Case Number: TC09694
By remote video hearing
Appeal reference: TC/2024/05828
PROCEDURE – application to make a late appeal – serious and significant delay – no good reason for the delay – balancing all circumstances – application refused
Judgment date: 24 November 2025
Before
TRIBUNAL JUDGE ANNE FAIRPO
Between
NICHOLAS DOUNETAS
Appellant
and
THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS
Respondents
Representation:
For the Appellant: Mr Philips, accountant
For the Respondents: Ms Peacock, litigator of HM Revenue and Customs’ Solicitor’s Office
DECISION
Introduction
This is an application for permission to appeal out of time against a closure notice issued on 19 December 2023 under s28A Taxes Management Act (TMA) 1970.
The original hearing on 7 October 2025 was postponed as Mr Philips, Mr Dounetas’ representative, had believed that the hearing would deal with the substantive appeal, rather than the application to admit the appeal late, and did not have the relevant correspondence to hand. In particular he did not have a copy of the bundle prepared by HMRC for the hearing, sent on 3 July 2025.
At the subsequent hearing on 20 November 2025, the bundle had apparently still not been provided by HMRC. However, Mr Philips confirmed that he had copies of the relevant correspondence. The bundle consisted only of correspondence between the parties, or the parties and the Tribunal, together with standard authorities for late appeals. Mr Philips did not object to going ahead with the hearing without the bundle having been provided to him. Taking into account the overriding objective and noting that Mr Philips had confirmed that he had all of the correspondence, I concluded that the hearing should go ahead.
HMRC applied the day before the hearing to introduce two new documents: an authority (Medpro [2025] UKUT 255 (TCC)) and a print of their self-assessment notes record from Mr Dounetas’ file. The same application had been made in respect of Medpro before the earlier hearing and had been granted at that time. Mr Philips noted that the self-assessment record print had only been received on the morning of the hearing. Given the nature of Mr Philips’ arguments regarding the reasons for the delay, I concluded that the self-assessment record was information which was of assistance and decided that it should be admitted into evidence notwithstanding the late application to admit it.
Background
The tax year under appeal ended on 5 April 2022. On 4 August 2023, HMRC commenced a compliance check into Mr Dounetas’ self assessment tax return for that year. Further correspondence was issued by HMRC on 6 October 2023 in relation to the ongoing enquiry.
On 19 December 2023, HMRC issued a Final Closure Notice pursuant to section 28A of the Taxes Management Act 1970. The notice amended Mr Dounetas’ return to include PAYE income of £85,073.54 from an engager agency in the 2021/22 tax year, which had been reported to HMRC by the engager under the PAYE system but which not been declared by Mr Dounetas. As a result, Mr Dounetas’ tax liability was revised from an overpayment of £1,110.80 to a liability of £13,481.80.
On 26 June 2024, Mr Dounetas’s agent submitted an appeal against the revised assessment and the associated penalty of £3,721.26. HMRC responded on 10 July 2024, asserting that the IR35 legislation applied and that PAYE deductions made by the engager agency were valid. HMRC reiterated its position on 24 July 2024 and advised the appellant to appeal to the Tribunal.
On 26 July 2024, Mr Dounetas’ agent replied with supporting documentation, including a self-billing invoice, a company bank statement, and a P60, contending that the engager agency had acted incorrectly when they deducted income tax and National Insurance from payments to Mr Dounetas’ company. HMRC maintained its position in correspondence dated 29 July 2024, confirming that the case was closed pending a Tribunal appeal. Further correspondence was submitted by Mr Dounetas’ agent on 1 August 2024, asking for a review and stating that Mr Dounetas would appeal to the Tribunal if no review was possible. HMRC responded on 6 August 2024, reiterating that the only available course of action was to appeal to the Tribunal.
On 10 October 2024, a Notice of Appeal was submitted to the First-tier Tribunal (Tax Chamber), making an application for permission to appeal out of time. Following service by the Tribunal, HMRC filed a Notice of Objection to the late appeal.
Discussion
The three-stage test established in Martland [2018] UKUT 0178 (TCC) provides the framework for determining whether a late appeal should be permitted. Applying this test to the facts of the present case:
Length of the delay
Mr Dounetas failed to submit his appeal within the statutory 30-day time limit following HMRC’s final closure notice dated 19 December 2023. An appeal to HMRC was made on 26 June 2024: that was five months and 8 days after the expiry of the statutory appeal deadline which was set out in the closure notice.
