Figa Store Limited v The Commissioners for HMRC

With the consent of the parties, the form of the hearing video over Teams. The documents to which we were referred were a hearing bundle of 355 pages. and a skeleton argument from each party.

Prior notice of the hearing had been published on the gov.uk website, with information about how representatives of the media or members of the public could apply to join the hearing remotely in order to observe the proceedings. As such, the hearing was held in public.

This is an application to make a late appeal. As well as the documentary evidence we heard oral evidence from Mr. Jack Atkins of The VAT People T/A The Customs People, who represent the Appellant. Mr. Vallis cross-examined Mr. Atkins. We found Mr. Atkins to be an honest and credible witness.

The underlying decision that the Appellant seeks permission to appeal against late is a C18 demand for customs duty of £878,730.54 and Import VAT of £174,234.56, a total sum of £1,052,965.00. The C18 was issued on 31.10.24 on the basis that the Appellant’s imports of goods from Morocco did not qualify for preferential customs treatment based on their origin.

On 13.12.24 The Customs People requested an independent review of the decision to issue the C18 on the basis that the Rules of Origin governing preferential origin between the UK and Morocco were met for at least some of the consignments in question.

On 17.1.25 HMRC notified the Appellant of the review conclusion, upholding the C18.

On 14.2.25 the Appellant lodged a T240 Notice of Appeal (“NOA”) with the Tribunal by email.

HMRC were copied to the email using the address reviews@hmrc.gov.uk.

The NOA stated at [5.1]:

“Whilst the supply is in time with review letter (Ref: REV-382311) stating an appeal should be made within 30 days of the date of this letter, 17th January 2025, the business considered it's decision in detail prior to lodging this appeal, including seeking advice from it’s authorised representative (The Customs People) with regards to available next steps and their potential outcomes.”

The Grounds of Appeal stated at [6.1] of the NOA were:

“Figa Store Ltd purchase fabric and material from UK suppliers, which is subsequently exported to a factory in Morocco, where this fabric is processed. Specifically, while in Morocco, the fabric is cut, made into a garment (exclusively women's clothing), packaged and exported from Morocco and re-imported into the UK prior to onward supply by Figa Stores Ltd.

The material exported out of the UK is primarily polyester fabric, although some cotton fabric is also exported outside the UK for processing prior to re-import.

As per the notification of final decision (ref: CFSS-5606311) issued on 31^st October, it is HMRC's view that the business has incorrectly claimed preference of goods imported for Morocco and has subsequently raised a Cl 8 with a total value of £1,052,965.00, including £878,730.54 customs duty.

The basis of the assessment as stated on the final decision is that the officer considers that following his audit the goods imported from Morocco under cover of EUR1s do not qualify for preferential treatment.

On review, the Rules of Origin governing preferential origin between the UK and Morocco are met for some of the consignments in question. In this regard we are also looking to agree a way forward in quantifying the true debt involved.

In this respect and on discussions with Figa Store Ltd and on reviewing relevant documentation, including long terms suppliers' declarations (LTSDs) that are in place, which I attach for reference, we have concluded that the assessment in it's current form is not appropriate as the LTSDs confirm that a proportion of material exported from the UK is of UK origin and so are treated as originating material under cumulation.

In summary, the decision is disputed on the basis that, under cumulation, duty is not due on a proportion of the goods covered by HMRC's decision.”

The boxes in the “Checklist” section of the NOA were both ticked as confirming that (a) a copy of the original decision notice or letter, and (b) a copy of the review conclusion letter were included with the NOA. Neither document was in fact included with the NOA.

Mr. Atkins, who lodged the NOA, mistakenly failed to attach the documents and did not realise his error at the time of lodging. Mr. Atkins was aware of the requirement to attach the documents and accepted that he failed to take reasonable care by not including them with the NOA.

There were no defects in the NOA itself.

On 3.3.25 at 09:41a Tribunal clerk notified Mr. Atkins that the Appellant’s appeal had been returned because a copy of any written record of any decision appealed against, and/or any statement of reasons for that decision, that the appellant has or can reasonably obtain, was not received with the NOA. There was no judicial consideration of whether the NOA should have been rejected.

