East Midlands Waste Management Ltd v The Commissioners for HMRC

I sit in the Tribunal on a part-time basis, in conjunction with my practice as a self-employed barrister where I am based at the same chambers as Mr Brown. This scenario is not uncommon, particularly in specialist areas of law such as tax. Nevertheless, as a precautionary measure, I asked both parties whether they had any concerns about me sitting in a case where a chambers colleague was appearing before me. Neither had any such concerns.

Furthermore, I do not consider that there should be any risk of a perception of bias or any other reason why I should recuse myself. A set of chambers is a very loose association of individual barristers who have their own independent practices (and, indeed, it is common for members of the same chambers to find themselves on the opposite sides of the same case). Furthermore, this is not a case that Mr Brown and I have discussed even informally.

I advised the parties that the Court of Appeal appears to be due to hear HMRC’s appeal against the Medpro decision on Wednesday 17 December 2025. Although it is hoped that a judgment will be published soon, neither party sought any delay in the resolution of this case. Both agreed that Martland applies a stricter approach (in that paragraph [45] of the Upper Tribunal’s decision in that case requires a tribunal to give precedence to certain matters that would militate against admitting a late appeal). Both were content, however, for me to follow Medpro and then to see whether Martland gives a different result.

I have, however, decided to adopt Martland initially. This not in order to prejudge the Court of Appeal’s decision but because I consider it will be easier for me to reach a decision by following the stricter approach and, if necessary, to decide whether the outcome was dependent on giving the precedence to the matters outlined in [45] of Martland). I note that a similar approach was taken by this Tribunal in the case of Lands Luo Limited v HMRC [2025] UKFTT 1207 (TC) (at [71]) albeit for different reasons.

The single issue before me was whether to admit three appeals that the Appellant has sought to make out of time against two VAT penalties and one VAT assessment. The specific facts relating to those three decisions are all slightly different and, therefore, I will effectively make three distinct decisions, albeit in relation to facts where there is considerable overlap.

The hearing bundle was very difficult to follow (containing much superfluous material and frequent repetition of documents for no apparent good reason and (because of what seem to be attachments and enclosures comprising copies of earlier correspondence) a lot of the documentation was often out of chronological order). This meant that it was not easy to identify the issues relevant for my determination. Those difficulties were compounded by the fact that the index to the bundle did not contain page references.

A further part of the difficulty was that most of the correspondence in the bundle related to decisions that were not under appeal at all or, in some cases, where timely appeals had been made and were therefore not directly relevant to the matters I had to consider. Indeed, it was common ground that each of the three late appeals I am concerned with stands alone in that there is no direct connection between the subject matters of these appeals (or between any of these three appeals and either of the two appeals which HMRC accept were made in time and which have been stayed pending the outcome of this application). Accordingly, when making my decisions, I have not treated as a factor favouring the admission of the appeals the possibility of any overlap of issues or evidence with matters that are going to be considered by the Tribunal in any event. (Footnote: ¹)

However, despite the discrete nature of the three late appeals, the broader facts are in my view relevant.

The key facts, so far as they are relevant to my decision, are as follows:

I was supplied with a witness statement from Mr Craig which broadly provided a narrative that corresponded with the picture that could be inferred from the correspondence. Mr Carey was content to let the witness statement stand without subjecting Mr Craig to cross-examination.

Mr Carey sought to characterise Mr Reilly (a director of the Appellant) as a seasoned-litigant in tax litigation by reason of the finding in the case involving PPS (Peterborough Plant Sales Limited v HMRC [2020] UKFTT 338 (TC)). Although I was somewhat reluctant to make a finding of fact by reference to a conclusion of the Tribunal in litigation involving a different company (albeit one with some association (in the broadest sense of the word) with the present Appellant), Mr Brown did not challenge the findings relied upon by Mr Carey. On the other hand, I do not think that the findings in that case help HMRC to any great extent. There is, in my view, a distinction between, on the one hand, a director (or shadow director) who takes an active role in a single case as a witness and, perhaps giving instructions in the background to professional advisers and, on the other, an individual with intimate professional knowledge of the time limits and procedures relating to appeals against decisions by HMRC. I note (as suggested by Mr Brown, and not disputed by Mr Carey) that PPS was represented by Moore Thompson, at least by the time of the hearing. I find, therefore, that Mr Reilly should not be assumed to have any greater knowledge of the litigation process than a typical taxpayer.

