VAT & Evasion Penalties

The VAT case of John Earl Dreyer v HMRC concerned a civil evasion penalty of nearly £5 million imposed on Mr Dreyer, relating to VAT fraud by Contactlenses Limited, a Seychelles company he controlled.

The central issue was whether Mr Dreyer could appeal the penalty after missing the statutory 30-day deadline, arguing that the time limit was invalid under the Bill of Rights Act 1689 and the European Convention on Human Rights.

The Tribunal held that the 30-day time limit for appeals was valid and enforceable. It rejected arguments that other legislation invalidated the statutory time limit, citing established case law that procedural rules such as time limits are not overridden by human rights considerations, even where penalties are “criminal”.

Mr Dreyer claimed to have requested a review of the penalty, but the Tribunal found no evidence that HMRC received such a request within the required timeframe. When Mr Dreyer eventually applied for permission to appeal out of time – over two years late – the Tribunal applied the three-stage test from Martland v HMRC, considering the length and seriousness of the delay, the reasons for it, and all relevant circumstances.

The Tribunal found the delay significant and unjustified, with Mr Dreyer only acting when enforcement was threatened in Canada. His substantive case was considered weak, and the prejudice to HMRC and the Tribunal system from allowing a late appeal was significant. Permission to appeal late was refused.

The case confirms the strict application of statutory time limits for VAT appeals and the high threshold for permitting late appeals, even in cases involving substantial penalties and human rights considerations.