Shoeb Choudhury v The Commissioners for HMRC

When the FTT 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 is satisfied on balance that it should be. In considering that question, we consider the FTT can usefully follow the three-stage process set out in Denton:

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 “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.

The reason (or reasons) why the default occurred should be established.

The FTT 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.

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 Hysaj, Moore-Bick LJ said this at [46]:

“If applications for extensions of time are allowed to develop into disputes about the merits of the substantive appeal, they will occupy a great deal of time and lead to the parties’ incurring substantial costs. In most cases the merits of the appeal will have little to do with whether it is appropriate to grant an extension of time. Only in those cases where the court can see without much investigation that the grounds of appeal are either very strong or very weak will the merits have a significant part to play when it comes to balancing the various factors that have to be considered at stage three of the process. In most cases the court should decline to embark on an investigation of the merits and firmly discourage argument directed to them.”

Hysaj was in fact three cases, all concerned with compliance with time limits laid down by rules of the court in the context of existing proceedings. It was therefore different in an important respect from the present appeal, which concerns an application for permission to notify an appeal out of time – permission which, if granted, founds the very jurisdiction of the FTT to consider the appeal (see [18] above). It is clear that if an applicant’s appeal is hopeless in any event, then it would not be in the interests of justice for permission to be granted so that the FTT’s time is then wasted on an appeal which is doomed to fail. However, that is rarely the case. More often, the appeal will have some merit. Where that is the case, it is important that the FTT at least considers in outline the arguments which the applicant wishes to put forward and the respondents’ reply to them. This is not so that it can carry out a detailed evaluation of the case, but so that it can form a general impression of its strength or weakness to weigh in the balance. To that limited extent, an applicant should be afforded the opportunity to persuade the FTT that the merits of the appeal are on the face of it overwhelmingly in his/her favour and the respondents the corresponding opportunity to point out the weakness of the applicant’s case. In considering this point, the FTT should be very wary of taking into account evidence which is in dispute and should not do so unless there are exceptional circumstances.

First, as recognised by Mr White, I am bound by the UT's decision in HMRC v Katib [2019] UKUT 189 ('Katib'). At [49], the UT stated (emphasis in original):

The UT stated in [54] that "when considering applications for permission to make a late appeal, failures by a litigant's adviser should generally be treated as failures by the litigant". In Katib, the UT had to consider the extent to which reliance on an adviser was a justifiable reason for failing to make an appeal in time. In that case, the adviser did not provide competent advice to Mr Katib, misled him as to what steps were being taken to appeal and failed to appeal on Mr Katib's behalf. On the facts of the case, the UT concluded that failings by the appellant's agent could not be relied upon by the appellant at any stage in the Martland analysis. The UT observed at [56] that:

In [58] and [59], the UT said:

Following Katib, if the failure to appeal within the time limits were due to KMB not carrying out instructions (and I make no finding as to that), that would not constitute a good reason for the delay in appealing. That is because I would have expected the Appellants, notwithstanding that English is not their first language, to have taken steps, either themselves or through their tax adviser, to assure themselves that all the assessments, penalties and liability notices were being properly challenged. In his witness statement, Mr Baczmaga says that the sums of money that are the subject of the late appeals are, in his view, incredibly large and the Appellants do not have those amounts to pay HMRC. In that case, it is inexplicable, and to my mind not credible, that the Appellants did not monitor carefully what KMB was doing but were content to take a 'hands off' approach to the appeals. I was not shown what communications there were between the Appellants and KMB and, of course, those were almost certainly privileged as noted in Katib, but it would probably not have made any difference. If the Appellants did not monitor what KMB were doing then that would, in my view, be blameworthy and not a good reason for the failure to appeal in time. If the Appellants did regularly check what KMB were doing then they should have known that the appeals had not been made and done something about it. It would only be in the unlikely event that KMB actively misled the Appellants about the state of the proceedings that the Appellants might establish that they had a good reason for the delay. There is, however, no evidence to support that in this case and, for that reason, I do not consider the possibility further when weighing up all the circumstances of the case in the third stage of the Martland approach.

Highlighted the need for litigation to be conducted efficiently and at proportionate cost and for statutory deadlines to be respected, relying on Martland and Katib.;

Submitted that they would be prejudiced if the appeal was allowed to proceed as they would have to divert resources to defend an appeal which they were entitled to consider closed.

Said simply that the Appellant had a weak case.

Initially sought to rely on the 31 May 2023 letter to the Company rejecting its ADR application on the basis that there was no appeal before the First-tier Tribunal, as evidence of further material delay by the Appellant in bringing his appeal. However, HMRC later accepted that the Appellant was not aware that he did not have an appeal before the First-tier Tribunal until he spoke to HMRC on 25 August 2025 and did not pursue this point further.

There was a serious and significant delay for which there was no good reason offered. I set out above why I am not satisfied that there should be an exception to the general rule in Katib. As the First-tier Tribunal in Lands Luo Limited set out at [74]:

HMRC make the point, which I also accept, that they are entitled to consider a matter closed once the relevant time limits has passed, this reflects the principle of finality in tax proceedings. These factors, even without placing additional weight on them (ie following the Medpro approach), militate against granting permission to make a late appeal.

Insofar as the merits of the appeal, both parties made simple statements: the Appellant said he had very strong grounds and HMRC said that the Appellant had weak grounds. Reviewing the Appellant’s (and Company’s) Grounds for Appeal, they focussed on the honesty and integrity of the Appellant (and the Company), the following of HMRC’s advice and the due diligence undertaken in respect of the Company’s supply chains. The Appellant’s challenge to the Director Penalty Review is built upon a challenge to the Company Penalty. Proceeding on the basis that such an approach is permissible the Appellant’s appeal will require and turn on the evidence of the Appellant. No such evidence was before me and no submissions were made on it (and in any event evidence should only be considered in this balancing exercise exceptionally). Consequently, I have no basis on which to conclude that the Appellant’s case was particularly strong or weak and therefore the merits of the Appellant’s challenge to the Director Penalty does not militate in favour of the granting or refusing to give permission to make a late appeal.

There is obvious prejudice to the Appellant if I refuse to grant him permission to make the appeal late because he will be unable to put forward his case at a hearing and, if successful, no longer be subject to the Director Penalty which is a substantial sum of money.