Penalties 1 and 2 were issued under the provisions of Schedule 24 to the Finance Act 2007. Paragraph 16(1) of that Schedule provides as follows:

Accordingly, for provisions concerning time limits, I must turn to the provisions within the Value Added Tax Act 1994, which are the same provisions that govern Decision 3.

Section 83A of that Act requires all appealable decisions, when notified to a taxpayer, to include an offer of a review.

Section 83C(1)(b) mandates HMRC to review a decision if the taxpayer “notifies HMRC accepting the offer within 30 days”.

Section 83D(1) permits HMRC to notify taxpayers of extensions to the 30-day review period, but only during the original review period (or such period as already extended). In other words, section 83D does not permit a retrospective extension of the review period.

However, section 83E permits a late acceptance of a review offer in cases where the taxpayer has a reasonable excuse for accepting late (and, if the excuse has ceased to apply, provided that the request is made without unreasonable delay after the excuse ceased to apply).

An appealable decision need not be subject to review. Taxpayers have the right to appeal directly to the Tribunal.

Section 83G(1) provides that, when an appealable decision is to be notified to the Tribunal, the appeal should be made within 30 days beginning with the date of the notice of assessment.

Section 83G(4), however, precludes an appeal being notified to the Tribunal if a request under section 83E has been made, until such time as HMRC have decided whether or not to give a late review.

Section 83G(6) provides that a late appeal may not proceed unless the Tribunal gives permission.

Although HMRC’s scope to allow late requests for review is limited to cases involving reasonable excuse, the Tribunal’s discretion is at large. Guidance on the approach to be taken by the Tribunal was set out by the Upper Tribunal in Martland:

In Medpro, the Upper Tribunal observed:

The reason that the Upper Tribunal needed to be “absolutely clear” about paragraph [44] of Martland was because the presiding judge in Medpro concluded that the guidance at paragraph [45] was wrong. In other words, he doubted that, when considering “the circumstances of the particular case”, any precedence should be automatically given to particular factors.

As noted at ¶‎11 above, I have initially adopted the full Martland approach.

Mr Carey described the option given to taxpayers who have failed to accept an offer of review or to make an appeal within the statutory 30-day period as “a roll of the dice”. A taxpayer in such a scenario:

That is undoubtedly right as a statement of the statutory wording and the processes that should be followed. However, when applying the Tribunal’s discretion, which requires consideration of all the circumstances of the case, I consider it would be generally wrong to penalise a taxpayer too harshly in relation to the period between the request for a late review and HMRC’s rejection of that request (even more so given the terms of section 83G(4)). As a general rule, taxpayers and HMRC should be encouraged to resolve matters between themselves without resorting to the Tribunal. Therefore, I would hesitate before applying a discretion in a way that discourages taxpayers from first seeking a late review. Of course, all the facts have to be considered in the round, in particular the timings of each case. Furthermore, if it is clear that a reasonable excuse approach is unlikely to be accepted by HMRC, it would then generally be better to seek the exercise of the Tribunal’s broader discretion without compounding the delay.

In HMRC v Katib [2019] UKUT 189 (TCC), the Upper Tribunal noted that, as a general rule, a failure by an adviser would be attributable to the Appellant. It continued:

I was given no reason to treat this as an exceptional case. However, the change of advisers at two different stages in the process is nevertheless a factor I will take into account at the third stage of the Martland analysis.

Finally, Mr Carey’s skeleton argument submitted that it was rules 2 and 5(3) of the Tribunal’s procedure rules that permit the Tribunal to extend time and that this power “must be exercised in accordance with the overriding objective”. I respectfully disagree. As the Upper Tribunal noted in Martland at [18], [19]:

There again, as the Upper Tribunal continued to indicate at the end of [19], whilst the source of the discretion is different, the approach is likely to be very similar.

The 30-day period for appealing/requesting a review ended on 5 September 2023.

The request for a late review was made on 16 February 2024, which was 164 days late.

The appeal was made to the Tribunal on 4 June 2024, which was 273 days late.

There is no doubt, in the context of a 30-day statutory time limit, that these delays were both serious and significant. Mr Brown, sensibly, did not suggest otherwise.

