Sanjay Ahya v The Commissioners for HMRC

This is an application by the appellant (Mr Ahya) to be allowed to appeal out of time against discovery assessments and penalty assessments issued by HMRC on 15 January 2024 and 18 January 2024 in respect of tax years 2005/6 to 2022/23. The aggregate assessments and penalties amount to a total of £75,055.12.

HMRC first contacted Mr Ahya on 26 September 2022, advising that they believed he may have received rental income which had not been declared to HMRC. Mr Ahya did not respond and a formal information notice was issued on 21 November 2022 under Schedule 36 Finance Act (FA) 2008. Mr Ahya then requested and was granted several extensions of time to comply, the last of which was on 21 February 2023. None of the information requested in the notice was received; after the last extension was granted Mr Ahya did not communicate with HMRC again until he wrote to appeal against the assessments and penalties.

On 17 May 2023, HMRC issued a penalty notice for failure to comply with the information notice. Subsequently, on 2 November 2023, HMRC wrote to Mr Ahya enclosing calculations of the tax they believed to be due for the tax years 2004/05 to 2021/22. Mr Ahya did not respond to this letter.

On 15 January 2024, HMRC issued formal assessments under section 29 of the Taxes Management Act 1970 totalling £57,762.40, and penalties under section 7(8) of the same Act totalling £5,199.24. On 18 January 2024, further penalties were issued under Schedule 41 to the Finance Act 2008 in the sum of £12,129.48.

Mr Ahya submitted a letter dated 8 March 2024, received by HMRC on 12 March 2024, which was treated as a late appeal against the assessments and penalties although it did not specifically appeal the assessments, only the penalties. HMRC rejected the appeal by letter dated 23 July 2024, on the basis that no reasonable excuse for the delay had been provided. Following further correspondence, HMRC reiterated its refusal on 13 September 2024 and advised Mr Ahya to apply to the Tribunal for permission to appeal out of time.

On 4 November 2024, Mr Ahya’s agent requested reconsideration of HMRC’s decision. HMRC responded on 18 November 2024, maintaining its refusal and providing guidance on how to apply to the Tribunal. Mr Ahya’s application to the Tribunal was submitted on 18 December 2024.

In determining whether permission should be granted to bring an appeal out of time, the Tribunal has applied the three-stage approach endorsed in Martland v HMRC [2018] UKUT 0178 (TCC). The Tribunal must first assess the seriousness and significance of the delay, then establish the reasons for the default, and finally evaluate all the circumstances of the case. In contrast to HMRC, the Tribunal is not restricted to considering whether or not there has been a reasonable excuse for the delay.

The relevant statutory time limit for lodging an appeal is 30 days from the date of the decision. Mr Ahya’s appeal was received by HMRC on 12 March 2024, and so HMRC contends that the appeal was 26 days late (in respect of the assessments and penalties issued under section 29 and section 7(8) of the Taxes Management Act 1970) and 23 days late (in respect of the penalties issued under Schedule 41 to the Finance Act 2008).

Mr Ahya contends that the delay in making the appeal was less than this as the letter was sent on 8 March 2024; further, it was also contended for Mr Ahya that the attempts to file tax returns, where successful, should be treated as an appeal and so the appeal should be regarded as being made when the returns were filed. As the letter of 8 March 2024 referred to returns being filed online, it was contended that the appeal date must therefore be on or before 8 March 2024 although no specific date of filing was provided in evidence.

We note the submissions made as to treating the filing of returns as being the date of appeal: filing a tax return is not, in our view, equivalent to making an appeal. s31A Taxes Management Act (TMA) 1970 requires that an appeal be made by giving notice in writing to HMRC setting out the grounds of appeal. Filing a return online does not meet this requirement and so we do not consider that Mr Ahya has established that an appeal was made any earlier than 12 March 2024.

