DECISION
Introduction
1.
This decision relates to an application made out of time on behalf of
the appellant for full written findings and reasons for the summary decision of
the Tribunal released on 15 September 2011.
2.
That summary decision (“the Summary Decision”) related to an original
appeal against a late filing penalty of £100 per partner in respect of the late
filing of the partnership return of Starlight Therapy Equipment Partnership for
the year ended 5 April 2009.
The original substantive appeal and its disposal
3.
The essence of the substantive original appeal was as follows. The representative
(who was newly appointed) was attempting to deliver a partnership return
required by section 12AA Taxes Management Act 1970 (“TMA”) on behalf of his
client partnership. He did not have the unique taxpayer reference number for
the partnership, as a result of which he was unable to file the return online.
In his original submission to the Tribunal he said he had made “several
attempts” to get this number from HMRC, but without success. In the end, he
filed the return in paper form on 29 January 2010 (before the online filing
date of 31 January 2010 but after the paper filing dated of 31 October 2009).
However the return was unsigned and was therefore rejected by HMRC, who issued
penalty notices imposing a penalty of £100 on each partner for late filing of
the return on 16 February 2010. By 10 November 2010 the return had still not
been properly delivered.
4.
On the basis of the evidence put before the Tribunal, the Summary
Decision dismissed the appellant’s appeal.
5.
The Summary Decision, which was sent to the parties on 15 September
2011, contained the usual final paragraph, which included the following text:
“A party wishing to appeal against this decision must apply
within 28 days of the date of release of this decision to the Tribunal for full
written findings and reasons.”
The appellant’s applications
6.
The appellant’s representative wrote in to the Tribunal by letter dated 15
November 2011 (received at the Tribunal on 21 November 2011) requesting full
findings of fact and reasons for the decision and also applying for permission
to appeal against it.
7.
With his letter dated 15 November 2011, the representative also enclosed
copies of a significant volume of further evidence which had not been submitted
with the original appeal (only some of it relevant to the year under appeal, as
it seems the problem recurred the following year and various documents relating
to that year were also copied to the Tribunal).
8.
The time limit for receipt by the Tribunal of the application for full
findings of fact and reasons for the original decision was 13 October 2011. It
was actually received on 21 November 2011. The application was therefore
received 34 days late. The Tribunal therefore responded by letter dated 13
December 2011 to the representative, asking for reasons why the application had
been made late.
9.
By letter dated 20 December 2011 (received at the Tribunal on 23
December 2011), the appellant’s representative apologised for the lateness of his
application, saying it was due to “tracing relevant papers which were
inadvertently misfiled”.
The appeals process
10.
Under the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules
2009 (“the TPRs”), the procedure for appealing a decision of the Tribunal is
clearly set out.
11.
An original decision can take one of three forms:
(1)
a simple decision, with no supporting findings of fact or reasons (this
can only be done with the consent of both parties).
(2)
a decision which includes only a summary of the findings of fact and
reasons which support it. This is commonly called a “summary decision”, and
the vast majority of the Tribunal’s decisions are issued in this form.
(3)
a decision which is accompanied by full written findings of fact and
reasons which support it. This is commonly called a “full decision”. In
general, only full decisions are published on the Tribunal’s website.
12.
A decision of the Tribunal can be appealed to the Upper Tribunal, but
only with permission (which may be granted either by the Tribunal or by the
Upper Tribunal). An appeal is only permitted on questions of law – the
findings of fact made by the Tribunal are generally final.
13.
The TPRs are drafted on the basis that a party cannot properly formulate
an application for permission to appeal unless it has first received a full decision.
Thus if a summary decision is issued, it will include a standard paragraph
which notifies the parties that if they wish to appeal, they must first apply
for a full decision. Once that has been issued, they may then apply for
permission to appeal against it, stating the grounds of appeal.
14.
There is a time limit of 28 days after the issue of a summary decision
for the Tribunal to receive a request for a full decision (see rule 35(5)
TPRs). This is a comparatively short time limit, because all that is required
from the party concerned is a simple application in no particular form and
giving no reasons. The standard wording included in every summary decision
(including the one in this case) includes a specific reference to the 28 day
time limit.
15.
Once a full decision has been issued, a party has a further 56 days from
the date on which it was sent to him to deliver an application for permission
to appeal to the Tribunal (see rule 39(2) TPRs). Every full decision issued by
the Tribunal includes a standard paragraph which notifies the parties of this
time limit. A longer period than 28 days is appropriate because the party must
have time to consider the full decision, perhaps take advice on it, and
formulate a statement of his grounds of appeal which must be included in any
application for permission to appeal.