Mr. Atkins’ line manager was not in the office on 3.3.25. Mr. Atkins discussed the issue with him on 4.3.25 and redrafted the appeal documentation that day. There was an issue with the online T240 form which prevented Mr. Atkins from printing the document, in that all but one text box disappeared when he tried to do so. Mr. Atkins did not attempt to use a pdf version of the form, which he could have done. On 5.3.25 Mr. Atkins reattempted using the online T240 and the issue was resolved. On the same day Mr. Atkins sent the form to the Appellant to sign it. On 6.3.25 at 12:15 Mr. Atkins re-filed the NOA with both the original decision letter and review conclusion letter.

By this point the NOA was 17 days beyond the 30-day time limit to make an appeal.

On 30.5.25 the Respondents objected to the application to make a late appeal.

The main purpose of the appeal was for the Appellant to enter ADR (which cannot be done absent an appeal being made to the Tribunal), but the Appellant’s ultimate purpose in making the appeal was because it was of the view that it had evidence to prove that preferential origin treatment could apply to a proportion of the goods that were the subject of the C18 demand.

The basic approach to applications for permission to make late appeals was, until recently, well established. In William Martland v HMRC [2018] UKUT 178 (TCC) (“Martland”), at [44]- [46], the Upper Tribunal said that:

In Denton v TH White Ltd (and related appeals) [2014] EWCA Civ 906 the Court of Appeal had set out a three-stage test for relief from sanction applications at [25] – [31]:

In Medpro Healthcare Limited (1) and Kalvinder Ruprai (2) v HMRC [2025] UKUT 255 (TCC) (“Medpro”) the Upper Tribunal said that the three-stage test set out in Martland was correct, at [88]. However, at [95] – [98] of Medpro Marcus Smith, J. went on to say:

“95.

The question is whether [45] of Martland (quoted at paragraph 6 above) 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).

96.

I do not consider this to be a permissible approach in the case of extensions of time under section 83G(6) VATA. The rule change to CPR 3.9 enabled the Court of Appeal to take the approach it did in Denton. The wording in section 83G(6) VATA has not been changed and does not, when construed, permit this aspect of the approach in Denton. The Upper Tribunal's guidance in relation to the exercise of a statutory discretion cannot fetter the statutorily conferred discretion of the FTT, even as to the weighting of relevant factors. There is a fine line to be drawn between the structuring of a discretion and the imposing of an obligation on a tribunal, ex ante, in the evaluation of certain factors. The latter course is permissible only if mandated by a proper construction of the power being exercised.

97.

The wording of section 83G(6) VATA is clear: it tracks not the "new version" of CPR 3.9 but the old version. The Upper Tribunal has placed a fetter on the discretion of the FTT which is not justified by the terms of section 83G(6) VATA. The Upper Tribunal cannot, in the case, by way of binding guidance, direct the FTT as to what weight to place on particular factors when it is considering, in all the circumstances, whether to extend time for appealing. The factors in the old CPR 3.9 and the approach described by the Upper Tribunal in Data Select and Aberdeen City provide sufficient guidance for the FTT to exercise its discretion, as does [44] (but not [45]) of Martland itself.

98.

The question is whether the Upper Tribunal's approach is "clearly wrong". Given the force of the point as advanced by the Appellants, and the frequency with which the FTT applies the Martland discretion, it is vital that this area of the law be clearly stated. It would be unfortunate for this lack of clarity to infect every application for an extension under section 83G(6) VATA. Given these factors, and the conclusion reached in relation to the construction of section 83G(6) VATA, Marcus Smith J concludes that the practice adopted in the FTT with regard to Martland and the section 83G(6) VATA power is clearly wrong. He would therefore allow the appeal on Ground 4 as well as on Grounds 1 to 3.”

The parties agreed that we should follow Medpro as a matter of precedent, and we do so. We therefore applyithe three-stage Martland test, but we are not obliged to give any particular weight to the CPR 3.9(a) and (b) factors.

For the Appellant, Mr. Brown submitted that:

For the Respondents, Mr. Vallis submitted that:

The NOA should have been filed within 30 days of the date of the review decision (s.16(1) Finance Act 1994). The application proceeded on the basis that the NOA was 17 days late.