With regard to the contention that the delay should be measured by reference to the date of Mr Ahya’s letter, Friday 8 March 2024, we do not agreed that the date on a letter means that the letter must have been sent on that date. The operative date is the date on which notice of an appeal is given to HMRC (s31A TMA 1970). We were provided with no evidence as to when or how this letter was sent to HMRC. It clearly was sent, as it was received, but we were provided with no evidence was to whether it was posted on the date set out in the letter or whether it was posted at some point over the weekend following that date (or, even on Monday 11 March 2024). We consider that the only reliable date available to measure any delay is the date on which the letter was recorded as received by HMRC.

In the context of a deadline which requires that the appeal be given to HMRC within 30 days (s31A TMA 1970), and therefore received by HMRC within 30 days, we consider that it is the date of receipt of a notice of appeal which determines the length of the delay. Accordingly, as it was not disputed that the appeal was received on 12 March 2024, we find that the delays involved are 26 days and 23 days.

For Mr Ahya, it was contended that the decision in Islam v Thanet District Council [2025] UKUT 281 (LC) indicated that a delay of just over three weeks was not considered to be lengthy and that such a delay might be regarded as less than serious.

Having considered that decision, which related to a delay in appealing to the First-tier Tribunal (Property Chamber), we note that the decision in the same paragraph makes it clear that the appellant in that case had contacted the Tribunal within a few days of the deadline before making the appeal, asking how to appeal. The Upper Tribunal considered that this also had to be taken into account, and had not been, in assessing the seriousness of the delay. There was no evidence that Mr Ahya had contacted HMRC to enquire as to how to appeal before the appeal was sent. Mr Ahya’s agent speculated that Mr Ahya must have contacted HMRC in order to gain access to his online account by 8 March 2024 (see below) and that this might amount to an earlier appeal but we were provided with no evidence of such contact, let alone that any such contact might have amounted to more than a technical query to the online service helpdesk to reset the account.

At the first stage, we find that the delay, although not extensive, is not trivial. It is sufficiently serious that we cannot simply dispense with the second and third stages of the approach set out in Martland. Submissions made with regard to prejudice arising from the delay have been considered below, in evaluating all of the circumstances of the case.

At the second stage, we are required to establish the reasons for the delay, as advanced by Mr Ahya and his agent. Various reasons were set out:

At the third stage, the Tribunal has considered all the circumstances of the case.

We do not consider that Mr Ahya has established a good reason for the delay amongst the reasons given. There was no separate reason given for the delay in appealing against the penalties.

The various explanations given in the hearing were not wholly consistent or supported by evidence and one explanation in particular is unsatisfactory. We consider that the submissions that it was believed that information from varying sources was required before an appeal could be made are not consistent with the submission (which is supported by the letter of 8 March 2024) that Mr Ahya did not realise that he had to appeal the assessments.

Overall, we consider that the most reliable explanation for the delay is that in Mr Ahya’s letter of 8 March 2024: that he mistakenly believed he had to file his tax returns for the years in dispute before appealing the penalties and did not realise that he had to appeal the notices.

The letter refers, at opening, to “you [sic] letter dated 15/01/2024 requesting submission of my 2004-05 to 2023-24 tax returns”. HMRC’s letters of 15 January 2024 do not request submission of any tax returns. There was no explanation as to how Mr Ahya had arrived at this belief. The notices are clear as to what is required. Whilst a mistaken belief alone, in the context of a short delay, might lean towards it being appropriate to grant permission for a late appeal particularly where an appellant is unrepresented, we do not consider that there were good grounds for any such belief and there were several other attempts at explaining the delay which we also have to take into consideration.

It was not explained why the identity theft which apparently resulted in a fraudulent loan being obtained by a third party meant that Mr Ahya could not access his online account with HMRC; there was no evidence that any such identity theft had resulted in anything other than one loan being taken out. His witness statement makes no reference to this identity theft nor to any attempts to access his online account.

