VAT & Late Appeals

The First-tier Tribunal's decision in Storm Environmental Ltd shows how procedure can settle an appeal long before its merits are ever examined.

The underlying dispute concerned the correct customs classification of imported steel bins, which in turn fixed the company's customs duty and import VAT position. That question was never resolved, because the appeal fell at two procedural hurdles.

The first was hardship. A VAT appeal generally cannot proceed unless the disputed tax has been paid, or a hardship application succeeds. HMRC had refused Storm's application. The second was timing. The appeal reached the tribunal ten months after the statutory deadline, and Storm needed permission to bring it late.

At the hearing, Storm offered to pay the outstanding tax and duty, and HMRC argued the tribunal could not consider the late appeal until payment was made or the hardship question resolved. The tribunal disagreed and clarified the correct order. Under its own procedural rules, an appeal is not admitted until permission for a late appeal is granted, and until that point there are no proceedings capable of being stayed pending a hardship decision. The late appeal application therefore had to be determined first. Only if permission were granted would the question of payment or hardship arise.

The tribunal then considered whether the ten-month delay could be excused. Applying the established approach in Martland, it found the delay both serious and significant. Storm had a reasonable explanation for around two and a half months, arising from confusion between a withdrawn decision and a later one, but no good reason for the remaining seven and a half months.

Storm's central argument was that its adviser had let it down. The tribunal accepted the facts but applied the principle in Katib, under which an adviser's failings are attributed to the taxpayer. Storm had been aware since April 2024 that an appeal was needed as soon as possible, yet appeared to take no steps to ensure one was made. Permission was refused and the application dismissed.

The practical point for businesses and their advisers is a hard one. Statutory deadlines are not a formality, and an offer to pay the tax at the hearing does not rescue a late appeal. Where an adviser has caused the delay, it is the taxpayer who carries the consequence before the tribunal.