Lands Luo Limited v The Commissioners for HMRC

This is the decision of the Tribunal, to which we have all contributed. The applicant, Lands Luo Limited (LL Ltd), applies for permission to make a late appeal to the Tribunal pursuant to section 83G(4)(c) of the Value Added Tax Act 1994 (VATA 1994). The late appeal is against HMRC’s decision dated 13 October 2023 to deny repayment of £153,357 input tax which LL Ltd had claimed in its VAT return for the 04/21 tax period.

The hearing took place on Wednesday 10 September 2025. On Monday 8 September 2025 HMRC had paid £42,321.84 to LL Ltd representing sums which HMRC accepted were properly claimed as inputs and therefore recoverable, less late submission or payment penalties and interest outstanding for more recent VAT periods.

The application raises issues about whether LL Ltd made an application to appeal in time, meaning that no permission to make a late application is required. LL Ltd’s case is that its agent had, in its email dated 8 November 2023, asked for a review or appeal. LL Ltd rely in addition on a letter dated 9 November 2023 which LL Ltd say was sent by its director, Mr Yuan Luo, seeking both a review and appeal, again in time. In any event LL Ltd submit that if an extension of time is required, it should be granted. This raises an issue relating to the decisions in Martland v HMRC [2018] UKUT 0178 (TCC) (Martland) and Medpro Healthcare Limited (1) and Kalvinder Ruprai (2) v HMRC [2025] UKUT 00255 (TCC) dated 30 July 2025 (Medpro) and the test to be applied by the First-tier Tribunal (Tax Chamber) (FTT Tax) when deciding whether to grant permission to bring an appeal out of time.

The respondents, The Commissioners for His Majesty’s Revenue and Customs (HMRC), contend that there was no application for an appeal or review contained in the email dated 8 November 2023. HMRC contend that the letter dated 9 November 2023 was not sent to HMRC and so cannot be relied on. It is submitted that there should be no extension of time to permit the appeal to be brought, because of the time that has passed from the time when an appeal should have been notified, the failure to take steps to determine what had happened to the appeal, and the need for finality.

LL Ltd carried on business by receiving orders for luxury goods from persons living in China. LL Ltd would then acquire the goods from retail outlets in the UK, using intermediaries to buy those goods from shops in the UK. VAT formed part of the price paid for those goods. LL Ltd would then obtain payment for the goods from the persons in China and send the goods to China. No VAT was payable by those persons in China to LL Ltd. LL Ltd would then claim the VAT paid to the retail outlets as inputs for the purposes of VAT. LL Ltd had no VAT that it received as outputs. It is apparent that the reclaimed VAT represented the profit that LL Ltd made in carrying out its business. Issues arose about the receipts supporting the claims for input tax that LL Ltd made.

We were provided with the following documents:

Mr Yuan Luo provided a 3 page written witness statement and gave oral evidence at the hearing through a HMCTS appointed Mandarin interpreter. Mr Luo answered questions from Mr Feng, Mr Corps and the panel.

We heard submissions from Mr Feng on behalf of LL Ltd and Mr Corps on behalf of HMRC, and are very grateful for their assistance.

By the conclusion of the hearing it was apparent that the following matters were in issue: (1) whether the email dated 8 November 2023 contained a request for a review or appeal; (2) whether the letter dated 9 November 2023 was written and sent to HMRC in November 2023; and (3) whether LL Ltd should be granted permission to bring a late appeal.

There was much common ground between the parties on the facts, but there was an important issue about whether the letter dated 9 November 2023 was sent by Mr Luo to HMRC. The findings set out below represent our findings of fact unless otherwise stated.

HMRC opened an enquiry into LL Ltd’s VAT return for the 04/21 tax period by letter dated 5 July 2021. Over the following two years HMRC carried out their enquiry. During this period HMRC requested information and documents from LL Ltd’s agent, Linlin of YWC LLP (the First Agent), which HMRC then reviewed. HMRC also met with the First Agent and Mr Luo to discuss LL Ltd’s business operation and records.

On 13 October 2023 HMRC issued its decision letter (the Decision Letter) to the First Agent by email. The Decision Letter set out the reasons why HMRC rejected £153,357 of LL Ltd’s claim for repayment of £153,848.90 input tax. The same letter, but dated 16 October 2023, was sent by post to LL Ltd.