The contention that it was believed that detailed information of Mr Ahya’s employment income was needed to respond to the notices is also, we consider, not a good reason for the delay. The notices are clear that what is required is to write to HMRC to dispute the assessment; there is no requirement to provide detailed figures in rebuttal with the appeal. We note that the contention that Mr Ahya was eventually able to access information in his online account and prepare the return figures is at odds with Mr Ahya’s witness statement, which states that he established the figures from his old records which.

Although Mr Ahya’s representative contended that HMRC manual ARTG2170 states that appeals require grounds that are not vague, such that the delay was inevitable as any appeal within the time limit would have been rejected as too vague, this contention overlooks the fact that ARTG2170 states that before rejecting an appeal on the basis that the grounds are too vague, the decision maker should consider ARTG2171. That page makes it clear that the decision maker is required to contact the taxpayer in order to try to obtain more details of the grounds of appeal, and not simply reject it. There was also no contention or evidence that these pages were seen or considered by Mr Ahya: as noted above, we consider that Mr Ahya did not realise that he had to appeal the assessments as well as the penalties. Accordingly, this is not an explanation for the delay.

The submission that it was “not appreciated that appeals should be lodged within the 30 day time limit even though full details of income and expenses were not available until after that date” is not, we consider, supported. In the circumstances, we have treated this as a submission that it was not appreciated that a response was required within 30 days, given that we consider that Mr Ahya did not realise that he had to appeal the assessments at all.

The notices sent to Mr Ahya include clear information as to the deadline for an appeal and what needs to be done to appeal. It was suggested in the hearing that this could be overlooked in a lengthy letter setting out significant potential liabilities. This was a suggestion, not a contention. However, the letter clearly states the deadline under a bold heading stating ‘what to do if you disagree’. The wording is not complex and we consider that it would not be overlooked by a person seeking to respond to the notices. Further, given the history of this case, we consider that Mr Ahya knew that deadlines are set for responses to HMRC, having previously been granted multiple extensions of time to provide information (which was not subsequently provided) during the enquiry process.

Mr Anya’s contention (on 31 August 2024, repeated in the Notice of Appeal) that he had had to wait for information from a Subject Access Request before appealing is not a good reason for the delay.

Firstly, Mr Ahya has not provided any evidence that such a Request was made before the late appeal was made on 8 March 2024. The only evidence of a Request was that dated 9 September 2024 provided from HMRC’s records, which was acknowledged on 1 October 2024. HMRC were unable to find any earlier Subject Access Request.

There is no reference to a Subject Access Request, or waiting for a response to it, in Mr Ahya’s letter to HMRC of 8 March 2024; if Mr Ahya was awaiting such a response in order to respond we consider that it would have been referred to in this letter.

The Request is first referred to in Mr Ahya’s letter to HMRC of 31 August 2024, which also states that “The Subject Access Request documents came in March 2024 after several attempts. Without this information how could we draft the return?” This is, as noted, inconsistent with Mr Ahya’s witness statement which states that the information was obtained from his old records and not from a response to a Subject Access Request.

A Subject Access Request was subsequently made to HMRC on 6 September 2024, although no evidence was available as to why this was made at that date.

Despite the clear assertion in the letter of 31 August 2024 and the Notice of Appeal that the contents of the response to this Request were relied upon to make the appeal, and that contention in the letter and Notice of Appeal that the delay in making the appeal was due to HMRC’s delay in providing such a response, we were advised in the hearing that no such response had been received. Mr Ahya’s representative stated that the reference to the response had been included in the Notice of Appeal due to a miscommunication, but it was also clearly referred in Mr Ahya’s letter to HMRC of 31 August 2024.

Considering the evidence before us, we conclude on the balance of probabilities that the Subject Access Request was not made until after Mr Ahya referred to it at the end of August 2024 as a reason for a delay some months earlier, and that he has not advised his representative of this. This is clearly unsatisfactory.

The Tribunal is not required to conduct a mini-hearing (per Martland) but should consider any obvious strengths or weakness of the substantive case in assessing all of the circumstances of the case.

