Ian Milhill v The Commissioners for HMRC

HM Revenue & Customs (“HMRC”) issued Mr Milhill with the following assessments and penalties:

The overall total was thus £875,623. That figure excludes interest, as it is not possible to appeal to the Tribunal against interest charged by HMRC.

Mr Milhill’s representative, Ms Rahman, asked the Tribunal to find that none of the above decisions was notified to Mr Milhill. We considered that issue first, because if it were to be the position, time would not have started to run, and Mr Milhill’s appeals would not be late. However, as explained in the main body of this decision, we found that all the decisions had been notified to Mr Milhill.

The second issue was whether the Tribunal should give Mr Milhill permission to make late appeals against the decisions. For the reasons set out below, we refused to give permission.

Mr Milhill’s Notice of Appeal to the Tribunal, filed by Ms Rahman, began by saying that it encompassed “all tax and penalty assessments issued against Ian Milhill”, and continued by referring to (a) three of the closure notices and related amendments; (b) the Sch 24 penalties; unspecified late filing penalties, and (c) what were described as “tax geared tax penalties”. Ms Rahman told us this was a reference to late payment penalties.

We pointed out that there was no reference in the Notice of Appeal to (a) the discovery assessment for 2015-16; (b) the closure notices and related amendments for 2018-19, or (c) the Sch 36 penalties. Ms Rahman responded by referring to the opening words, which referred to “all tax and penalty assessment issued against Ian Milhill”.

We expressed some concern about the lack of specificity, but on behalf of HMRC, Ms di Benedetto said HMRC accepted that the Notice of Appeal did encompass the discovery assessment; the closure notice and related amendment for 2018-19; the Sch 36 penalties and those late payment penalties for which related documents had been included in the Bundle, namely those for 2014-15 and 2016-17, and we proceeded on that basis.

The Tribunal was provided with a bundle of documents and authorities running to over 750 pages (“the Bundle”). In addition, Mr Milhill provided a witness statement, gave oral evidence led by Ms Rahman, was cross-examined by Ms di Benedetto and answered questions from the Tribunal.

It was part of the case as put by Ms Rahman that Mr Milhill was not notified of any of the decisions. However, there was no evidence to that effect in his witness statement. From the witness box, Mr Milhill said initially that he “could not remember” what he had received; then that he “had not received” the decisions, and finally, when asked to confirm which of those was the position, he said he “did not remember”, and we accepted that evidence.

Some of Mr Milhill’s oral evidence was inconsistent with his witness statement, in particular he said in the latter that he had not filed appeals in time because his mental health meant he “could not carry out his day-to-day affairs without the assistance of his secretary”. However, in oral evidence he said that he was “too busy” to deal with his tax affairs. We consider this conflict in the evidence at §§42-48 below.

On the basis of the evidence provided to us, we make the findings of fact below. We make further findings later in this decision; where we do so, they are identified as such.

Mr Milhill initially ran a call centre business via a number of companies and partnerships, working with a Mr Milanesi; that relationship broke down in 2016-17. The affairs of the businesses were dealt with by Haines Watts, a firm of Chartered Accountants, who were also instructed in relation to Mr Milhill’s personal tax. At all relevant times, Ms Jackie Griffiths, an accountant, acted as Mr Milhill’s finance manager. Mr Milhill said that he had set up these arrangements so that Ms Griffiths and Haines Watts between them dealt with all his tax affairs.

Mr Milhill had told HMRC he lived at an address in Nottingham, and until 3 July 2020, HMRC addressed all correspondence to him at that address. However, it was in fact Ms Griffiths’ home address. Mr Milhill provided that address to HMRC because he travelled frequently and because Ms Griffiths dealt with his financial and tax affairs.

On 3 July 2020, prior to commencing enforcement proceedings, HMRC checked the address they had been given by Mr Milhill, and realised it was not his home address. From that date onwards, all HMRC correspondence was addressed to Mr Milhill at his home address in Grantham.