However, I also note (for the purposes of Stage 3 below) that:

The statutory 30-day period fell squarely in the period in which the Appellant was changing advisers. I make no finding as to who instigated the change or why. It was undoubtedly unfortunate that it occurred in the middle of an appeal period. However, in what appears to be an intensive and multi-faceted tax investigation such as this, I conclude that there would never have been an ideal time for a change of adviser.

On behalf of the Appellant, Mr Craig appears to have come to terms with the extent of the wide-ranging and complex investigation remarkably quickly, assisted (so it seems) by the co-operation of the former adviser at Moore Thompson. However, even by 24 October 2023, Mr Craig could not be sure that he had a complete set of files.

By that stage, Mr Craig had been in contact with Mr Krumins to introduce himself and it would be extremely harsh to criticise Mr Craig (and, by extension, the Appellant) for any of the delays up to this stage. They are, of course, far from ideal but, in my view, there was a wholly reasonable excuse for the late appeals up to then.

Indeed, that description will continue to apply up to 27 October 2023, when Mr Krumins gave his comprehensive summary of the status of the case.

In respect of Penalty 1, Mr Krumins made it clear that the onus was on the Appellant (or agent) to decide whether to accept HMRC’s decision, to accept the review offer or to make an appeal.

For reasons I shall expand upon in the next three paragraphs, were there no professional representative involved in the case, I might be tempted to say that the reasonable excuse continued beyond that stage (although, given the complexity of the case, one might in such a situation ask whether it was reasonable for a taxpayer to be riding solo). However, there was a representative on hand and one who gave the impression of being wholly competent to assist the Appellant in resolving its disputes with HMRC. I therefore conclude that Mr Craig should have taken a cue from Mr Krumins’s e-mail and sought at that stage a late review without any meaningful delay (subject to absences or other pressing commitments, ideally within the following week). By his failure to do so, I consider that the Appellant’s reasonable excuse then ceased to apply. However, a lack of reasonable excuse is not fatal to the Appellant because of the Tribunal’s broader discretion.

Furthermore, there is a limit to the criticism that can be levelled at Mr Craig. Whilst it is undoubtedly true that the need for the company to take some action was highlighted (and, similarly, for Penalty 2), what is lacking from Mr Krumins’s e-mail was the sense of urgency. Furthermore, it is clear that both Mr Krumins and Mr Craig were working collaboratively and with a shared view to resolving the case.

I also note what Mr Krumins wrote in relation to Penalty 1 (and Penalty 2 as well) in the summary boxes, which can be contrasted with the clear statements about the 2022 assessments now being out of time and how: if appeals were to be contemplated, the Appellant would need to explain why the appeals were late. (Mr Krumins did proceed to make a similar comment in relation to Penalty 1, albeit at the end of a paragraph concerning the underlying assessments from 2022.)

This second point can of course be read in two different ways. On the one hand, it could have been seen as a gentle reminder that statutory time limits exist (and, so, should have prompted a careful reader to think about time limits in relation to the other matters (i.e. Penalties 1 and 2)). However, looking at the tone of the e-mail as a whole, I prefer to interpret the e-mail as suggesting that Mr Krumins’s concerns about time limits were restricted to the 2022 assessments and that he was content for discussions to continue in relation to Penalties 1 and 2 without requiring any formal step being taken by the Appellant for the time being. I am reinforced in this interpretation by the closing comments in the e-mail where Mr Krumins reminded Mr Craig that HMRC might need to protect their collection position at some future point. This was, after all, a complex investigation which was looking at different aspects of the Appellant’s tax position and, in particular, was still ongoing. Thus, although I do not believe that the ongoing failure to make a late review acceptance or appeal amounted to a reasonable excuse, I consider that it is perfectly understandable why the requisite steps were not taken at that stage. This is a factor to which I will return at Stage 3 below.

That more relaxed state of affairs then continued throughout November when steps were taken by Messrs Krumins and Craig to arrange a meeting which then took place on 5 December 2023.

As noted at ¶‎16(18) above, Mr Craig was given a clear reminder that appeals were outstanding in relation to the penalties. And, as Mr Carey submitted, a simple letter seeking a late review or a “holding” appeal to the Tribunal (with the most skeletal of grounds of appeal) could have been submitted on the next day. However, I also note what Mr Craig said in his witness statement:

To say the least, it was unfortunate that Mr Craig did not pen a simple letter asking for a late review and hand it to Mr Krumins at the meeting itself. In my view, that would have had the effect of pausing the clock and made the Appellant’s position on this application far more attractive. However, I cannot ignore the unchallenged evidence as to the perception in Mr Craig’s mind that, in the scheme of things, February would be acceptable. Again, I will revert to this when looking at Stage 3 below.

