Diane Stoney v The Commissioners for HMRC

The hearing took place on 1 July 2025 using the Teams Video system. 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.

We were provided with a bundle prepared for the hearing comprising 423 pages.

This is an application by the Appellant dated 9 July 2024 for permission to commence a late appeal against Assessments and Closure Notices totalling £9,911.80 issued in respect of invalid claims to Enterprise Investment Scheme (“EIS”).

The chronology of events, which was not in dispute, was helpfully set out in the Respondent’s Notice of Objection to the Late Appeal Application as follows.

On 13 December 2018, the Appellant registered for Self-Assessment with a view to claim relief for expenses.

On 2 January 2019, the Respondents received the Appellant’s tax return for the year ending 5 April 2018, via the Self-Assessment portal.

On 8 April 2019, the Respondents received the Appellant’s tax return for the year ending 5 April 2019, via the Self-Assessment portal.

On 2 April 2020, Officer Bromley issued an opening letter to the Appellant to check his tax return for the year ending 5 April 2019. The letter explained that the Respondents were looking into the EIS claim included in his tax return. The Appellant was asked to provide copies of the EIS3 compliance certificate and a statement demonstrating that he had invested £10,000.

On 9 April 2020, the Respondents received the Appellant’s tax return for the year ending 5 April 2020, via the Self-Assessment portal. On 24 March 2021, Officer Bromley issued another opening letter to the Appellant to check his tax return for the year ending 5 April 2020. In similar terms to the letter of 2 April 2020, the letter explained that the Respondents were looking into the EIS claim included in his tax return and the Appellant was asked to provide copies of the EIS3 compliance certificate and a statement showing his investment.

On 17 May 2021, a further opening letter was issued by Officer Bromley in the same terms as the earlier letters. The letter indicated that the Respondents were in possession of information which suggested the investment was not made. The Appellant was asked to provide further information to support the EIS claims.

On 19 July 2021, Officer Bromley issued an Assessment for the year ending 5 April 2018 in the amount £3,533.60, and Closure Notices for the years ending 5 April 2019 and 5 April 2020 in the amounts of £2,778.20 and £3,600.00 under s.29 TMA 1970.

Both the Assessment and the Closure Notices contained a section explaining what options were available to him if he disagreed with the Respondents decisions.

On 10 March 2022, the Appellant called the Respondents and advised that he, along with several colleagues were victims of fraud from a company called Fast Tax Rebate.

On 16 August 2022, the Appellant called the Respondents and advised that he was in receipt of the Respondents’ decisions for the years ending 5 April 2018 and 2019, and that he disputed the charges as he believed that the was a victim of fraud.

On 10 May 2023, the Appellant called the Respondents to advise that he would be sending in an appeal which was received on 19 May 2023. The letter explained that the Appellant had been a victim of fraud, and he asked the Respondents to help deal with the matter. The Appellant also provided a new address.

On 11 October 2023, the Respondents responded to the Appellant’s letter, and provided him with copies of all the correspondence previously sent to him. On 18 October 2023, the Appellant e-mailed the Respondents advising that he had been a victim of fraud and needed help.

On 19 October 2023, Officer Bromley provided her contact details to the Appellant. The Appellant replied and advised that he was unable to call her back straight away due to work constraints but would do so shortly.

On 7 November 2023, the Appellant e-mailed Officer Bromley advising that his mother had severe medical conditions, due to which she would put the Appellant’s mail in the bin.

On 10 November 2023, the Appellant e-mailed Officer Bromley to appeal the decisions sent out under the covering letter dated 11 October 2023.

Correspondence ensued over the course of the next few months in which Officer Bromley requested further information, such as bank statements, from the Appellant.

On 6 February 2024, Officer Bromley issued the Appellant with the Respondents’ View of the Matter and the opportunity to request a Statutory Review or make an appeal to Tribunal within 30 days of the date of the letter.

On 7 June 2024, the Respondents received a Subject Access Request (“SAR”) from the Appellant which was responded to on 14 June 2024.

On 2 July 2024, the Appellant requested a Statutory Review.