Mr Milhill has been in SA continually since 1997 and so was issued with tax returns every year. He failed to file his returns by the due dates for 2015-16 to 2023-24 inclusive, and was issued with penalties for late filing. In total, HMRC issued 25 separate late filing penalty decisions during the relevant period; the total sum charged was £9,600. A further two late filing penalties, each of £100, were issued after the date of Mr Milhill’s Notice of Appeal to the Tribunal, and those are not before us for consideration.

Mr Milhill filed his 2014-15 tax return in October 2018. It included a claim for partnership expenses of £136,330 which he had incurred personally, and a claim for capital losses of £233,606.23. When that SA return was filed, Mr Milhill was charged a late payment penalty of £1,022.

On 26 April 2019, Mrs J McGuire, an Inspector of Taxes, opened an enquiry into the 2014-15 return, but received no reply to her opening letter. She issued a Notice under Sch 36, para 1 (“a Sch 36 Notice”), but again there was no response. This was followed on 16 July 2019 by a fixed penalty of £300 and on 27 August 2019 by daily penalties of £1,760, making an overall total of £2,160. The penalty notices were copied to Haines Watts; they each included the time limit for an appeal, being 30 days after issuance.

On 22 November 2019, Mr Gary Loughlin of Haines Watts belatedly responded to Mrs McGuire’s opening letter. He said that Mr Milhill was currently “collating supporting documentation” for the claimed partnership expenses; he accepted that Mr Milhill had omitted (a) earnings from one of the companies for which he was a director and (b) a capital gain which he said was yet unquantified. He promised to provide Mrs McGuire with more information about rental profits and the loss claim. Mrs McGuire subsequently sent three further letters to Haines Watts and to Mr Milhill (at Ms Griffiths’ address), but received no reply.

Between December 2019 and the end of 2020, Mr Milhill was raising funds for a global technology business; this involved travel to Dubai, the USA and Antigua and included a three month stay in Dubai. While in those locations Mr Milhill liaised with and met potential investors; in the USA he also met with the people who controlled various patents. During this time, he was in weekly contact with Ms Griffiths, other than when she was unwell, see §50 below.

On 2 March 2020, Mrs McGuire issued a closure notice and amended Mr Milhill’s 2014-15 return, increasing the tax payable by £325,727.35. The closure notice included the time limit for an appeal, being 30 days after issuance. It was sent to Mr Milhill (at Ms Griffiths’ address) and copied to Haines Watts.

On the same day, 2 March 2020, Mrs McGuire issued a discovery assessment under TMA s 29 in relation to the 2015-16 tax year. The amount assessed was £104,209. The assessment included the 30-day time limit for an appeal, and it was sent to Haines Watts and Mr Milhill at Ms Griffiths’ address.

On 9 July 2020, after Mr Milhill’s address had been changed on HMRC’s system, Mrs McGuire sent Mr Milhill copies of her correspondence with him, from the opening letter onwards, including the 2014-15 closure notice/amendment and the 2015-16 assessment. Mr Milhill was at home in Grantham at that time. He couldn’t remember whether he received this letter, but his general practice was to pass letters about tax to Ms Griffiths.

On the same day, 9 July 2020, Mrs McGuire also sent:

Mr Milhill was copied on the letter to Haines Watts, and Haines Watts was copied on the letters to Mr Milhill, but no reply was forthcoming from either. On 7 August 2020, Mrs McGuire wrote again to both Mr Milhill and Haines Watts, saying that a penalty for deliberate behaviour was likely because HMRC considered Mr Milhill had knowingly provided an incorrect return.

On 13 August 2020, HMRC sent Mr Milhill a “penalty explanation” letter, which said HMRC would be charging a Sch 24 penalty of £237,710 on the basis that he had deliberately omitted a significant capital gain from his 2014-15 return and had deliberately failed to file an SA return for 2015-16 despite knowing it was required.

On 10 September 2020, Haines Watts responded, providing some answers to Mrs McGuire’s earlier questions; asking that the proposed penalty and the adjustments to Mr Milhill’s 2014-15 return be “reconsidered”, and saying that both Mr Milhill and Ms Griffiths had been unwell and Mr Milhill had suffered bereavements. We make further findings about those issues at §42ff.