The Decision Letter offered LL Ltd a review of HMRC’s decision and explained that LL Ltd could either accept the offer of a review, or appeal to an independent Tribunal, but in either case it must do so within 30 days of the date of the letter. The letter further explained that if LL Ltd accepted the offer of a review it could still appeal to an independent Tribunal if it did not agree with the outcome of the review but that it must do so within 30 days of receiving the outcome of the review.

There is a significant internal inconsistency in the Decision Letter. On page four of the letter it states:

“As HMRC is unable to check every record held, in anticipation of the above amounts, I have on this occasion, as officer best judgement allows, granted repayment of 30% of your total input tax claim, which should adequately cover these concerns.”

However the table in the Decision Letter provides that only £491.86 of the claimed input tax will be repaid. The Decision Letter also refers to a spreadsheet which HMRC had sent to the First Agent showing the invoices against which it has denied the input tax. This spreadsheet corresponds with the table in the Decision Letter, so no repayment of £46,154.67 was allowed. Mr Corps submitted, accurately, that the letter only permitted a repayment of £491.86 in its effect. Mr Corps did accept, however, that there was no explanation of why the £46,154.67 had not been allowed as the Officer had suggested that it would be. It was also not apparent how the figure of £46,154.67 set out in the Decision Letter related to the repayment made to LL Ltd by HMRC on 8 September 2025 (see paragraph 35 below).

The document bundle included a printout and translation of WeChat exchanges between Mr Luo’s wife and the First Agent from 12 September 2023 to 8 November 2023. This printout shows that on 12 September 2023 the First Agent explained to Mrs Luo that the First Agent had taken some time off work due to her mother’s ill health but that she would continue to help with “the tax adjustment” after her mother’s surgery and when things had settled down.

Mrs Luo contacted the First Agent on WeChat again on 31 October 2023 to ask if there is any news from “Daniel and peter”, which were the first names of the two HMRC Officers who were dealing with the separate corporation tax enquiry and VAT enquiry into LL Ltd respectively.

The First Agent responded stating that “peter’s done with vat” adding that “it was postponed because my mom was in the hospital” and “he gave an extension”. Mrs Luo asked the First Agent whether she needed to call him back. The printout that we saw did not show the First Agent’s response to this question. The next communication on the printout regarding the VAT enquiry is on 8 November 2023 at 15:05 when Mrs Luo asked the First Agent about when the extension expired. The printout does not show any response from the First Agent to this question.

The document bundle included an email from the First Agent to Officer Peter Kershaw of HMRC at 15:21 on 8 November 2023. It appears, and we find, that this email was in response to the email from Officer Kershaw dated 13 October 2023 attaching the Decision Letter. The email reads:

“…

Thank you for contacting us, sorry that I just had a chance to read your email.

My mum had a brain surgery in September and since then her condition has been critical, so I took leave from work to look after her. and the director with his family also in China at the moment will be coming back in early December 2023.

In the exceptional situation, can I please request your kindly consideration to extend the deadline to respond to your assessment letter to around 15/12/2023.

…”

The WeChat printout shows that there was a subsequent WeChat call between the First Agent and Mrs Luo at 15:40 that day which lasted 12.02 minutes. Mr Luo stated in his oral evidence that both he and his wife were on this call and that as a result of this call he decided to write to HMRC because he was not sure that the First Agent would respond to HMRC on his behalf, due to the First Agent’s mother’s illness. As already noted, whether Mr Luo did write to HMRC, and if he did write whether he sent the letter, are points in issue.

Officer Kershaw responded to the First Agent at 17:46 on 9 November 2023 agreeing to extend the deadline until 15 December 2023.

The document bundle included, as an appendix to the grounds of appeal provided with the Notice of Appeal dated 14 October 2024, a photocopy of a handwritten letter from Mr Luo to Officer Kershaw at HMRC dated 9 November 2023 which reads as follows:

“My wife and I found out from my accountant LinLin on 31 October 2023 that you have issued a decision on April 2021 VAT period.

Before the deadline, my wife and I had a WeChat call with LinLin on 8 November 2023 on what to do and she told us her mother was ill with cancer.

I am writing to you to appeal and accept your offer of a review because I am not sure if my accountant LinLin is going to respond on my behalf before the deadline as her mother is diagnosed with cancer around the same time you had issued your decision.

