VAT & Time Delays

The First-tier Tribunal has granted permission for a late appeal in Shahada Rahman Joli v HMRC, allowing the appellant to challenge a Personal Liability Notice of around £1.55m despite an application made well over two years out of time. The decision turns on the delay rather than the merits, and the substantive appeal has still to be heard.
 
The notice followed a penalty for the deliberate under-declaration of VAT by Extensive Enterprise Ltd, itself the subject of an assessment of some £2.2m for periods between October 2019 and January 2021. HMRC issued a penalty of just over £1.55m against the company and a matching Personal Liability Notice against the appellant as its director.
 
Her account was that she had been a director in name only. An NHS nurse with no commercial experience, she said she had been appointed in September 2019, had ceased to act by March 2020, and that real control of the business rested with another individual whom HMRC has been unable to trace. Her resignation was not recorded at Companies House until September 2021, and HMRC questioned whether the supporting paperwork was contemporaneous. During the relevant period she was also dealing with serious ill health.
 
The statutory deadline for appealing is 30 days. The appeal here was made 777 days late, which the Tribunal accepted was both serious and significant. Applying the Martland approach, it considered the length of the delay, the reason for it, and then weighed all the circumstances.
 
The Tribunal found that the appellant had a good reason for the delay up to February 2023 on account of her health. It was also critical of HMRC's own correspondence, describing a key letter as "particularly obtuse" and finding that the status of her out-of-time request for a statutory review had been left very unclear. Set against the prejudice of losing the right to contest a £1.55m liability, and with no indication that the passage of time had damaged HMRC's ability to defend the case, permission was granted.
 
Permission to appeal late is not a verdict on the merits. The appellant must still prove that the penalty was wrongly attributed to her, and the Tribunal was careful to confine its decision to the unusual facts before it. It does show, though, that the quality of HMRC's own correspondence can form part of the assessment. Where a review decision is ambiguously expressed, that ambiguity may count against HMRC when a tribunal comes to weigh the reasons for the delay.