On 15 September 2020, Mrs McGuire wrote to Mr Milhill, listing the six letters she had sent out asking for information, and adding that both the 2014-15 closure notice and the 2015-16 discovery assessment had already been issued.

On the same day, she wrote to Haines Watts, saying it was unclear whether their letter of 10 September 2020 was an appeal against the closure notice and/or the discovery assessment, and if so, it was late. She added that if the reference to illness and bereavements was being put forward as reasons for the lateness, more details were required. On 5 October 2020, Haines Watts confirmed that Mr Milhill was seeking to appeal, and provided some more details.

On 13 November 2020, HMRC issued Mr Milhill with a further Sch 36 Notice, and copied it to Haines Watts. On 17 December 2020, in the absence of a response to the Sch 36 Notice, HMRC issued a £300 penalty.

Meanwhile, on 10 December 2020, Mrs McGuire had written again to Haines Watts, explaining that (as set out in HMRC’s Partnership Manual at PM163360) it was incorrect to claim partnership expenses as a deduction in his SA return because the law requires partners to reclaim expenses from the partnership, which deducts them from the profits before calculating each partner’s share. That letter was copied to Mr Milhill.

On 13 May 2021, Mr Loughlin of Haines Watts emailed Mrs McGuire, saying:

“I have made numerous attempts to obtain the information to progress both the appeals and [the] enquiries for 2017 to 2019, but so far have not received a response.

I have again contacted the client stating the importance of providing the information required to progress both issues – i will contact you tomorrow if that is okay to let you know if I have received a response.”

No information was subsequently provided, and on 19 May 2021, Mrs McGuire wrote to Mr Milhill under the heading “Late appeals against the 2015 and 2016 assessments issued 2 March 2020” saying:

“As I have not received a reply in respect of your reasonable excuse as to why you submitted late appeals against your 2015 and 2016 tax assessments issued on 2 March 2020 and how this continued until you submitted your appeals on 5 October 2020 then I can only assume you cannot. Consequently, you can either

•

withdraw your appeals or

•

proceed to Tribunal to have your late appeals accepted.

I would add, that you have made no attempt to provide any further information and/or documents to support your contentions that the amounts assessed in the 2015 and 2016 assessments issued on 2 March 2020 were excessive.”

By this letter, HMRC therefore refused Mr Milhill permission to appeal late against the 2014-15 closure notice and the 2015-16 discovery assessment. On 18 June 2021, HMRC issued Mr Milhill with penalties of £237,710 as explained in their earlier letter, see §24.

Meanwhile, Mr Milhill had belatedly filed his SA returns for 2016-17, 2017-18 and 2018-19, and on 18 August 2020, HMRC issued late payment penalties of £6,248 for the first of those years.

Mrs McGuire opened enquiries into each of those returns, and closed those enquiries on 21 June 2021. The closure notice for 2016-17 increased the tax payable by £41,714; that for 2017-18 increased the tax payable by £82,162 and that for 2018-19 reduced a claimed tax overpayment by £4,260. The closure notices were sent to Mr Milhill with copies to Haines Watts. On 3 August 2021, HMRC issued a penalty explanation letter, saying they intended to charge penalties under Sch 24 on the basis that Mr Milhill had deliberately filed incorrect returns for each of the three years because he had knowingly:

On 17 September 2021, HMRC issued those penalties; they totalled £76,506.

Between the beginning of 2021 and the end of 2023, Mr Milhill continued to be “very busy” with his work activities, as well as with other aspects of his life, including being involved with the local cricket club.

The collection of the amounts due from Mr Milhill were referred to HMRC’s Debt Management team, which initiated bankruptcy proceedings. In September 2022, Mr Milhill was served with a schedule of costs relating to those proceedings.