I look forward to hearing from you

Yours sincerely

MrY Luo”

In his written witness statement Mr Luo stated:

“The letter was written on 9 November 2023 with my wife, I then photocopied it, and posted in the morning using one 1^st class stamp.”

In oral evidence Mr Luo said that he could not remember when he photocopied the letter. He stated that he had not sent the letter by recorded delivery because, although it was important, the letter itself had no value.

Mr Luo stated further in oral evidence that he was not in China at the time of his WeChat conversation with the First Agent or on 9 November 2023, as stated in the First Agent’s email to Officer Kershaw on 8 November 2023. Mr Luo stated that he posted the letter dated 9 November 2023 on that day. Mr Luo stated that he did not know why the First Agent had told Officer Kershaw on 8 November 2023 that Mr Luo was in China.

By emails dated 10 and 23 July 2025 sent during the preparation for this hearing, HMRC had asked Mr Luo to provide a copy of his passport as evidence that he was in the UK and not in China between 8 and 10 November 2023. Mr Luo confirmed in his oral evidence that Mr Feng had passed this request for his passport on to him, but he did not provide a copy of his passport as requested. Mr Luo did not provide any explanation as to why he did not provide a copy of his passport.

HMRC have no record of receiving the letter from Mr Luo dated 9 November 2023 and stated that they did not see the photocopy of the letter until 19 December 2024 when they received the Tribunal appeal documents. Although Mr Feng made the point that Officer Kershaw had not been called to state that he did not receive the letter, it is apparent that HMRC have no record of receiving the letter. That is apparent from HMRC’s correspondence. On 14 December 2023 Officer Kershaw wrote to the First Agent extending the deadline for LL Ltd to request a review to 4 January 2024. He gave this extension because he was about to go on leave and would not be able to review any request until after 4 January 2024 in any event. Such a letter would not have been necessary if HMRC had received Mr Luo’s letter dated 9 November 2023 asking for an appeal and review.

The First Agent then emailed HMRC on 15 December 2023 regarding the corporation tax enquiry. HMRC provided a substantive response regarding the corporation tax enquiry to the First Agent on 9 February 2024, to which the First Agent responded on 11 March 2024. HMRC wrote again to the First Agent regarding the corporation tax enquiry on 17 April 2024 and 14 October 2024 but there is no further correspondence between the First Agent and HMRC in the document bundle that relates to either the corporation tax or VAT enquiries.

Mr Luo stated in his oral evidence that he did not discuss the VAT enquiry further with the First Agent after he posted the letter to HMRC on 9 November 2023. He said that he did not contact HMRC to find out what was happening with his request because he was used to HMRC taking a long time to deal with things, as it had taken them over two years to complete the VAT enquiry. We will address this evidence in our findings about whether Mr Luo sent the letter dated 9 November 2023 to HMRC.

Mr Feng sent an email to Peter Kershaw on 1 October 2024 stating that he was now acting for LL Ltd. Mr Feng emailed HMRC again on 3 October 2024 saying:

“Having spoken to the client I am advised that he was told by the previous agent that a review of the decision had been made and that this had never been received which accounts for the delay. The previous agent has now been removed and I would like to formally make a late appeal against the decision. Please confirm your acceptance of the appeal and I will make arrangements to submit further information for your consideration of R13 VATR 1995.”

HMRC relied on the fact that Mr Feng did not in that email state that Mr Luo had written a letter dated 9 November 2023 asking for an appeal and review, which suggested that Mr Luo had not written or sent such a letter.

HMRC provided a substantive response to Mr Feng’s email of 3 October 2024 by letter dated 10 October 2024 in which they rejected the late request for a review because LL Ltd did not have a reasonable excuse for the delay. This letter also advised that LL Ltd could apply to the Tribunal for permission to make a late appeal against the Decision Letter.

Mr Feng wrote to Officer Kershaw again on 15 October 2024 as follows:

“…

Thank you for your email and letter.  The client wants a statutory review. See my previous email that because you did not action the acceptance of a review the client changed his tax agent to me.  Please contact the review team to action it. I have new information ready to send to you. I am planningto send the new information next week.”

LL Ltd submitted their notice of appeal to the Tribunal dated 14 October 2024 together with an application for permission to make a late appeal to the Tribunal (the Application).