On 8 July 2024, Officer Bromley wrote to the Appellant to advise that his request for a Statutory Review was out of time and no reasonable excuse had been provided for the delayed Statutory Review request.

On 18 July 2024, the Tribunal received the Appellant’s Notice of Appeal dated 9 July 2024.

Between the 2 and 5 December 2024, the Respondents asked the Appellant why there had been a delay of 5 months before a Statutory Review was requested. The Appellant stated that he was not aware of his appeal rights.

The approach to this type of application is well known and set out in the oft cited Upper Tribunal decision in William Martland v The Commissioners for HM Revenue and Customs [2018] UKUT 0178 (TCC) (“Martland”).

In Martland at [29], the UT held that the starting point for considering applications to allow a late appeal is as follows:

“…the presumption should be that the statutory time limit applies unless an applicant can satisfy the FTT that permission for a late appeal should be granted, but there is no requirement that the circumstances must be exceptional before the FTT can grant such permission.”

At [44] the UT set out the three-stage process that should be followed:

“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:

(1)

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.

(2)

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

(3)

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.”

At [45], the UT provided guidance on how the evaluation of “all the circumstances of the case” should be carried out:

“That balancing exercise should take into account the particular importance of the need for litigation to be conducted efficiently and at proportionate cost, and for statutory time limits to be respected. …The FTT's role is to exercise judicial discretion taking account of all relevant factors, not to follow a checklist.”

The UT highlighted the importance of finality at [34]:

“…the purpose of the time limit is to bring finality, and that is a matter of public interest, both from the point of view of the taxpayer in question and that of the wider body of taxpayers.”

The FTT is not required to carry out a detailed evaluation of the merits of the underlying appeal, the UT stating at [46]:

“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. …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.”

In the more recent case of Websons (8) Limited [2020] UKUT 0154 (TCC) (“Websons (8)”) the Upper Tribunal confirmed that Martland remains good authority.

The Respondents also cited, inter alia, HMRC v Hafeez Katib [2019] 0189 UKUT (TCC) (“Katib”), in which the UT held at [17] that the First tier Tax Tribunal had made an error of law “in failing to...give proper force to the position that, as a matter of principle, the need for statutory time limits to be respected was a matter of particular importance to the exercise it its discretion”.

The Respondents’ submissions can be summarised as follows.

The Respondents cited Romasave (Property Services) Ltd v Revenue & Customs Commissioners [2015] UKUT 254 (TCC) (“Romasave”) in which the UT held that a delay of three months against a 30-day appeal window was serious and significant ( at [96]):

“In the context of an appeal right which must be exercised within 30 days from the date of the document notifying the decision, a delay of more than three months cannot be described as anything but serious and significant.”

On 18 July 2024, the Tribunal receipted the Appellant’ Notice of Appeal dated 9 July 2024. This is 4 months and 12 days after the expiration of the statutory time limit at s.49G TMA 1970. The Respondents submitted that the delay in this case is therefore serious and significant.

The Respondents submitted that each case must be taken on its own merits and the fact that the Tribunal has accepted other cases involving EIS fraud, specifically Huntly v HMRC [2022] UKFTT 00135 (TC), does not bind this Tribunal. In support of this proposition, the Respondents cited Mulvenna & anor v Secretary of State for Communities and Local Government [2015] EWHC 3494 (Admin) (“Mulvenna”) in which it was held:

“This simply will not do. Anyone objecting to a decision of a public authority by way of judicial review must challenge it without delay, they cannot wait until others show that the way is clear…. But for reasons of good administration our system of public law cannot work on the basis of persons holding back from legal challenges until another claimant in a similar position has a success in court. Those unhappy with a public authority’s decision must take the initiative and promptly challenge it.”

In Moore and Anor ( T/A Moore Farms) v HMRC [2022] UKFTT 411 (TC), a late appeal application was made based on a decision in another similar case and this was refused by Tribunal, even though the substantive merits of the case were considered to be strong. Judge Cannan stated at [94]:

“In my view, the publication of a new authority which prompts an appeal out of time might have some weight in the balancing exercise at stage three. However, it is not in itself a good reason for not appealing in time. If it was, then it would nullify to a large extent the benefit of finality recognised in Data Select and Aberdeen City.”