On 14 November 2023, Mr Milhill’s new agent, Tax Resolute Ltd, filed a Notice of Appeal with the Tribunal; this was rejected on the basis that direct tax appeals had first to be made to HMRC. On 24 January 2024, Ms Rahman wrote to HMRC on behalf of Mr Milhill, saying:

“The Client is appealing against all tax and penalty assessment issued against Ian Milhill. We understand that there was the additional income tax liability for 2014/15 - £326,955.61 and 2016/17 for 104,209.40 and 2017/18 - £82,162.47 on the basis that it is unreasonable and excessive. The tax assessments were issued on 21/06/2021 for £128,136.73. There were also schedule 24 Penalties for £237,710.88 dated 18/06/2021 and £76,506.67 dated 17/09/2021 and consequential tax penalties i.e. late filing penalties and tax geared tax penalties, which we would like to be done under the cover of one appeal as all the issues are connected.”

On 24 January 2024, HMRC refused to admit those late appeals, and on 1 February 2024, Ms Rahman filed a new Notice of Appeal with the Tribunal, which included an application for permission to make late appeals. The grounds repeated the passage set out above.

Meanwhile, HMRC had commenced enforcement action against Mr Milhill, applying to the High Court for him to be declared bankrupt. A related hearing had been listed for 1 July 2025, but was adjourned pending the outcome of these proceedings.

In around 2015, Mr Milhill’s mother died. Mr Milhill said in his witness statement that as the result of the bereavement, his mental health meant he subsequently “could not carry out his day-to-day affairs without the assistance of his secretary”. There was no related medical evidence, and this point was challenged in cross-examination by Ms di Benedetto.

We first considered the period from Mr Milhill’s mother’s death in 2015 to 5 October 2020, when Haines Watts wrote to Mrs McGuire referring to the death, and continuing “during this period Mr Mihill spent considerable time away from home and his businesses, concentrating on caring for his parents during this difficult time”. Haines Watts, who we reasonably infer to have been acting under instruction, did not say that Mr Milhill had any consequential mental health difficulties.

On 23 October 2020, Mrs McGuire replied to the letter from Haines Watts: her questions included the following:

“3.

Can you tell me how this impacted on his personal and business interests.

4.

Can you tell me if he was prevented from carrying on with his day-to-day personal life and how.

5.

Can you tell me if he continued running his businesses? If not, what happened during the period involved.

6.

Please fully explain why the above prevented him from:

a.

Submitting his SA Tax Returns on time

b.

Completing accurate SA Tax Returns

c.

Submitting timeous appeals against his 2015 and 2016 Assessments.”

On 22 February 2021, Haines Watts replied as follows:

“As previously stated, Mr Mihill’s mother passed away approximately six years ago following treatment for cancer. This greatly affected Mr Mihill resulting in him taking an extended break from his work commitments. This is turning lead to delays in keeping his personal tax affairs up to date resulting in the late submission of his tax returns.

The response was thus couched in vague and imprecise terms which failed to answer Mrs McGuire’s detailed questions; it also related to the late submission of the SA returns and not to the failure to appeal by the statutory time limits.

As we have already found, on the basis of Mr Milhill’s oral evidence, in 2019-20 he was “too busy” to deal with his tax affairs because he was raising funds for a global technology business. He told the Tribunal he continued to be “very busy” in the following three years, both with his business and with other responsibilities such as his involvement with the local cricket club.

We find that there is no reliable evidence that mental health difficulties consequent upon his mother’s death prevented Mr Milhill from appealing the penalties, assessments and closure notices issued to him by HMRC. In particular, it is not credible that a person who was capable of operating one or more significant business ventures, including meetings with investors in Dubai, Antigua and the USA, was unable to “carry out his day-to-day affairs without the assistance of his secretary”.

We therefore reject that part of Mr Milhill’s witness statement and find as a fact that he was at all relevant times mentally capable of carrying on day to day activities, and was not prevented by his mental health from engaging with HMRC in relation to his tax affairs.

At various points during the period from April 2014 to September 2020, Mr Milhill suffered from a broken wrist, a chest infection and a problem with one of his ankles; he was also hospitalised to correct a defect in one of his eyes. No dates were provided for any of those health issues, and they were thus not linked to any appeal deadline. As they were all relatively minor, we find that they did not prevent Mr Milhill from making appeals by the statutory due dates.