Mr Feng and LL Ltd did not provide any new information to HMRC. However in their Notice of Objection to the Application, HMRC stated at paragraph 67 that:

“the Respondents are now prepared to further allow input tax deduction on those invoices which were originally refused only because they were issued more than 30 days after the date of supply, or were a ‘consolidated invoice’, based on the information provided to Officer Kershaw ahead of making his decision….. This would permit repayment of £44,556.44. To that limited extent, and only so far as the Parties have not been able to come to an agreement before the Tribunal considers the Appellant’s Application, the Respondents consider the Application should be allowed.” (underlining added)

On Monday 8 September 2025, HMRC repaid £42,321.84 to LL Ltd which was the £44,556.44 referred to at paragraph 67 of HMRC’s Notice of Objection, less late submission or payment penalties and interest outstanding for more recent VAT periods. At the hearing Mr Corps submitted that, given this payment had been made, there was no need to allow LL Ltd to bring an appeal out of time.

Mr Feng submitted that, properly interpreted, this email is a request for a review or an appeal. He submitted that, due to the First Agent’s mother’s illness her mental state was such that she was confused and therefore wrote extension rather than review or appeal in the email in error. He further submitted that as HMRC in the Decision Letter only gave the option of a review or appeal, they should have read this email as requesting a review or appeal.

In our judgment the email dated 8 November 2023 is not a request for a review or appeal. The wording of the email

“in the exceptional situation, can I please request your kindly consideration to extend the deadline to respond to your assessment letter to around 15/12/2023”

is clearly a request for an extension of time. LL Ltd might reasonably have wanted an extension of time to decide whether to apply for either an appeal or a review. This was in circumstances where there was an illness in the First Agent’s family, and, according to the First Agent, Mr Luo was not in the country. An extension of time would permit the First Agent to give Mr Luo and LL Ltd advice about whether to pursue a review or appeal. The letter was not itself a request for a review or an appeal.

We find therefore that this email is a request for an extension, and is not a request for a review or appeal.

This letter was written and photocopied, as is apparent from the existence of the photocopy of the letter, but the photocopy of the letter does not prove when the letter was written. It is apparent from its terms that the letter requests an appeal and review. Mr Luo’s evidence was that he wrote the letter in the UK on 9 November 2023 and posted it using a first class stamp.

The First Agent informed HMRC in an email of 8 November 2023 that Mr Luo was in China. Mr Luo denied that he was in China at that time. Mr Luo however refused requests by HMRC to provide a copy of his passport which would have shown stamps of entry and exit from China or the UK. There was no other evidence before us to show that Mr Luo was in the UK at the material time.

HMRC has no record of having received the letter, and this appears from the contents of HMRC’s contemporaneous correspondence. There was no chasing up on the progress of the review or appeal of HMRC either by Mr Luo or the First Agent. Mr Luo suggested that he did not think that the First Agent could contact HMRC about that letter because it was written from his personal address, and he did not chase up because the fact that there were delays was not a surprise given the timescales involved in HMRC’s enquiries. We accept that the enquiry into the VAT return had taken a considerable period of time, but we do not accept that the letter was written and sent in the UK to HMRC for the detailed reasons given in paragraph 43 below.

When Mr Feng, as LL Ltd’s second agent, first contacted HMRC in October 2024 he made no reference to the letter dated 9 November 2023 and the request for a review or appeal that had been made in it. Mr Feng subsequently said that his client had informed him that the First Agent had requested a statutory review but that request had not been received by HMRC and that this was the reason for the delay. At no point prior to submitting the appeal to the Tribunal on 14 October 2024, did Mr Feng state that Mr Luo himself had written to HMRC requesting a review or provide HMRC with the photocopy of the letter dated 9 November 2023.