Treatment of the appellant’s applications
Application for full findings of fact and reasons for the decision
16.
As mentioned above, no particular format is required for an application
for full findings of fact and reasons for a decision. The letter from the
appellant’s representative dated 15 November 2011 was therefore perfectly
satisfactory from this point of view. The only problem with it was that it was
received 34 days late.
17.
The Tribunal does have a general power to extend time limits, including
the 28 day time limit for making an application for full findings of fact and
reasons for a decision.
18.
I consider the question of whether I should exercise this power later on
in this decision, under the heading “Extension of time”.
Application for permission to appeal against the summary decision
19.
As will be apparent from the summary of the appeals process set out
above, this application is incorrect, or at best premature. No application for
permission to appeal can be made until a full decision has been issued, and of
course no full decision has been issued in this case.
20.
As it stands, therefore, this application must be refused.
Power to treat one kind of application as another kind of application
21.
However, under rule 42 of the TPRs:
“The Tribunal may treat an application for a decision to be
corrected, set aside or reviewed, or for permission to appeal against a
decision, as an application for any other one of those things.”
22.
This raises the question of whether the appellant’s application for
permission to appeal should be treated as being an application of one of the
other kinds mentioned in rule 42.
(a)
Treat the application for permission to appeal as an application for a
correction?
23.
In rule 42, the reference to a decision being “corrected” clearly refers
to rule 37 of the TPRs, which allows for the quick and straightforward
correction of a “clerical mistake or other accidental slip or omission in a
decision, direction or any document produced by [the Tribunal]”.
24.
I do not consider there is anything in the Summary Decision which could
require correction in this manner. Certainly nothing of that type was
mentioned in the letter dated 15 November 2011 from the appellant’s
representative.
(b)
Treat the application for permission to appeal as an application for a
review?
25.
The reference in rule 42 to a decision being “reviewed” clearly refers
to rule 41 of the TPRs. Rule 41 provides a mechanism whereby the Tribunal can,
if it is satisfied (upon receiving an application for permission to appeal)
that there was an error of law in its original decision, take action to correct
that error (after seeking representations from the parties). In general, a
review can only be undertaken upon receipt of an application for permission to
appeal. In effect it represents a “short cut” to allow obvious errors of law
to be corrected without the need to subject the parties to the formal appeals
process in the Upper Tribunal.
26.
I am not satisfied that there was any error of law in the Summary
Decision and therefore even if I had power to undertake a review of it, I would
not do so. I doubt whether I have the power in any event, as a review may only
be undertaken “on receiving an application for permission to appeal” and, as
set out above I consider the appellant’s application for permission to appeal
in this case to be invalid because no full decision has yet been issued.
(c)
Treat the application for permission to appeal as an application for a
set-aside?
27.
In his letter dated 15 November 2011, the appellant’s representative
supplied new information (both in the body of the letter itself and in the form
of attachments to it) which had not been supplied to the Tribunal in the
original notice of appeal or in any other form before the Summary Decision was
issued. The letter also said “[w]e would be grateful if the Tribunal can
reconsider the matter in the light of the attached documents and information
listed as under”.
28.
This might be interpreted as a request for the Tribunal to re-hear the
appeal afresh on the basis of the new evidence provided. Of course, because
this appeal was dealt with as a default paper case and the appellant’s
representative has made no request for an oral hearing, this amounts to a
request for the Tribunal to reconsider the appeal as a default paper case on
the basis of all the papers now supplied, rather than to hold a hearing (or
re-hearing) of the appeal.
29.
Having decided that the application cannot succeed as an application for
permission to appeal, as an application for a correction or as an application
for a review, it seems to me that the safest course is to treat it as an
application for the Summary Decision to be set aside, which I now turn to
consider.
Consideration of set-aside application
30.
The TPRs do not contain a general power for the Tribunal to order a
re-hearing or reconsideration of an appeal that has been decided.
31.
However, rule 38 of the TPRs gives a mechanism for decisions to be set
aside and remade, in whole or in part, in certain circumstances. The rule
provides as follows:
“Setting aside a decision which disposes of proceedings
38. (1) The Tribunal may set aside a decision which
disposes of proceedings, or part of such a decision, and re-make the decision,
or the relevant part of it if –
(a) the Tribunal considers that it is in the interests
of justice to do so; and
(b) one or more of the conditions in paragraph (2) is
satisfied.
(2) The conditions are –
(a) a document relating to the proceedings was not
sent to, or was not received at an appropriate time by, a party or a party’s
representative;
(b) a document relating to the proceedings was not
sent to the Tribunal at an appropriate time;
(c) there has been some other procedural irregularity
in the proceedings; or
(d) a party, or a party’s representative, was not
present at a hearing related to the proceedings.