The appeal to this Tribunal was submitted on 10 October 2024, approximately two months after the last of several letters from HMRC advising Mr Dounetas that he needed to apply to this Tribunal for permission to appeal out of time if he wanted to dispute the closure notice.
The dates were not disputed, although Mr Philips stated that he had told the HMRC officer earlier that the assessment was not agreed. He accepted that there was no earlier correspondence after the date of the closure notice which appealed the decision.
Noting the decision in Romasave [2015] UKUT 0254 (TCC), which concluded that a delay of three months was serious and significant in the context of a thirty day deadline for compliance, I find that there has been a serious and significant delay by any measure in the context of a thirty day deadline for making an appeal to HMRC.
The reasons for the default
The notice of appeal states that the appeal was made late because Mr Dounetas, either directly or through his agent, had tried to contact the inspector dealing with the matter on several occasions without success.
In the hearing, Mr Philips stated initially that he had spoken to HMRC many times. The notice of appeal and appeal letter to HMRC stated that he had tried to contact them without success. When asked about the discrepancy, Mr Philips stated that he had spoken to an HMRC officer twice before the appeal was submitted but had not been able to resolve the dispute.
HMRC’s records confirmed that there were two telephone contacts made by Mr Philip before the appeal was submitted. A voicemail had been left on 23 February 2024, which had not been replied to because Mr Philips was not authorised as Mr Dounetas’ agent, as no 64-8 had been provided. Mr Philips had then called again on 24 June 2024, stating that a 64-8 was being prepared. HMRC stated that he was advised to write in with evidence.
Mr Philips explained that the delay had raised because he had been trying to get an explanation from HMRC as to why the assessment had been issued, as he still did not understand why HMRC had assessed Mr Dounetas. He accepted that there had been a delay in appealing to HMRC.
Mr Philips did not have a clear explanation for the subsequent delay in appealing to the Tribunal. He suggested that it was due to delays in responses from HMRC, that it may have taken them two months to reply to his last letter of 1 August 2024. He did not, however, dispute that HMRC’s reply to that letter was actually dated 6 August 2024. He then stated that he had not appealed earlier as he thought he would be able to come to an agreement with HMRC although there was no evidence of any attempt to contact HMRC.
Evaluation of the circumstances
Whether there is a good reason for the delay
The closure notice dated 19 December 2023 clearly sets out the deadline for appealing in a section entitled “what to do if you disagree”. There was a delay of six months before Mr Dounetas’ agent appealed to HMRC on 26 June 2024, stating that they had “tried to contact [HMRC] on a few occasions without success”.
As set out above, HMRC replied on 10 July 2024 to confirm that the appeal was late and that Mr Dounetas would have to appeal to this Tribunal to request that HMRC accept the late appeal. This was repeated in a letter of 24 July 2024, following a response from Mr Dounetas’ agent. On 26 July 2024, Mr Dounetas’ agent wrote to ask for the case to be reviewed. HMRC wrote again on 29 July 2024 in reply and, again, advised that Mr Dounetas should appeal to this Tribunal. On 1 August 2024, Mr Dounetas’ agents wrote to HMRC and again asked for the case to be reviewed. They stated that they would appeal to this Tribunal if the case could not be reviewed. On 6 August 2024, HMRC wrote and re-iterated that the only course of action available to Mr Dounetas was to appeal to this Tribunal.
No good reason has been given for the delays in this appeal: I do not consider that attempting to contact HMRC by telephone to request an explanation for the assessment is a good reason for the delay of over five months in appealing to HMRC, particularly given that the closure notice clearly stated the appeal process and the deadline for such an appeal. Mr Philips’ contention that he would have told HMRC by telephone that the assessment was disputed does not assist: s31A Taxes Management Act 1970 makes it clear that appeals must be made in writing, and this requirement was also stated in the closure notice.
In addition, despite being advised in four letters within a short space of time in July and August 2024) that an appeal to the Tribunal was needed, there was a further significant delay in appealing to this Tribunal and no good explanation has been given for that delay. Hoping to reach an agreement, particularly in the absence of any contact of that nature, is not a good reason for delay. Although this decision is concerned with the delay in appealing to HMRC, the further delay in submitting an appeal to the Tribunal is a circumstance to be included in the evaluation of the circumstances.