We find that Mr Luo did not write the letter dated 9 November 2023 in the UK on 9 November 2023 and send it to HMRC by first class post on either 9 or 10 November 2023. This is because although it is not surprising that there was no photocopy of the envelope being sent to HMRC (it was reasonably said on behalf of LL Ltd that no-one would photocopy an envelope), we do not accept Mr Luo’s evidence that he was in the UK and not in China around the relevant time, even after making all proper allowances for the difficulties that Mr Luo had in giving evidence through an interpreter. The First Agent stated contemporaneously in the email dated 8 November 2023, that Mr Luo was in China, and this was one of the reasons given by the First Agent for the need for an extension of time. Mr Luo was aware of HMRC’s requests to see his passport to show whether he was in China, but Mr Luo did not provide the passport, and he did not give any reasonable explanation for the failure to provide it, for example explaining that he did not receive a stamp in his passport, or that he was in China on 8 November 2023, but had returned on 9 November 2023. We find that Mr Luo was in China at the relevant time and was therefore not able to write and send the letter by first class post to HMRC as he said. There are other facts supporting our finding. These include the failure by Mr Luo to chase a response to his letter dated 9 November 2023, which would have been expected if it had been sent. They also include the failure by Mr Feng to make immediate reference to the letter dated 9 November 2023 when communicating with HMRC about a review or appeal. If Mr Luo had written and sent a letter to HMRC on 9 November 2023 asking for a review or appeal, he would have mentioned it to Mr Feng to justify the request for the appeal or review.

For all the reasons set out above we find that it is more likely than not that Mr Luo did not write and send the letter dated 9 November 2023 to Officer Kershaw by first class post in the UK on 9 or 10 November 2023. We also find that further to the First Agent requesting and being granted an extension of time for LL Ltd to submit its request for a review, no actual request for a review or appeal was made to HMRC by the First Agent or by Mr Luo on behalf of LL Ltd before Mr Feng wrote to HMRC requesting a late appeal on 3 October 2024.

It is therefore apparent from our findings under the first and second issues that LL Ltd need permission to bring a late appeal. This means that we have to confront the conflicting decisions of the Upper Tribunal (Tax and Chancery Chamber) on the proper approach to be taken to the test about whether to grant such permission. It is first necessary to identify the relevant provisions of law.

VATA 1994 governs appeals against HMRC decisions and references to sections in this decision are to sections in that Act unless otherwise stated

Section 83(1)(c) provides that an appeal shall lie to the Tribunal with respect to a decision by HMRC about the amount of any input tax which may be credited to a person.

Section 83A provides that HMRC must offer a person a review of such a decision at the same time as the decision is notified to that person and section 83C(1)(b) provides that HMRC must review a decision where the offer is accepted within 30 days of the date of the offer, and HMRC may extend the time allowed to accept the offer of a review (or make an appeal to the Tribunal) within the original time allowed or any previously extended time allowed (section 83D).

However section 83E(2) provides that where a request is made for a review outside the time allowed, HMRC must review the decision if the request is in writing and HMRC are satisfied that the person had a reasonable excuse for not accepting the offer of a review within the time allowed and made the request without unreasonable delay after the excuse had ceased to apply.

Section 83G(4)(c) provides that where HMRC have notified P that they will not carry out a late review, P may only appeal to the Tribunal if the Tribunal gives permission. The wording is:

“(4)

In a case where HMRC are requested to undertake a review in accordance with section 83E

Section 83G(6) provides an appeal may be made after the end of the periods specified in other provisions of VATA 1994 if the Tribunal gives permission to do so. The wording is very similar to that of 83(4)(c) as follows:

“An appeal may be made after the end of the period specified in subsection (1), (3)(b), (4)(b) or (5) if the tribunal gives permission to do so.”

Although nothing turns on the point, we consider that the application is properly analysed under 83G(4)(c) and not 83G(6), although they are in material terms identical. We say this because 83G(4)(c) provides that, where HMRC is requested to carry out a section 83E review (review out of time), which Mr Feng did by email dated 3 October 2024, and HMRC notifies the Appellant that the review will not be undertaken, which they did by letter dated 10 October 2024, an appeal may only be made if the Tribunal gives permission. 83G(6) on the other hand applies where permission is sought to make a late appeal after the end of the periods specified in 83G(1), (3)(b), (4)(b) or (5), none of which apply in this case.

The Tribunal Procedure (First-tier Tribunal)(Tax Chamber) Rules 2009 (SI 2009/273) (the Tax Tribunal Rules) make provision for the overriding objective. Rule 2 is headed “Overriding objective and parties' obligation to co-operate with the Tribunal”. It provides:

“(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”.

There is no equivalent in the Tax Tribunal Rules to rule 3.9 of the Civil Procedure Rules, a point which becomes relevant because of the dispute that arose in Medpro.