(3) A party applying for a decision, or part of a
decision, to be set aside under paragraph (1) must make a written application
to the Tribunal so that it is received no later than 28 days after the date on
which the Tribunal sent notice of the decision to the party.”
32.
Before the Tribunal will set aside a decision and re-consider a case,
therefore, it must first consider that it would be in the interests of justice
for it to do so. Second, it must be satisfied that one of the conditions in Rule
38(2) is satisfied. Third, the party must have made its application so that it
was received within the 28 day time limit set out in rule 38(3).
33.
Clearly in this case, the application was not received within the 28 day
time limit applying to set-aside applications (the same as the time limit for
applications for full findings of fact and reasons). As mentioned above, it
was received 34 days late. I consider the question of extension of this time
limit in more detail below under the heading “Extension of time”.
34.
Turning to the other requirements of rule 38, I find it convenient to
take these requirements in reverse order, that is to say I consider first the
conditions in rule 38(2) and then the general “interests of justice”
requirement in rule 38(1)(a).
Is any condition in rule 38(2) satisfied?
35.
The conditions in Rule 38(2) which might most obviously be said to be
satisfied in this case are those contained in Rule 38(2)(a) or (b) – on the
basis that “a document” (i.e. the new evidence which the appellant now seeks to
put forward) “was “not sent to a party” [i.e. HMRC]” or “was not sent to the
Tribunal at an appropriate time” (i.e. before the Tribunal was making its
decision on the appeal).
36.
However, I consider that a failure to send the new evidence would need
to be in the nature of a “procedural irregularity” before it can satisfy the
condition in (2)(a) or (b), because of the wording of paragraph (2)(c), which
refers to “some other procedural irregularity” in a way which implies
that (2)(a) and (2)(b) are considered to be specific examples of procedural
irregularity.
37.
It follows that the condition in rule 38(2)(a) or (b) is only satisfied
if the representative’s failure to submit full evidence in support of the original
appeal can be regarded as a “procedural irregularity”. Whilst his failure to
submit full evidence at the correct time might certainly be considered
procedurally inadequate, I do not consider it to have been a procedural
irregularity – the question of what evidence should be submitted in support of
an appeal is a matter for each party to decide for himself in conjunction with his
advisers, and I do not see how a decision to submit what turns out to be
inadequate evidence could be regarded as giving rise to a “procedural
irregularity”.
38.
None of the other conditions in rule 38(2) seem to me to be relevant in
this case – no other procedural irregularity is alleged and because this was a
default paper case, there was no hearing (and therefore there is no question of
any non-attendance at such a hearing). I therefore find that none of the
conditions in rule 38(2) is satisfied in this case and therefore there is no
question of setting the Summary Decision aside, even if the “interests of
justice” test in rule 38(1)(a) were satisfied and an extension of the time
limit in rule 38(3) were granted.
39.
In case I am wrong in my view on rule 38(2), however, I have also
considered the “interests of justice” requirement of rule 38(1)(a) and later on
in this decision (under the heading “Extension of time”) I consider the
question of whether an extension of time should be granted for the time limit
laid down in rule 38(3).
Is the “interests of justice” test in rule 38(1)(a) satisfied?
40.
The requirement in rule 38(1)(a) of the TPRs (that it must be “in the
interests of justice” to set a decision aside) requires a broad balancing of
the various factors involved.
41.
It might be said that it will always be in the interests of justice to
consider new evidence before reaching a final decision, and that argument has
some force. It is however only half the story. It could not be right that a
party should be permitted to re-litigate the same dispute repeatedly simply on
the basis of bringing forward some new evidence every time the result went
against him.
42.
The function of the Tribunal is to provide efficient resolution of
disputes between taxpayers and HMRC. Whilst some latitude may be allowed for
taxpayers who are inexperienced in presenting their case, it would completely
undermine the Tribunal’s function if it were routinely to allow losing parties
(whether taxpayers or HMRC) to re-litigate appeals on the basis that they did
not feel they had put sufficient evidence before the Tribunal when it first
heard the appeal. Parties should be well aware that an appeal offers a one-off
opportunity to put their case as best they can, not an opportunity to hope for
a successful outcome on the basis of minimal effort and then make a better
second attempt if the first fails, possibly followed by an even better third
attempt, and so on. To put it in layman’s terms, an appellant must realise
that the appeals system gives him one bite at the cherry unless a very good
reason can be shown why he should have a second.