It was contended that Mr Ahya had a strong case, that it had been shown that he did not owe any tax for the years in question. The support for this was the table of figures included by Mr Ahya in his letter of 8 March 2024 to HMRC. The figures were stated to have been provided by “well-regarded accountants”, although the Tribunal had no evidence as to who these accountants were (a name was included in Mr Ahya’s witness statement, but it was not clear whether this individual had been instructed to prepare the figures included in that letter) and the bundle contained no documents prepared by accountants to support the figures in the letter of 8 March 2024, nor any evidence from accountants. We also consider that if Mr Ahya had taken advice from well-regarded accountants in preparing these figures that they would have advised him that he needed to appeal the notices rather than submit tax returns for periods which they would have known were out of time to be submitted.

It was also contended that, as the figures showed that Mr Ahya had no profit from the property rentals, there was no requirement to notify HMRC and submit returns. The support for this was a page of an HMRC manual which was published in April 2016. The submissions did not make any reference to statutory requirements for reporting income from property. There was no evidence that Mr Ahya had made any enquiries as to his reporting obligations during the tax years in question.

HMRC have submitted that the assessments were based on information available to them and that Mr Ahya failed to engage meaningfully during the enquiry. It was not disputed that the assessments were validly raised; the dispute was with the quantum.

We note, again, that we are not to conduct a mini-hearing but consider that the evidence before us does not show that Mr Ahya has such a strong case that it should weigh heavily in favour of giving permission to appeal out of time. Unevidenced figures, which on the face of it indicate that Mr Ahya’s property rental business involved deductible repayments of interest in excess of Mr Ahya’s combined rental income and net employment income, in addition to other costs, for a considerable number of years cannot support such a conclusion.

Accordingly, the merits of the case are not obviously particularly strong and we consider that there is limited weight to be placed upon this in evaluating all of the circumstances.

HMRC contends that allowing a late appeal in these circumstances would prejudice the efficient administration of justice and divert resources from cases where taxpayers have complied with statutory deadlines. HMRC should be able to rely on statutory time limits for the purposes of allocating resources. For Mr Ahya, it was contended that HMRC had not shown that they had taken any action between the deadline and the date the appeals as received, so that there could be no costs implications to HMRC of the late appeal being accepted.

On balance, we consider that the prejudice to HMRC is not unusual and, given the relatively short delay, not something that needs to be afforded any particular weight.

The prejudice to Mr Ahya is obvious but not particularly unusual in cases which seek to permission to appeal out of time: if permission is not given, he will not be able to challenge assessments which amount to significant sums (although we were not provided with any clear documentary evidence to indicate what effect this might have on Mr Ahya). However, we also note that the assessments were raised after Mr Ahya failed to provide any information to HMRC in the course of an enquiry spanning considerably more than a year, even after being issued with a Schedule 36 Notice and despite being granted repeated extensions of time to provide the required information.

The balancing exercise on this application was not straightforward; the delay is not particularly lengthy compared to some that this Tribunal has had to consider, but neither is it trivial. However, set against this are the unsatisfactory explanations for the delay. These are contradictory, unsupported by evidence, and the reason given in correspondence and the Notice of Appeal for the delay (needing the information from a Subject Access Request response) was subsequently stated to be untrue.

We have taken into account the need for litigation to be conducted efficiently but do not consider that any particular weight needs to be afforded to that factor, considering the decision in MedPro [2025] UKUT 00255 (TCC) and because we consider that the relatively short length of the delay, the unsatisfactory explanations for the delay and the fact that the case is not obviously a strong one are the more important factors in this balancing exercise.

As noted, the case is not obviously a strong one, and the prejudice to the parties is not particularly unusual. In the circumstances, we do not consider that the prejudice to Mr Ahya should outweigh the unsatisfactory explanations for the delay, noting as set out above that he did not usefully engage with the enquiry process which had given him plenty of opportunity to provide the information which he now wants to be permitted to include in his appeal to HMRC.

Having considered all of circumstances of the case, the Tribunal is not satisfied that permission for a late appeal should be granted. The application is therefore refused.

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.