As noted above, the next stage was the late request for a review which was made on 16 February 2024.

It is noted that HMRC (unusually in this case) took over two months to respond. In that period, the Appellant cannot notify an appeal to the Tribunal by virtue of section 83G(4)(a).

In my view, there is little excuse for the Notice of Appeal not being submitted promptly after 25 April 2024. Even if one (by applying a rule of thumb that decisions have to be made within 30 days, a rule that does not actually apply in this scenario) were to treat “promptly” as meaning within 30 days, it is notable that even that timescale was not complied with, there being a 40-day interval. I infer that some delay was attributable to the appointment of a VAT litigation specialist. However, in this period in particular, I detect a worrying lack of urgency which does not assist the Appellant’s case.

As is common ground, the starting point is that permission should not begranted unless the FTT is satisfied on balance that it should be (Martland at [44]). I also note that prejudice to the taxpayer is not a trump card (even though the amount at stake in this case (£229,872) is considerable) as, otherwise, late appeals would routinely be admitted. Conversely, the fact that the appeal is late is no trump card so far as HMRC are concerned as is clear from the fact that Parliament has given the Tribunal discretion to admit late appeals. Nevertheless, I accept that the lateness means that, as a starting point, the appeal should not be admitted.

I also observe that this is not a case where the merits of the case are obvious one way or another and, to be fair, neither party urged me to consider that their case was so strong that I should have taken that factor into consideration in my analysis.

I accept that HMRC will be inconvenienced to some extent by the fact that, as a result of the delay, staff have been redeployed to other roles and any witnesses (and other staff) will need to re-read the case notes if the appeal is to be admitted. Therefore, HMRC will be put to additional resource cost over and above that which they would have been required to expend had timely appeals been made.

It is canon of construction that the way that HMRC organise themselves internally cannot be a relevant factor when construing a statute (see, for example, Langham (HM Inspector of Taxes) v Veltema [2004] EWCA Civ 193 at [32]). However, I do not consider that this precludes me from taking the additional resource costs into account when exercising my discretion as that requires me to look at all the circumstances of the case: this is not a question of construction of a statute but a different exercise altogether. Accordingly, this is a factor that counts to some extent against the Appellant. And, as I am taking my lead from Martland as opposed to from Medpro, I will give this factor particular prominence.

I also accept that statutory time limits are important and that, in different ways, Mr Krumins gave Mr Craig reminders as to what needs to be done. And, as I am taking my lead from Martland as opposed to from Medpro, I will similarly give this factor particular prominence.

However, despite that, from my reading of the correspondence, I cannot escape the feeling that, until 5 December 2023, Mr Krumins was not particularly concerned about time limits in relation to Penalties 1 and 2 – he was more than happy to have a collaborative person acting on the Appellant’s behalf working towards a resolution. In addition, I find that Mr Krumins could not have reasonably concluded that the Appellant was not challenging Penalties 1 and 2: Mr Craig’s 16 February 2024 letter did refer to repeated statements in the past challenging quantum. Furthermore, based upon Mr Craig’s evidence, I conclude that Mr Craig did not appreciate the desirability of taking things further (by taking a formal step) before February 2024. Mr Craig did what he thought was expected of him. Looking at this case from the perspective of a specialist in tax litigation, Mr Craig’s delays were clearly unfortunate. However, they were fully understandable in the circumstances of the case where, as I infer, Mr Craig was not a specialist in tax litigation.

The least excusable delay was between 25 April 2024 and 4 June 2024. This, in itself, was 40 days (which, as I have noted, is longer than the basic 30-day period conferred by statute) and came after nearly eight months of delay (albeit including 69 days where the Appellant was precluded from making an appeal to the Tribunal). I further note that the Appellant’s culpability is then aggravated by the fact that it failed to make a timely application for the late admission of the appeal, despite the appointment of what should seemingly have been a competent specialist.

However, taking a step back, it is my conclusion that HMRC could not have been in any real doubt as to the likelihood that the Appellant would challenge the penalty. Accordingly, I consider that, to deny the Appellant the opportunity to challenge a penalty of almost £230,000 for these delays in the particular circumstances of this case would be a disproportionate consequence of the failings that have undoubtedly occurred. I therefore direct that the Penalty 1 appeal be admitted.