43.
In carrying out the balancing exercise, it seems to me that the starting
point should be that the burden lies on the party seeking to obtain a set-aside
to justify its argument. Bearing in mind that the purpose of the set-aside
process is to correct procedural irregularities, it seems to me that the
“interests of justice” condition can only be satisfied if some kind of
procedural irregularity is established. I can find no procedural irregularity
in this case, but even if I could, it must be remembered that:
(1)
this is an appeal relating to a late filing penalty of £100 per partner,
(2)
HMRC have already applied a significant degree of effort and expense in
order to address the case that was put forward on behalf of the appellant,
(3)
Even in the new papers submitted by the appellant’s representative, the
point that the return was still outstanding as at November 2010 was still not
addressed.
44.
In the context of such an appeal, it seems to me that the hurdle placed
before an appellant seeking to set the decision aside and to introduce new
evidence should be quite high. I do not consider the appellant can have
cleared the hurdle in this case.
45.
In summary, quite apart from the point that the relevant application was
made out of time (as to which, see below) I therefore consider that no power to
set aside the Tribunal’s existing decision can arise as no procedural
irregularity has occurred and in any event it would not be in the interests of
justice to do so.
Extension of time
Introduction
46.
My findings under this heading are relevant to two possible extensions
of time. First, should time be extended for the appellant’s application for
full findings of fact and reasons for the decision? Second, should time be
extended for the application which I am treating as an application to set aside
the Summary Decision?
47.
The effect of refusing either extension of time, viewed on its own,
would be to decide the appeal finally against the appellant. The position is
therefore very similar (in practice, identical) to the situation where an
appellant wishes to start an appeal after expiry of the statutory time limit
for doing so. The case law which governs how judicial discretion is to be
exercised in such cases should apply equally to these situations.
Extensions of time – applicable rules and case law
48.
The Tribunal has power to allow extensions of time, and in an
appropriate case it will do so. The relevant time limit is set out in the TPRs
(rule 35(5) in the case of an application for full findings of fact and
reasons, and rule 38(3) in the case of an application to set aside a
decision). The TPRs also contain a general power to extend those time limits
(in rule 5(3)(a)). In considering whether or not to exercise that power, it is
clear that the Tribunal must observe the “overriding objective” of the TPRs,
which is set out in rule 2(1):
“The overriding objective of these Rules is to enable the
Tribunal to deal with cases fairly and justly.”
49.
As is set out in rule 2(2)(a) of the TPRs, dealing with a case fairly
and justly includes dealing with it:
“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”.
50.
As has been made clear in numerous decisions of the Tribunal, time
limits are there to be observed and will only be extended for good reason. In Ogedegbe
v HMRC [2009] UKFTT 364 (TC), for example, the Tribunal said:
“While this Tribunal has got power to extend the time for
making an appeal, this will only be granted exceptionally. Moreover, there
must be at least an arguable case for making the appeal. In the present
circumstances I cannot see that the Appellant has even an arguable case.”
51.
By way of further example, in GSM Worldwide Limited v HMRC
[TC/2010/07222, hearing 22 December 2010], the Tribunal said (in the context of
an application for permission to make a late appeal under the Value Added Tax
Act 1994):
“To allow the application I would have to be satisfied that
there were exceptional reasons that, consistent with the obligation to deal
fairly and justly with those parties, required me to extend what would
otherwise be the statutory 30 days for appealing. I am unable to think of any
good reason that accounts for GSM’s delay in lodging the appeal notice. For
those reasons I dismiss the application.”
52.
A similar point was made in R (on the application of Cook) v GCIT (No
2) [2009] STC 1212, where Dyson J quoted extensively (with approval) from
the earlier decision of Lord Drummond Young in IRC for judicial review of a
decision of the General Commissioners of Income Tax (Hugh Love) [2006] STC 1218. In particular, he agreed with Lord Drummond Young’s statement that:
“Section 49 [Taxes Management Act 1970] is a provision that
is designed to permit appeals out of time. As such, it should in my opinion be
viewed in the same context as other provisions designed to allow legal
proceedings to be brought even though a time limit has expired. The central
feature of such provisions is that they are exceptional in nature: the normal
case is covered by the time limit, and particular reasons must be shown for
disregarding that limit. The limit must be regarded as the judgment of the
legislature as to the appropriate time within which proceedings must be brought
in the normal case, and particular reasons must be shown if a claimant or
appellant is to raise proceedings, or institute an appeal, beyond the period
chosen by Parliament.”
53.
