".

(17) On 11 July 2023, the agent telephoned HMRC to indicate disagreement with the payment that the appellant had been asked to pay.

(18) On 26 February 2024, the agent, on behalf of the appellant, notified her appeal to the tribunal and requested permission to make a late appeal.

DISCUSSION

Submissions

14. In summary Miss Ritchie submitted as follows:

(1) It is inconceivable that either the appellant or the agent had not received copies of the relevant documents, including the view of the matter letter, as asserted by the agent in correspondence. In any event, it is abundantly clear that the appellant received the letter of 9 November 2021. It then took a further two years and three months for her to notify her appeal to the tribunal. This is a significant and serious delay.

(2) The only reason which appears to have been given by the appellant for the delay is poor health. HMRC is sorry that the appellant has suffered poor health. But insufficient evidence has been provided to explain why this prevented either her or the agent notifying the appeal in time. Her health was not mentioned in the notice of appeal nor in correspondence following the closure notices and the view of the matter letter. Indeed, the appellant was able to contact HMRC by telephone in February 2020.

(3) No submissions were made in the notice of appeal, nor indeed during the hearing, regarding failure to receive certain correspondence.

(4) The balance of prejudice weighs in favour of rejecting the application. Officer Hutchings has now retired from HMRC and HMRC will therefore be prejudiced in that it will not be possible to call her as a witness. The appellant's case has obvious weaknesses. No evidence has been supplied to explain the unexplained cash deposits which Officer Hutchings was unable to reconcile. HMRC's document retention policy of six years means that evidence and information required to defend this appeal is no longer easily accessible.

15. In summary Mr Salam submitted as follows:

(1) The appellant was depressed when she got the closure notices. She consulted her GP and received medication.

(2) She was travelling to Pakistan during the period in question, and her father died in 2022.

(3) The Covid pandemic made it difficult to communicate.

(4) The appellant's claim is meritorious which is a big strength. It has a reasonable prospect of success. The appellant can prove where the money came from.

My view

16. As I have mentioned above, and notwithstanding the correspondence in which the appellant's agent persistently denied that neither he nor the appellant had received relevant communication from HMRC, such denial of receipt was not sustained as a ground of appeal before me.
17. However, when considering the first stage of the Martland analysis, namely to establish the length of the delay, I am content, as is HMRC, to consider the delay started on 9 November 2021, namely the date on which letters to both the appellant and the agent was sent by Officer Hutchings, and which included the view of the matter letter and the settlement letter of 14 June 2019. It is clear from the appellant's letter to Officer Hutchings of 16 November 2021 that she received the 9 November 2021 letter, as she authorised Mr Salam to communicate with HMRC regarding her case and other tax affairs via email.
18. The delay therefore is some two years and three months, and that is clearly serious and significant. I therefore need to proceed to the next stage of the analysis, namely, to establish the reasons why this delay occurred.
19. Like HMRC, I sympathise with the health issues that the appellant has suffered. But there is wholly insufficient evidence to explain why between 9 November 2021 and 26 February 2024, neither the appellant nor her agent was able to notify her appeal to the tribunal. I accept that she may well have been on medication, and I also accept that she was affected by the death of her father. But she had clearly authorised her agent to deal with her tax affairs, including her original appeal and the view of the matter letter and I do not accept that her personal health position and the impact of her father's death, had any impact on her agent's ability to notify her appeal to the tribunal. Authority was given to the agent in the appellant's letter of 16 November 2021. The agent clearly failed to submit the appeal until February 2024. Katib is authority for the proposition that failings by an agent are deemed to be failings by an appellant. And there is no evidence whatsoever as to why the agent failed to submit the appeal in time. If it was reasonable for the appellant to wash her hands of responsibility for submitting the appeal by appointing the agent, then the agent's failures are deemed to be hers. And I can see no justifiable reason why the appeal was not made on a timely basis.
20. I now need to carry out an evaluation of all the circumstances, assessing the merits of the reasons given for the delay and the prejudice which would arise to the parties by granting or refusing permission. I take into account the particular importance of the need for litigation to be conducted efficiently and at proportionate cost, and that statutory time limits should be respected. In doing this, I can have regard to any obvious strengths or weaknesses of the appellant's case.
21. It is Mr Salam's submission that the strength of the appellant's case outweighs everything else. However, I gave him ample opportunity at the hearing to take me through the documents in the bundle to demonstrate any obvious strengths of the appellant's case. In particular, given that the issue is simply that the appellant has been unable to explain unexplained deposits into her bank account from her husband's Pakistan bank account, I asked Mr Salam to show me a clear debit from the latter being reflected as a credit in the former. He took me through various bank accounts from which it is clear that HMRC have accepted debits from the appellant's husband's account into her account as not being additional income. But he was unable to clearly show me that the deposits which are reflected in the closure notices, have a clear provenance in debits from her husband's account. Indeed, as Miss Ritchie noted, this is the problem that HMRC have faced, namely clear and obvious evidence to tie up the debits and credits for these particular items.
22. Accordingly, I am afraid for the appellant that I cannot see any obvious strength in her case. Indeed, given the ample opportunities that the appellant and her agent have been given to provide this evidence, it seems to me that her position is very weak.
23. The appeal is very late. The matters were put in the hands of a professional who could be expected to appreciate that statutory time limits, imposed by Parliament, should be respected. The view of the matter letter made it clear in large letters, that the deadline for asking for a review or making an appeal to the tribunal was 9 May 2019. There was no request for a statutory review. There was no appeal until February 2024. There is no suggestion that the appellant was misled by her agent. The appellant's case is weak. HMRC would be considerably prejudiced if this matter proceeded to appeal, since the relevant HMRC officer has now retired and many of the relevant documents may have been destroyed.
24. The balance of prejudice weighs very heavily in favour of rejecting the application.

DECISION

25. For the foregoing reasons I reject the application and refuse the appellant permission to notify her appeal to the tribunal out of time.

RIGHT TO APPLY FOR PERMISSION TO APPEAL

26. 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.
Release date: 09^th MAY 2025