The Respondents accepted that the Appellant’s mother’s medical conditions led to her disposing of his post and that he has dyslexia. However, the Respondents do not accept that the Appellant did not know how to structure his appeal or that he did not understand his appeal rights as, they submitted, he managed to appeal to the Respondents, and it does not require a sophisticated taxpayer to make an appeal. Furthermore, the Appellant was provided with Officer Bromley’s contact details but did not seek her assistance to discuss making an appeal.

The Respondents did not accept that the Appellants’ appeal rights were not explained to him; they were contained on the correspondence sent to him. The Respondents also did not accept that the Appellant took their decision as final.

The Respondents noted that the Appellant’s dyslexia did not prevent him from appealing the decision to the Respondents or submitting a SAR request to the Respondents, a process which the Respondents contend is just as complex as appealing to the Respondents or requesting a Statutory Review.

The Respondents contended that to allow the application would give the Appellant an advantage over other taxpayers who make a timely request for a Statutory Review or appeal to the Tribunal and that there is no good reason why the default occurred.

The Respondents submitted (as confirmed by the UT), that litigation must be conducted efficiently and at proportionate cost and that statutory deadlines must be respected. Were the application allowed, the Respondents would be prejudiced in having to divert resources to defend an appeal which they were entitled to consider closed, especially given the significant length of the delay. The Appellant failed to comply with the relevant statutory time limit and the Respondents are entitled to finality in proceedings. To allow a late appeal in this instance is inconsistent with the principles of good administration of justice which require litigation to be conducted efficiently and at proportionate cost.

In relation to the merits of the substantive matter, the basis of the Appellant’s appeal is that he was a victim of fraud. However, the Appellant accepts that he is not eligible for EIS relief. He was asked to provide documentary evidence to support the claim for EIS investment tax relief, but no response was received during the enquiry period. To the limited extent that the merits of the case should be considered, it is submitted that the Appellant’s case is weak.

The Appellant was assisted by Mr Bentley who had provided the Tribunal with a witness statement. The document was contained in the document bundle and no challenge to it was made by the Respondents. That said, we noted that its content could more properly be described as submissions and, to the extent that it is appropriate, we have treated it as such.

Mr Stoney’s returns were submitted in his name without his knowledge or authority with the relief payment being sent to a third party. The Respondents confirmed that registration for Self-Assessment appeared to made for the purposes of claiming expenses, however EIS relief was then claimed.

Despite requesting help on a number of occasions, Mr Stoney was never provided with advice on how to appeal but rather was directed towards repaying the sums he had never received and setting up a payment plan which he understood was the only option available to him.

The delay in making an appeal to HMRC, and subsequently to the Tribunal, was due to a number of factors. Mr Stoney had changed address due to his mother’s health problems. That combined with his lack of understanding led to delay.

It is submitted that the prejudice of a financial burden to the Appellant arising from fraud outweighs that to HMRC in litigating a matter they believed had come to an end. It is in the interests of justice to allow the application.

Although not binding on the Tribunal, other cases such as Huntly (see [38]), Mccumisky v HMRC [2022] UKFTT 00128 (TC), Cormack v HMRC [2021] UKFTT 0355 (TC) and Robson v HMRC [2023] UKFTT 00226 (TC) involved similar issues where each Appellant had been the victim of fraud in similar circumstances and the Tribunal should take these cases into account given the link between the fraudulent agent in those cases and the Appellant’s.

The reasons set out in Mr Stoney’s Notice of Appeal can be summarised as follows. The Appellant is not a sophisticated taxpayer. He has always been PAYE and the returns were submitted fraudulently without his knowledge or authorisation. Mr Stoney confirmed to us at the hearing that he had worked in a factory for 15 years and had no experience of the Self-Assessment regime.