As to stage 1 of the Martland approach, this is not simply an exercise in mathematics; there is a large element of context. First, the only defect was the failure to attach the decisions appealed against. Secondly, the Respondents were copied to the email lodging the original NOA and were therefore aware that the Appellant intended to appeal the decision. This was not a case in which for instance the Respondents had long ago closed their case file and would have to reopen it. Thirdly, it took the Tribunal from 14.2.25 – 3.3.25 to reject the NOA. That accounts for the majority of the delay. Fourthly, whilst the Respondents criticised the Appellant’s representative for a delay of 3 days in resubmitting the NOA, Mr. Atkins has explained the delay. Far from simply sitting on his hands we are satisfied that Mr. Atkins was taking steps to resolve the issue. We do not find the delay of 17 days in this particular case to be serious or significant.

As to stage 2, the reasons for the delay are clear. Mr. Atkins mistakenly omitted to attach the documents to his email filing the original NOA. When the appeal was rejected, he discussed the issue with his line manager on 4.3.25, and on that day the T240 form malfunctioned when attempting to print. These are not “good” reasons. However, on the scale of reasons that the Tribunal grapples with on applications of this nature, they are not particularly egregious. We accept that the mistakes of Mr. Atkins are to be attributed to the Appellant.

As to stage 3, applying the approach in Medpro, considering all the circumstances of the case with no ex-ante weighting on the CPR 3.9(a) and (b) factors, we consider that the application to make a late appeal should be allowed.

The delay was not serious or significant in the circumstances. The Respondents were aware, within the statutory time period for making an appeal, that the Appellant wished to appeal. We do not accept that the Appellant’s appeal is very weak. The Grounds of Appeal are, in our view, clear. They assert that for a proportion of the imports the preferential origin treatment was in fact available because supplier declarations were held. As to the evidence in support of that argument, this is not a proper application on which to carry out a detailed analysis of the prospects of success. We conclude that the merits of the Appellant’s case are neither very weak, nor are they very strong. We do not accept that there is limited prejudice to the Appellant because it mainly sought to appeal to enter into ADR. The effect of refusing permission to make a late appeal is that it cannot appeal at all. It will not be able to enter ADR, but nor will it be able to challenge the C18 demand by a statutory appeal. There is no real prejudice to the Respondents in permitting the application. They have always been aware that the Appellant wished to appeal against the C18. By contrast, refusing the application will be terminal for the Appellant’s appeal against a C18 of £1,052,965.00. As to the latter point; ever was it thus, but we do take it into account. Bearing in mind the relatively short delay, the otherwise compliant original NOA, and the absence of real prejudice to the Respondents, we allow the application applying the approach in Medpro.

Had we applied the approach in Martland to weighting on the CPR 3.9(a) and (b) factors it would have made no difference to our decision.

The Tribunal raised two issues of its own volition on which it sought the assistance of the parties. The Tribunal is grateful for their submissions. As we have been able to determine the application without reliance on those issues, what we say about them below is obiter dicta. However, we set out briefly our views.

The first issue is whether this appeal is in fact late at all. That turns on the interpretation of r.20 of The Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (“the FTT Rules”).

In interpreting any rule of the FTT Rules, the Tribunal must seek to give effect to the overriding objective (r.2(3)(b)). The overriding objective of the FTT Rules is to enable the Tribunal to deal with cases fairly and justly.

Under r.2(2) of the FTT Rules:

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;

avoiding unnecessary formality and seeking flexibility in the proceedings;

ensuring, so far as practicable, that the parties are able to participate fully in the proceedings;

using any special expertise of the Tribunal effectively; and

avoiding delay, so far as compatible with proper consideration of the issues.”

Rule 20 of the FTT Rules states:

“20.—(1) A person making or notifying an appeal to the Tribunal under any enactment must start proceedings by sending or delivering a notice of appeal to the Tribunal.

(2)

The notice of appeal must include—

(a)

the name and address of the appellant;

(b)

the name and address of the appellant’s representative (if any);

(c)

an address where documents for the appellant may be sent or delivered;

(d)

details of the decision appealed against;

(e)

the result the appellant is seeking; and

(f)

the grounds for making the appeal.

(3)

The appellant must provide with the notice of appeal a copy of any written record of any decision appealed against, and any statement of reasons for that decision, that the appellant has or can reasonably obtain.

(4)

If the notice of appeal is provided after the end of any period specified in an enactment referred to in paragraph (1) but the enactment provides that an appeal may be made or notified after that period with the permission of the Tribunal—

(a)

the notice of appeal must include a request for such permission and the reason why the notice of appeal was not provided in time; and

(b)

unless the Tribunal gives such permission, the Tribunal must not admit the appeal.