In the period before November 2019, Mr Milhill had a number of what he described as “cancer scares”, but again he did not provide dates for these investigations or link them to a failure to meet any specific appeal deadline. The closure notices, discovery assessments and Sch 24 penalties were all issued in 2020 or 2021, by which time he was very busy raising funds for his business ventures.

Taking all the above into account, we find as a fact that Mr Milhill’s physical health issues did not prevent him from meeting any of the statutory appeal deadlines.

In 2019, 2020 and 2022 Ms Griffiths had time off work for medical investigations into a serious illness. Mr Milhill did not obtain any temporary cover during those periods. Again, he has not specified the periods when Ms Griffiths was off work; how those dates related to the deadlines for filing his appeals; why Haines Watts did not do so on his behalf or why a late appeal application was not filed when Ms Griffiths returned to work. We find that Ms Griffiths’ absence was not a cause of the delays in failing to file his appeals by the due dates.

Ms Rahman asked the Tribunal to find that Mr Milhill was not notified of any of the decisions listed at the beginning of this judgment. We considered that issue first, because (as explained below) if Mr Milhill was not notified of the decisions, time will not have started to run, and his appeals will not be late.

We begin with the legislation under which the decisions in question were made, followed by the Interpretation Act s 7 and the judgment of the Upper Tribunal (“UT”)in HMRC v Websons(8) Ltd [2020] UKUT 0154 (TCC) (“Websons”), which explains the legal position if a person has not been notified of a decision.

As can be seen from the list below, each of provisions under which the decisions in question were made required HMRC to notify the taxpayer:

Decisions made under all of the above provisions could be notified by post, see TMA s 115(2).

The Interpretation Act 1978, s 7 reads:

“Where an Act authorises or requires any document to be served by post (whether the expression "serve" or the expression "give" or "send" or any other expression is used) then, unless the contrary intention appears, the service is deemed to be effected by properly addressing, pre-paying and posting a letter containing the document and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.”

In Calladine-Smith v Saveorder Ltd [2011] EWHC 2501 (Ch), Morgan J said at [26] that after a letter has been despatched:

“if the addressee of the letter proves on the balance of probability that the letter
was not served upon him then that matter has been proved and the section should be applied accordingly. Of course it is not enough simply to assert that someone did not receive the letter; the court will consider all the evidence and make its findings by reference to the facts which are established including issues as to the credibility of witnesses. That is the ordinary way in which a court goes about making findings of fact.”

In R (oao Broomfield) v HMRC [2018] EWHC 1966 (Admin), Lewis J confirmed that the person must prove that the letter was not received “at the address to which it was, properly, addressed”.

The case of Websons concerned an appeal by HMRC against an FTT judgment which had given Websons permission to appeal a VAT decision after the time limit. The relevant statutory provision required that the decision in question be notified to the taxpayer, see [41]. The UT said at [43] that “if, on the facts” the appellant had not been notified of the decision, time would not have started to run and “there would be no requirement to extend time to enable the appeal to be admitted”.

However, the FTT had not made any finding of fact as to whether the decision in question had been properly notified. By the time of the UT hearing, both parties had agreed that it was an error of law for the FTT not to make that finding. The UT said at [51]:

“We accept that the FTT made an error of law in failing to make any findings of fact as regards Websons’ contention that it had not been notified of the Review Decision. As our discussion of the relevant law illustrates, the FTT should not have proceeded on the assumption that the appeal was out of time without having established whether or not that was the case. The FTT gave no consideration to the relevant statutory provisions which establish when time starts to run for the notifying of an appeal in respect of a review decision and therefore clearly did not have those provisions in mind when making the Decision.”

The UT remitted the case back to the FTT to make the relevant finding, adding that it would also be appropriate for further evidence to be filed before that hearing took place.

As is clear from the legislation set out at §56 above, all the relevant provisions required that Mr Milhill was notified before time could start to run for the purposes of an appeal.