In BPP Holdings Limited v HMRC (BPP Holdings) [2016] EWCA Civ 121; [2016] 1 WLR 1915 Ryder LJ gave a judgment with which Richards and Moore-Bick LJJ agreed. There had been conflicting decisions in the Upper Tribunal about the approach to be taken to procedural defaults and failings. At [16] Ryder LJ stated that:

“The key question underlying the two decisions can be characterised in the following way: whether the stricter approach to compliance with rules and directions made under the CPR as set out in Mitchell v News Group Newspapers Ltd (Practice Note) [2014] 1 WLR 795 and Denton v TH White Ltd (De Laval Ltd, Part 20 defendant) (Practice Note) [2014] 1 WLR 3926applies to cases in the tax tribunals. The two conflicting decisions of the UT on the point came to different conclusions. For the reasons I shall explain, I am of the firm view that the stricter approach is the right approach”.

Ryder LJ referred to the fact that the difference between the two decisions was based on the fact that CPR 3.9 had not been incorporated into the Tax Tribunal Rules. One judge held that the approach in Mitchell v News Group and Denton v White should be followed notwithstanding the absence of CPR 3.9 in the Tax Tribunal Rules. The other judge had considered that unless and until the equivalent of CPR 3.9 was enacted in the Tax Tribunal Rules, the FTT Tax should not adopt the stricter approach in Mitchell v News Group and Denton v White. At [37] Ryder LJ stated:

“There is nothing in the wording of the overriding objective of the tax tribunal rules that is inconsistent with the general legal policy described in Mitchell and Denton . As to that policy, I can detect no justification for a more relaxed approach to compliance with rules and directions in the tribunals and while I might commend the Civil Procedure Rule Committee for setting out the policy in such clear terms, it need hardly be said that the terms of the overriding objective in the tribunal rules likewise incorporate proportionality, cost and timeliness. It should not need to be said that a tribunal's orders, rules and practice directions are to be complied with in like manner to a court's. If it needs to be said, I have now said it.”

There was an appeal in BPP Holdings to the Supreme Court [2017] UKSC 55; [2017] 1 WLR 2945. The appeal was dismissed. The Supreme Court held that, although the CPR were not directly applicable to Tribunals, the Upper Tribunal's guidance, that the Tribunals should generally follow a similar approach to time limits and sanctions to that applied under those Rules, was appropriate, see [26] of the judgment. It was also confirmed that no different rule applied to public law cases, and public bodies such as HMRC were to be encouraged to live up to high standards in litigation

Following the judgment in BPP Holdings, the Upper Tribunal in Martland set out how the FTT Tax should exercise its discretion in deciding whether to grant permission to submit a late appeal. In [34] of Martland it was said:

“…the purpose of the time limit is to bring finality, and that is a matter of public interest, both from the point of view of the taxpayer in question and that of the wider body of taxpayers.”

The main guidance given in Martland was set out in [44]. In broad terms the Upper Tribunal adopted and followed the approach of the Court of Appeal in Denton v White. As is well known the focus of the decision in Denton v White was on relief from sanctions. In the light of the subsequent decision in Medpro it is necessary to note that there was a specific provision in rule 3.9 of the Civil Procedure Rules which was headed “Relief from sanctions”. That provided:

“(1)

On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need—

(a)

for litigation to be conducted efficiently and at proportionate cost; and

(b)

to enforce compliance with rules, practice directions and orders”.

[44] of Martland is in the following terms:

“When the [FTT Tax] 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 Tax] is satisfied on balance that it should be. In considering that question, we consider the [FTT Tax] 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 Tax] "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 Tax] 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.”

Martland stated that when evaluating all the circumstances of a case it is necessary for the Tribunal to consider the prejudice to both parties of granting or refusing the permission. The paragraph in Martland which prompted controversy in the subsequent decision of Medpro was [45]. This provided:

“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.” (underlining added)

[46] of Martland went on to provide:

“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.”

In HMRC v Hafeez Katib [2019] 0189 UKUT (TCC), the Upper Tribunal held at [17], that the FTT Tax had made an error of law:

“in failing to...give proper force to the position that, as a matter of principle, the need for statutory time limits to be respected was a matter of particular importance to the exercise of its discretion.”

In Medpro the appellants argued that the Upper Tribunal’s previous decisions in the line of authority following Martland, to the effect that in determining applications to appeal to the FTT Tax beyond the statutory time limit, the FTT Tax should, as in the civil courts, give particular importance to the two factors highlighted in CPR r.3.9: namely the need for litigation to be conducted efficiently and at proportionate cost, and for statutory time limits to be respected, was impermissible because it amounted to imposing a fetter on the broad statutory discretion afforded by, in that instance, section 83G(6).