Mr Philips stated that HMRC should have had him on record as Mr Dounetas’ agent as he had been Mr Dounetas’ agent ever since he had applied for a UTR on Mr Dounetas’ behalf. To this extent that this was intended to be a reason for the delay, as HMRC had not returned his voicemail from 23 February 2024 because he was not on record as Mr Dounetas’ agent, I do not consider that this provides Mr Dounetas with a good reason for the delay. By the time the voicemail was left, the deadline for compliance had already passed over a month earlier and, as noted, the closure notice makes it clear that an appeal must be made in writing.
To the extent that Mr Dounetas relies upon his agent’s actions as a reason for the delays, the decision in Katib [2019] UKUT 189 (TCC) makes it clear that, when considering applications for permission to make a late appeal, the general rules is that failures by an appellant’s adviser should generally be treated as failures by the appellant. No reason was given as to why this general rule should be departed from in this case.
Prejudice to the parties
With regard to the prejudice to the parties, if I refuse permission to appeal then Mr Dounetas will be unable to challenge the closure notice further. It is clear from case law that, whilst it is not appropriate to conduct an exhaustive analysis of the merits of the substantive appeal, the circumstances should be reviewed to determine if there is clearly a strong case, where there may be greater prejudice to an appellant in refusing permission to appeal.
Mr Dounetas’ substantive case is that the income assessed under PAYE was not his personal income but belonged to his company, which had accounted for VAT on that income and had made payments from it to him and his wife. HMRC maintains that the IR35 legislation applied, that Mr Dounetas was a deemed employee, and that PAYE deductions were correctly made. They advised that self-billed invoices supplied by the engager to Mr Dounetas showed that income tax and National Insurance had been deducted, with a BR tax code being applied.
Mr Philips stated that the invoices had been queried with the engager by Mr Dounetas and that the engager had been advised that any deductions should have been made under CIS, not National Insurance and PAYE. Given that Mr Dounetas was engaged as a software developer, it was not clear why Mr Philips believed that any deductions should have been made under the Construction Industry Scheme, which does not apply to such IT-related services.
Mr Dounetas’ evidence was that the engager had advised him that all contractors were now being invoiced in this way following the changes to IR35. He confirmed that he was paid an hourly rate to complete work which was given to him by the end client (a large business outside the public sector) to do and that he worked at the client site when required to do so.
The three self-billing invoices (all within the 2021/22 tax year) included in evidence indicated that he was paid on a weekly basis for “basic hours” of between 35 and 42.5 hours. The end client was the same on all three invoices (which related to weeks in September and October 2021 and February 2022). A P60 for the tax year ended 5 April 2022 confirmed that Mr Dounetas had received total gross pay of £85,073.54, with tax deducted (at basic rate) of £19,599.40 and National Insurance of £5,086.27.
The evidence provided does not indicate that there should be significant weight placed on the merits of the appeal: the documents supplied by Mr Dounetas state that his engagement was paid net of tax and National Insurance, and his evidence was that the engager considered that they were required to deduct tax. This indicates that the engager agency believed that they were Mr Dounetas’ deemed employer under the IR35 rules. Mr Dounetas does not appear to have challenged that conclusion with the employer. Mr Philips’ contentions that the assessment is unfair, as the company had received the money and had accounted for VAT on the income are not strong arguments in Mr Dounetas’ favour, as these are the consequences of being engaged to provide services via a personal service company in circumstances within the IR35 legislation.
There were no submissions as to any other prejudice to Mr Dounetas if the application to appeal out of time was refused.
HMRC contended that they would be prejudiced if the appeal were to be allowed to proceed out of time, as they would be required to divert resources to an appeal which they were entitled to consider to be closed.
Conclusion
Considering the approach set out in Martland, this is a serious and significant delay. I do not consider that the reasons given are reasonable excuses for the delay and, balancing all the circumstances, I do not consider that the prejudice to Mr Dounetas in refusing permission to make a late appeal to HMRC outweighs the other circumstances in the case and as such I should not depart from the starting point that permission to appeal late should not be granted.
I note that the Upper Tribunal decision in Medpro is being appealed. For the avoidance of doubt, the decision above would be the same regardless of the decision in Medpro. That is, given the length of the delay and the lack of good reason for the delay, and noting the limited weight to be placed on the merits of the appeal, the decision would have been the same whether or not particular weight was placed on the public interest factors expressly mentioned in CPR3.9 in balancing all of the circumstances of the case.
Right to apply for permission to appeal
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.
Release date: 24th NOVEMBER 2025