We first considered whether we had sufficient evidence to decide that issue, and decided that we had: the Bundle contained 300 pages of correspondence between the parties and Mr Milhill had provided a witness statement as well as giving further detailed oral evidence.

We thus moved on to consider the decisions themselves, beginning with the least contentious: those issued after 3 July 2020, the date when HMRC changed Mr Milhill’s address on their system from that of Ms Griffiths to his own home.

The decisions made after 3 July 2020 were addressed to Mr Milhill in Grantham and copied to Haines Watts. There was no dispute that these letters had been properly addressed, prepaid and posted. In accordance with the Interpretation Act s 7; they were therefore deemed to have been delivered to Mr Milhill unless he proved the contrary.

We took into account the following:

We find that Mr Milhill has not proved that these decisions were not served on him, and they are thus deemed to have been duly notified. Furthermore, on the balance of probabilities, given Mr Milhill’s normal practice in relation to letters from HMRC, we find as a fact that he received those decisions and passed them to Ms Griffiths.

On 9 July 2020, Mrs McGuire sent Mr Milhill copies of the 2014-15 closure notice and the 2015-16 assessment.

Mr Milhill said that he “couldn’t remember” whether he received that letter and the attachments. For the same reasons as set out above, we find that he failed to prove that this letter had not been served on him, and we also find as a fact on the balance of probabilities that it was received by him and subsequently passed to Ms Griffiths.

However, as the original of the 2014-15 closure notice and the 2015-16 assessment had been sent to Ms Griffiths’ address, we considered whether sending Mr Milhill copies of the decisions was sufficient to meet the notification requirements in the legislation.

The relevant authority here is Marano v HMRC [2023] UKUT 113 (TCC). Mr Marano’s accountant had received a copy of a penalty assessment, and the issue in dispute was whether this was sufficient to constitute notification to Mr Marano. The UT carried out a detailed examination of the case law, and summarised the relevant principles at [63]:

“(i)

The starting point, as with any statutory provision, is a consideration of the terms, context and purpose of the relevant provision: HMRC v Raftopoulou [2018] EWCA Civ 818 per David Richards LJ at [33].

(ii)

Some provisions are likely to have different interpretations to others; there
is no one standard interpretation that will fit all notification provisions.

(iii)

There may be situations where a provision requires a particular or special
formality for the giving of notice: per Lady Smith in R (Spring Salmon and
Seafood Ltd) v IRC [2004] STC 444 at [32] and per David Richards LJ in
Raftopoulou at [36].

(iv)

There is also a category of cases where the purpose of service of a notice
can be recognised as being simply to see to it that the recipient is informed.

(v)

As long as the statutory purpose has been achieved, a failure to follow the
literal wording of the provision does not invalidate a notice: Hastie &
Jenkerson v McMahon [1990] 1 WLR 1575 and Ralux N.v./S.a. v Spencer
Mason (The Times 18 May 1989).

(vi)

When considering whether the statutory purpose has been achieved it is
necessary to look at the question from the perspective of the taxpayer, HMRC’s intentions in giving the notice are not relevant: see R (Sword
Services Ltd) v HMRC [2016] EWHC 1473 and Flaxmode Ltd v HMRC [2008] STC (SCD) 666.

(vii)The reality of a situation should be taken into account and, in cases where
notification requires no particular formality, evidence of actual notice having been received or of a taxpayer being made clearly aware of the subject matter
of the notification directly or indirectly, may be sufficient for notice of it to
have been given, even if the notice has not been given directly to the taxpayer
(Sword Services).”

The UT went on to decide that, in the context of the Sch 55 penalty in question:

“Taking this approach, and considering Sched 55 para 18, its purpose is to ensure that once HMRC makes a penalty assessment, the taxpayer is made aware of two facts: first, that they have been so assessed and second, the period to which that assessment relates. This then enables the taxpayer to consider their position and determine how to react, including whether to appeal. There is nothing in the wording of Sched 55 para 18 or its context to indicate that any special formality is required in order for a penalty notice to be valid, provided that the notification conveys the required information.”