Mr Stoney advised the Respondents that he struggles with reading and writing and that he did not fully understand the information on the Closure Notices or correspondence sent to him. He called the Respondents a number of times to seek help and accepted a payment plan as he understood it was the only way to resolve the problem as he was told he was responsible for the returns. Mr Stoney confirmed to us in the hearing that his appeal rights were not explained, and he understood the Respondent’s decision to be final.

Mr Stoney did not know the specifics of the case against him or how to structure an appeal. The company to which the repayment was made was dissolved during the relevant period and the Respondents failed to make checks on the companies to which the monies were repaid.

Mr Bentley confirmed to us that the SAR and appeal to the Tribunal were made by him on Mr Stoney’s behalf and he reiterated that Mr Stoney was not a sophisticated taxpayer who had no understanding of the case against him which led to Mr Bentley’s involvement and assistance.

Mr Bentley submitted that, applying Martland, the delay is mitigated in the context of Mr Stoney’s lack of understanding. Balancing the prejudice to HMRC against a strong case and Mr Stoney not having the opportunity to have his appeal heard, it is in the interests of justice and fairness to allow the application.

In reaching our Decision, we have followed the three-stage test set out in Martland.

The length of the delay was just over 4 months. We bear in mind the importance of compliance with statutory time limits, and we agree that the delay is both serious and significant.

However, the length of the delay, which weighs against granting the application is not, in itself, determinative and we must consider the remaining guidance laid down in Martland.

We accepted the evidence, which was not challenged, that the Appellant struggles with reading and writing. It was clear from the correspondence within the bundle that the Appellant had informed the Respondents of his difficulties, and we were satisfied that this was also clear from the content of that correspondence. In such circumstances, we accepted that Mr Stoney had not understood the contents of the (often lengthy) letters sent to him which set out his appeal rights.

We noted that the Appellant was provided with Officer Bromley’s contact details and could have made contact to enquire about appeal rights. However, in circumstances where Mr Stoney believed the Respondent’s decision to be final, we were satisfied that he had no reason to do so. Our conclusion was reinforced by the evidence of Mr Stoney, which was supported by the records of telephone calls contained within the bundle, that his conversations with the Respondents were directed towards repayment and payment plans and not his appeal rights.

We did not accept the Respondent’s submission that Mr Stoney had in some way waited for other appeals to “show that the way is clear” as we found that there was no evidence to support the proposition that Mr Stoney’s motive for appealing was based on other cases. Rather, we formed the view that Mr Stoney had been made aware of other similar cases which predated his Notice of Appeal and which he was fully entitled to cite in support of his application.

We were satisfied that it was only when Mr Stoney sought help from Mr Bentley that action was taken to make the application to admit a late appeal. The fact that an SAR was made prior to the application, in our view, supports Mr Stoney’s evidence that he was unaware and had no understanding of the case against him. We accepted, for the reasons set out at [60] above, that Mr Stoney did not know how to commence or structure an appeal and that this was done on his behalf by Mr Bentley.

We were satisfied that Mr Stoney had acted reasonably, seeking assistance with time to pay believing that repayment was his only option. We also accepted that the appeal was only made due to the involvement and assistance of Mr Bentley. In those circumstances, we were satisfied that there was a good reason for the delay, which weighs in favour of allowing the application.

We turn now to consider “all the circumstances of the case". There is limited information before us and we were careful not to conduct a detailed analysis of the underlying merits of the case (Martland at [46]).

Mr Stoney submits that he is a victim of fraud. The Respondents did not seek to challenge this. The prejudice to Mr Stoney is the loss of the ability to challenge the Assessments and Closure Notices which total a substantial amount for Mr Stoney.

The Respondents are entitled to finality and treated this matter as settled. It will have to divert time and resources into the litigation.

We cannot, on the information before us, reach any view as to the strength of the Appellant’s substantive case. However, we have concluded that the prejudice to the Appellant in refusing the application outweighs that to the Respondents and, taking into account all of our findings following the approach set out in Martland, we have concluded that the interests of justice and fairness weigh in favour of the Appellant.

The application is therefore allowed and permission is granted to bring a late 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.