In Medpro there was a dispute between the two judges sitting in the Upper Tribunal, Marcus Smith J and Upper Tribunal Judge Jonathan Cannan, about whether Martland should be followed. Marcus Smith J was the more senior judge, and so his view prevailed. Marcus Smith J held that the requirement to give particular importance to statutory time limits was wrong.

It was, however, common ground between the judges in Medpro that the three stage test set out in Martland was correct. The Upper Tribunal in Medpro stated at [88]:

“we consider the three stage structure of the discretion at [44] of Martland … to represent an unimpeachable approach.”

At [94] it was said

“…At [44] of Martland, the Upper Tribunal set out the three-stage test. That paragraph says nothing about the ex-ante weight to be attached to the factors being weighed and is unimpeachable.”

At [95] of Medpro Marcus Smith J stated:

“The question is whether [45] of Martland … goes further and in referring to the “particular importance of the need for litigation to be conducted efficiently and at proportionate cost, and for statutory time limits to be respected” was doing what the Court of Appeal did in Denton, and according these factors particular weight. Read on its own, it must be doubted whether Martland was doing this. Martland at [45] is not unequivocally clear, and can be read as merely stressing that these factors matter, as indeed they do. But there can be no doubt that the Upper Tribunal has subsequently followed the Denton approach not merely as to the structure of the discretion (ie the three-stage test) but also as to the (additional, extra) weight to be accorded to the CPR 3.9(a) and (b) factors (ie the “top table” point).”

Marcus Smith J said that he did not consider this to be a permissible approach in the case of extensions of time under section 83G(6). This was because the rule change to CPR 3.9 enabled the Court of Appeal to take the approach it did in Denton v White. The wording in section 83G(6) has not been changed (nor has it in 83G(4)(c)) and did not, when construed, permit this aspect of the approach in Denton v White. Although there was reference to the decision in BPP Holdings this was only in the context of permitting the Upper Tribunal to give guidance to the FTT Tax. There did not appear to be any assessment of Ryder LJ’s approach to CPR 3.9 or his endorsement of the stricter approach set out in Mitchell v News Group and Denton v White. It also might be noted that the Upper Tribunal in Medpro had already agreed to allow the appeal on other grounds, but it does appear that there was a considered decision to allow the appeal on this point.

We are sitting in the FTT Tax. It is our duty, as a matter of precedence, to apply the guidance on the law given by the Upper Tribunal. We are, however, now confronted with differing approaches to be applied from the Upper Tribunal namely that set out in Martland and that set out in the judgment of Marcus Smith J in Medpro.

We should state immediately that we doubt that the difference in the approach to the test to be applied to determine whether to grant permission to bring a late appeal between Martland and Medpro is likely to lead to different results in many cases. This is because when it comes to evaluating all the circumstances of the case, factors specific to the case are always likely to determine the outcome.

We will, in determining whether to grant permission to make a late appeal, adopt the three stage test, which it is common ground between Martland and Medpro should be applied. Thereafter we will consider all the circumstances of the case by applying the test, and stricter approach, set out in Martland. This is because it seems to us that the approach in Martland is consistent with the approach of the Court of Appeal in BPP Holdings which was affirmed, or permitted, by the Supreme Court. In that case, as appears from the passages from Ryder LJ’s judgment, the Court of Appeal directed that although CPR 3.9 was not part of the Tax Tribunal Rules, the approach set out in Denton v White should be followed. That was not said in the context of the unfettered statutory discretion in section 83G(4)(c) or 83G(6), but it seems to us that it was a statement of general application to the exercise of such discretions by the FTT Tax. We will, however, also cross-check our decision against the test set out in Medpro to see whether it leads to a different result.

Applying the three stage test set out in Martland to the facts of this case we find as follows. As to step one and the length of the delay, the statutory time limit for LL Ltd to submit its appeal to the Tribunal was 4 January 2024. This was the extended period allowed by Officer Kershaw for LL Ltd to accept the offer of a review. HMRC received LL Ltd’s request for a review on 23 October 2024. This is a delay of 292 days. We find that a delay of 292 days is both serious and significant.