Lord Drummond Young went on to examine the factors which he considered
to be relevant when considering whether, exceptionally, to grant extensions of
time limits for brining proceedings. He made it clear he did not consider this
to be a comprehensive list.
54.
He named five factors, which can be summarised as follows:
(1)
Is there a reasonable excuse for not observing the time limit? So for
example, reasonable lack of knowledge of grounds for an appeal might be
relevant, as might the fact that HMRC had contributed to the delay.
(2)
If there was a reasonable excuse for the delay, did the appellant act
reasonably promptly after that excuse ceased? For example, if the appellant
only belatedly became aware of grounds for an appeal in spite of acting with
due diligence, did he act swiftly to bring his appeal?
(3)
Prejudice to the respective parties by either allowing or refusing
permission for the appeal to proceed late. In this context, it is important to
note that by definition an appellant will often suffer severe prejudice if he
cannot bring his appeal out of time; for example he may suffer severe financial
hardship, suffer distress on his property or be made bankrupt. I do not consider
that prejudice of this type can be regarded as a decisive factor, otherwise
there would be a permanent open door for late appeals in any large and serious
case.
(4)
The public interest. Here, he identified three elements. First, there
is a general public interest in the finality of litigation, and this may
militate particularly strongly against extending time when the delay has been a
very lengthy one. Second, there is the possible effect on other litigation
concluded in the past if similar litigation is allowed to be re-opened. Third,
there should be a general policy of respect for time limits laid down by (or,
by extension, under the authority of) Parliament.
(5)
Does the delay affect the quality of evidence available? Loss of
documents and fading of witnesses’ memories can lead to a serious deterioration
in the quality of justice that is possible.
55.
As Lord Drummond Young clearly stated, the above list is not intended to
be comprehensive. A different range of factors may be in play in each case,
and other factors have been taken into account in other cases. For example:
(1)
in Pledger v HMRC [2010] UKFTT 342 (TC), in which the appellant
had “deliberately embarked upon a course of delay and obstruction” the Tribunal
declined to exercise its discretion to permit a late appeal after a review of
the applicable law; the appellant’s behaviour towards HMRC was clearly taken
into account in reaching that decision.
(2)
It is also clear from the above passage in Ogedegbe that an
overall impression of the strength of the appellant’s case may also be
relevant.
(3)
The length of the delay was also a factor in GSM Worldwide.
56.
I would suggest that the present case throws up another potential factor
to take into account, namely the size and seriousness of the matter in
question. This could perhaps be regarded as part of the “public interest”
consideration – just how much valuable time and resource of both the Tribunal
and HMRC should be made available to reconsider an appeal against a penalty of
£100 per partner?
57.
Whilst all the above can provide pointers as to the issues for
consideration in any particular case, it is clear that they are no more than
that and the overriding rule remains that the relevant time limit will only be
extended if good reason is shown why it should be.
Application of the law to the present case
58.
In this case, the Appellants’ applications were not received until 34
days after the expiry of a 28 day deadline. All that they were required to do
within the deadline was:
(1)
In relation to the application for full findings of fact and reasons, send
a letter or email requesting them; and
(2)
In relation to the application which I am treating as an application to
set aside the decision, send a letter or email making the application,
identifying the procedural irregularity upon which the application depended.
59.
Misfiling of papers does not at first sight appear a particularly good
or persuasive reason for missing such a straightforward deadline in either case.
60.
The cases make it clear that the burden lies on the appellant to show
that it is appropriate to extend a time limit, and that such extensions will be
“exceptional”.
61.
This is not a large and serious matter and enough public resource, both
of the Tribunal and of HMRC, has already been devoted to its resolution. I see
no good reason why I should exercise my power to extend time in all the
circumstances.
Summary
62.
The appellant’s application for full findings of fact and reasons for
the Summary Decision was made 34 days after expiry of the 28 day time limit.
63.
I see no good reason to extend that time limit and therefore the
application is invalid.
64.
The application for permission to appeal is invalid as it cannot be made
until full findings of fact and reasons have been provided.
65.
I have treated the latter application, in the alternative, as an
application to set aside the Summary Decision.
66.
That application was also made late and I see no good reason to extend
the time limit for making it. Furthermore, I find it would in any event be
without merit as no procedural irregularity in the appeal has been identified
which could justify such an application, nor would I consider it to be in the
interests of justice to order a set-aside in any event.
67.
The appellant’s applications are refused. The Summary Decision is
therefore final. Full findings of fact and reasons for that decision do not
need to be provided and no application for permission to appeal against it can
validly be made.
68.
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.
KEVIN POOLE
TRIBUNAL JUDGE
RELEASE DATE: 13 March 2012