We are in no doubt that the same applies to (a) the closure notices/amendments and (b) the discovery assessment, both of which were attached to Mrs McGuire’s letter of 9 July 2020. The statutory purpose of the former is to inform the taxpayer that the enquiry has come to an end, and about any amendments made by HMRC to the return which has been the subject of that enquiry. The purpose of issuing a discovery assessment is to inform the taxpayer of the tax assessed.

As explained below, we also find that Mr Milhill was in any event notified of the decisions sent to Ms Griffiths (including the 2014-15 closure notice and the discovery assessment) because she received them as his agent.

Mrs McGuire did not attach to her letter of 9 July 2020 any of the following: the late payment penalty of £1,022 issued in October 2018 for 2014-15; the late filing penalties issued before 3 July 2020 (which totalled £6,500) or the Sch 36 penalties of £2,160. These penalties taken together total £9,682.

Those decisions were addressed to Mr Milhill, and sent to the address he had provided to HMRC as being his address. However, it was in fact that of Ms Griffiths. Mr Milhill did not dispute that the letters had been properly addressed, stamped and posted, and did not put forward any evidence to the effect that Ms Griffiths had never received those decisions. They are thus deemed to have been delivered to her address, in accordance with the Interpretation Act s 7.

HMRC did not know until 3 July 2020 that Mr Milhill did not live at that address. Ms Griffiths was thus acting as an undisclosed agent for Mr Milhill, and there was no dispute that she had actual authority to act in that capacity: Mr Milhill had set up the arrangement so that all HMRC correspondence would go directly to her.

In Bowstead and Reynolds on Agency (23^rd edition) at 8-205 the learned authors state that where a person who has authority to act as an agent receives a notice from a third party (such as, in this case, HMRC), the position is as follows:

“A notification given to an agent is effective as such if the agent receives it within the scope of the agent’s actual or apparent authority, whether or not it is subsequently transmitted to the principal, unless the person seeking to charge the principal with notice knew that the agent intended to conceal the notification from the principal.”

The case law underpinning that passage was discussed in detail by Judge Mosedale in Tinkler v HMRC [2016] UKFTT 170 (TC) at [98]-[103]. We respectfully agree with the analysis there set out and incorporate it by reference. She concluded at [104]:

“It is an absolute rule that service on an agent with actual or apparent authority to receive notices is service on the principal, whether or not the agent informs the principal of the notice.”

Judge Mosedale also considered other relevant authorities, including in particular R (oao Spring Salmon and Seafood) [2004] STC 444 (“Spring Salmon and Seafood”), before saying at [107]:

“Where the TMA required notice to be given to a person, there is no reason at all to suppose Parliament intended to oust the normal rules of agency. So where, for instance, as in Spring Salmon and Seafood the agent was expressly authorised to receive a notice on behalf of the taxpayer, that notice was given to the taxpayer when it was given to the agent.”

For the same reasons as given by Judge Mosedale, we find that the HMRC decisions issued before 3 July 2020 were notified to Mr Milhill.

Judge Mosedale’s decision was also made on the alternative basis that Mr Tinkler was “estopped” (prevented) from arguing that he had not received the HMRC notice in question. Her decision was upheld on that point by the Supreme Court, see Tinkler v HMRC [2021] UKSC 39. The Court found that Mr Tinkler was estopped because the conditions set out below applied:

Those conditions apply to Mr Milhill:

Therefore, even if the law of agency were not to apply, Mr Milhill would be estopped from relying on non-notification of the HMRC decisions which were sent to Ms Griffiths’ address.

For the reasons explained above, we find that Mr Milhill was notified of all the decisions.

The second issue is whether to give Mr Milhill permission to make late appeals. We begin by setting out the time limits by which the appeals should have been made, followed by the principles established in the case law; we then apply those principles to Mr Milhill’s case.