The 30-day period for appealing/requesting a review ended on 20 October 2023.

The request for a late review was made on 16 February 2024, which was 119 days late.

The appeal was made to the Tribunal on 4 June 2024, which was 228 days late.

There is no doubt, in the context of a 30-day statutory time limit, that these delays were both serious and significant. Again, Mr Brown, sensibly, did not suggest otherwise.

However, I also note (for the purposes of Stage 3 below) that:

The reasons are the same as for Penalty 1. The only difference is that the penalty was issued shortly after Mr Craig was first instructed and, therefore, the 30-day period was entirely on his watch.

The delay in this case is slightly shorter for the simple reason that the penalty was issued 45 days later. This counts slightly (but not materially in my view) in the Appellant’s favour (when compared with Penalty 1). Also making the Appellant’s case in relation to Penalty 2 marginally more attractive than in relation to Penalty 1 is the fact that the application for the late appeal was properly made when the appeal was made to the Tribunal.

On the other hand, the quantum is somewhat lower.

Nevertheless, a shade under £40,000 is still a significant sum.

If the circumstances of Penalty 2 were identical to those pertaining to Penalty 1, I would consider that (even with the reduced quantum of Penalty 2) justice would require the admission of the appeal late. To the extent that the facts are different (see ¶‎71 above), those are differences which (if anything) favour the Appellant. I therefore direct that the Penalty 2 appeal be admitted.

The facts relating to Decision 3 are somewhat different from those for Penalties 1 and 2. And, it should be noted, HMRC are not objecting to the admission of this appeal. Nevertheless, it is, ultimately, the Tribunal’s decision.

The assessment was notified to the Appellant on 8 November 2023. Although that notice of assessment included an offer of a review, HMRC accept that the ongoing discussions with Mr Craig included the intimation of a future appeal. The offer of a review was then repeated on 25 April 2024.

Although I would consider the time to run from 7 December 2023 (being 30 days from 9 November 2023), HMRC are content to suggest that, in the circumstances of the case and the ongoing discussions, the clock was reset on 25 April 2024. On that basis, for the purposes of Stage 3, I will proceed on the basis that the appeal was made just 10 days outside the time limit.

Time limits cannot be disregarded simply because the amount of tax at stake is (as here) significant. Indeed, a significant amount of tax at stake should focus the minds of taxpayers and those advising them. Nevertheless, it cannot be said that, from Day 31, HMRC could assume that the case was not being fought by the Appellant. There is no statutory obligation for taxpayers to send HMRC copies of notices of appeal and, in my experience, most appellants routinely do not. The fact that there can then be delays between the receipt of an appeal and the Tribunal then notifying HMRC of the appeal is not something that, in my view, should be held against appellants.

I do note the further circumstances which are common to Penalty 1 being a possible reason for the delay (the appointment of a specialist litigator) and the failure to seek permission to appeal late when the appeal was made (see ¶¶‎57 and ‎63 above). However, ultimately, this is a case where the appeal was made 10 days late.

In the circumstances of the case, however, I consider it would be disproportionate for the Appellant to be denied the right to pursue this appeal for a modest delay of 10 days. I therefore direct that the Decision 3 appeal be admitted.

I wish to conclude with two observations.

First, given that I have decided that all three appeals should be admitted when looking at this case through the stricter prism of the Martland approach, it follows that (if I were to have adopted the Medpro approach) I would similarly have admitted all three appeals.

Secondly, I have reached these decisions by reference to the specific circumstances of this case. In particular, I have decided that, given the tone of the correspondence between Messrs Krumins and Craig, it would be unfair for the Appellant to be denied the opportunity to pursue the appeals notwithstanding the various delays along the way. I wish to emphasise that I am in no way criticising Mr Krumins for his approach. I repeat what I said at ¶‎16(13) above and I would not wish to discourage HMRC officers from taking that approach with taxpayers and their advisers: as has been said elsewhere, an element of informality can promote collaboration between HMRC and taxpayers, which can only be for the better. Conversely, had the same delays occurred without that correspondence in the background, there is every possibility that I would have reached a different conclusion, notwithstanding the significant amounts at stake. Taxpayers should take note: time limits are there to be complied with, and missing them can have serious consequences.

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.