(5)

When the Tribunal receives the notice of appeal it must give notice of the proceedings to the respondent.’

FTT Rules 20(1) and (2) refer specifically to an NOA, as do r.20(4) and r.20(5). Rule 20(3) refers to a different document and recognises that if an Appellant cannot reasonably obtain a written record of any decision, then that would not invalidate any NOA.

There may be any number of reasons why that might be the case. In such a case, if the Tribunal automatically rejected the NOA as not being accompanied by a copy of a written record or statement of reasons it would be wrong to do so.

Mr. Brown submitted that failure to include a written record or a statement of reasons cannot alone simply invalidate a NOA that is otherwise compliant with r.20(2) of the FTT Rules. If that was to be the effect of r.20(4) the rule both could and should have said so. Further, such an interpretation gives effect to the over-riding objective of dealing with cases fairly and justly.

Mr. Vallis submitted that if r.20(3) is not met there is no valid appeal, because it is a requirement in r.20 which itself builds on para.5 of Sch.5 of the Tribunals Courts and Enforcement Act 2007 which provides the statutory foundation for the FTT Rules.

We prefer Mr. Brown’s submissions. Had r.20(4) been intended to say that where a copy of the written record appealed against and any statement of reasons that an Appellant had, or could reasonably obtain was provided after a statutory time limit, and that permission was required for the appeal to be admitted, it both could, and should, have said so. Instead, r.20 of the FTT Rules draw a distinction between the NOA itself, and the documents referred to in r.20(3).

We therefore conclude that where a NOA is provided within a statutory time limit, but the document(s) in r.20(3) of the FTT Rules are not, that the appeal is not late and does not require permission to be admitted. The Tribunal may well refuse to allow an admitted appeal to progress further until any default in respect of r.20(3) is remedied, but that is a separate issue

The second issue is whether the Tribunal has the power to waive the requirement in r.20(3) of the FTT Rules with the effect that the appeal is not late.

Rule 7 of the FTT Rules states, in as far as is relevant:

“Failure to comply with rules etc.

7.—(1) An irregularity resulting from a failure to comply with any requirement in these Rules, a practice direction or a direction does not of itself render void the proceedings or any step taken in the proceedings.

(2)

If a party has failed to comply with a requirement in these Rules, a practice direction or a direction, the Tribunal may take such action as it considers just, which may include—

(a)

waiving the requirement;

(b)

requiring the failure to be remedied;

(c)

exercising its power under rule 8 (striking out a party’s case);

(d)

restricting a party’s participation in proceedings; or

(e)

exercising its power under paragraph (3).

Mr. Vallis submits that r.7(1) of the FTT Rules does not apply to defective NOAs because absent a valid NOA there are no proceedings to be rendered void. We do not need to decide that point.

We were concerned with whether r.7(2) of the FTT Rules permitted us to waive a requirement in r.20(2) or 20(3) of the FTT Rules. Mr. Vallis submitted that r.7(2) of the FTT Rules did not, because it was only concerned with proceedings that had already been validly commenced.

We do not accept that interpretation. Rule 7(2) of the FTT Rules does not state that it applies only to certain of the FTT Rules, or that it does not apply to r.20. Had that been the case we would have expected the Rule to say so. Further, had there been no discretion to provide a just outcome in cases where r.20(2) or (3) had not been complied with that would tend to set up a rigid and draconian regime when a hallmark of the FTT’s overriding objective is to deal with cases fairly and justly through avoiding unnecessary formality and seeking flexibility in the proceedings. We therefore conclude that where a NOA fails to comply with an aspect of r.20(2) or r.20(3) of the FTT Rules the Tribunal has a discretion to waive the initial requirement and require the defect to be remedied. We note that, having analysed the relevant authorities, Judge Perez came to the same conclusion in P.R.B. Trading Ltd v HMRC [2023] UKFTT 00421 (TC), at [27] – [37], and [51].

In this case, we concluded that we would therefore have (a) had the discretion, and (b) exercised it in the Appellant’s favour because this was a single error in the context of an otherwise compliant NOA.

Had the single defect in the NOA been dealt with in that manner this application would not have been necessary.

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.