As to step two and the reasons for the delay, Mr Feng’s submission on behalf of LL Ltd was that there was not in fact a delay because the First Agent’s email of 8 November 2023 was a request for a review or an appeal and because the letter dated 9 November 2023 was an in-time request for a review and appeal. For the reasons given in our findings on issues one and two, we do not accept either of these submissions. There was no other excuse or explanation that was offered, but it was apparent from the facts that there had been a serious illness of the First Agent’s mother and Mr Luo’s absence overseas. However we do not consider that either of these are good reasons for the delay in circumstances where HMRC had properly allowed an extension.

As to step three and all the circumstances of the case, in weighing up the prejudice to each party of granting or refusing the permission we have considered all the relevant factors, of which there are six which have seemed to us of particular relevance. First there was a serious and significant delay for which there was no good reason offered. Time limits are there to be complied with. Delays prevent Tribunal proceedings being conducted efficiently and at proportionate cost. Secondly LL Ltd wrongly attempted to rely on a letter dated 9 November 2023 which, for the reasons set out above, was not sent to HMRC. Thirdly there is an important principle of finality in tax proceedings. The time limits exist to bring an end to proceedings. These three factors strongly militate against granting permission to appeal out of time.

Fourthly however, since LL Ltd submitted its application to make a late appeal to the Tribunal, HMRC have exercised their collection and management powers to allow a repayment of £42,321.84, which is a significant proportion of the input tax claimed, having originally submitted in the response to the appeal that an appeal out of time limited to that sum should be permitted. When Mr Corps was asked how the important principle of finality in tax proceedings should be applied in circumstances where HMRC had itself originally accepted that there should be an appeal, albeit limited to the sums set out in their Notice of Objection to the Application if the parties were not able to come to an agreement, and revisited the repayment of input tax due to LL Ltd some two days before the hearing. Mr Corps submitted that HMRC only wanted to collect the tax that was due and that with this payment there was no further input tax repayable to LL Ltd, so permission to submit the late appeal should not be granted. It seemed to us that HMRC’s decision dated 13 October 2023 was, in the particular circumstances of this case, not as final as many other decisions made by HMRC.

Fifthly, for the detailed reasons given in paragraph 15 above, there is an important internal inconsistency in the Decision Letter. The Decision Letter stated that inputs of £46,154.67 would be allowed, but only £491.86 was in fact allowed. It is not apparent, from the information before us, how the figure of £46,154.67 set out in the Decision Letter related to the repayment made to LL Ltd by HMRC on 8 September 2025. This suggests that there is a real possibility that there may be merits in any appeal. We could not conclude that either party’s case was particularly weak or strong. We do consider, however, that the internal inconsistency in the Decision Letter is a matter that ought to be resolved by the FTT Tax.

Sixthly it is not apparent that the delay from January 2024 until October 2024 has caused HMRC any prejudice, this is because HMRC has by its own volition revisited and adjusted the inputs, albeit prompted by the application to appeal out of time.

In balancing all of the relevant factors we have concluded that LL Ltd ought to be permitted to appeal out of time. It is apparent that despite the importance of a strict approach to procedural defaults, the importance of complying with procedural requirements and finality in tax proceedings, adjustments have been made to the inputs by HMRC (for good reason) after the application for permission to appeal out of time. The Decision Letter itself raises matters that deserve a principled answer. It is impossible to escape the fact that HMRC have, by offering to make adjustments to the inputs in their Notice of Objection to the application, and by making adjustments to the inputs on the 8 September 2025, never in practice treated this matter as closed by reason of the expiry of time.

This decision is made applying the stricter Martland test. We can confirm that, given that we have granted permission to make a late appeal in the particular circumstances of this case, we would have come to the same conclusion applying the Medpro test.

For all the reasons above the application for permission to make a late appeal pursuant to section 83G(4)(c) is GRANTED.

LL Ltd shall provide to HMRC and the Tribunal no later than 28 days after the date of this decision its amended grounds of appeal detailing the reasons that it disagrees with the Decision Letter, taking account of the amendment made by paragraph 67 of HMRC’s Notice of Objection dated 14 March 2025, and the subsequent payment made by HMRC on 8 September 2025.

HMRC shall provide their Statement of Case to LL Ltd and the Tribunal no later than 28 days after LL Ltd’s compliance with the direction at paragraph 81 above.

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.