There was no dispute that when HMRC issued all the decisions, they also offered to carry out a statutory review, and it was also common ground that Mr Milhill had not accepted those offers. The relevant legislation is therefore TMA s 49H, headed “Notifying appeal to tribunal after review offered but not accepted”. It reads:

“(1)

This section applies if

(a)

HMRC have offered to review the matter in question (see section 49C), and

(b)

the appellant has not accepted the offer.

(2)

The appellant may notify the appeal to the tribunal within the acceptance period.

(3)

But if the acceptance period has ended, the appellant may notify the appeal to the tribunal only if the tribunal gives permission.

(4)

If the appellant notifies the appeal to the tribunal, the tribunal is to determine the matter in question.

(5)

In this section ‘acceptance period’ has the same meaning as in section 49C.”

TMA s 49C(6) reads:

 “…‘acceptance period’ means the period of 30 days beginning with the date of the document by which HMRC notify the appellant of the offer to review the matter in question.”

It is thus clear that where, as here, HMRC offer to carry out a review of a decision, the statutory time limit is 30 days beginning with the date of the letter offering the review.

TMA s 49 is headed “Late notice of appeal” and so far as relevant reads:

“(1)

This section applies in a case where

(a)

notice of appeal may be given to HMRC, but

(b)

no notice is given before the relevant time limit.

(2)

Notice may be given after the relevant time limit if

(a)

HMRC agree, or

(b)

where HMRC do not agree, the tribunal gives permission.

(3)-(7) …

(8)

In this section ‘relevant time limit’, in relation to notice of appeal, means the time before which the notice is to be given (but for this section).”

Since HMRC did not agree to Mr Milhill making late appeals against the decisions, he can only appeal if the Tribunal gives permission under TMA s 49(2)(b) above.

There has been extensive case law as to how the Tribunal should approach applications to make a late appeal. The leading case is Martland v HMRC [2018] UKUT 0178 (TCC) (“Martland”). At [37],the UT set out Rule 3.9 of the Civil Procedure Rules (“CPR”), which reads:

“(1)

On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need –

(a)

for litigation to be conducted efficiently and at proportionate cost; and

(b)

to enforce compliance with rules, practice directions and orders.”

The UT then considered Denton v TH White Limited [2014] EWCA Civ 906 (“Denton”) and BPP v HMRC [2017] UKSC 55 (“BPP”). The UT said:

“[40] In Denton, the Court…took the opportunity to ‘restate’ the principles applicable to such applications as follows (at [24]):

‘A judge should address an application for relief from sanctions in three stages. The first stage is to identify and assess the seriousness and significance of the “failure to comply with any rule, practice direction or court order” which engages rule 3.9(1). If the breach is neither serious nor significant, the court is unlikely to need to spend much time on the second and third stages. The second stage is to consider why the default occurred. The third stage is to evaluate “all the circumstances of the case, so as to enable [the court] to deal justly with the application including [factors (a) and (b)]”.’

[41] In respect of the ‘third stage’ identified above, the Court said (at [32]) that the two factors identified at (a) and (b) in Rule 3.9(1) ‘are of particular importance and should be given particular weight at the third stage when all the circumstances of the case are considered.’”

The UT noted at [42] that the Supreme Court in BPP had implicitly endorsed the approach in Denton, and also confirmed at [26] that “the cases on time-limits and sanctions in the CPR do not apply directly, but the Tribunals should generally follow a similar approach”. At [43]the UT said:

“The clear message emerging from the cases – particularised in Denton and similar cases and implicitly endorsed in BPP – is that in exercising judicial discretions generally, particular importance is to be given to the need for ‘litigation to be conducted efficiently and at proportionate cost’, and ‘to enforce compliance with rules, practice directions and orders’. We see no reason why the principles embodied in this message should not apply to applications to admit late appeals just as much as to applications for relief from sanctions, though of course this does not detract from the general injunction which continues to appear in CPR rule 3.9 to ‘consider all the circumstances of the case’.”

At [44] the UT set out the following three stage approach by way of guidance to this Tribunal:

The UT also said at [46]:

“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.”

Both parties accepted that the Tribunal should follow the three-stage approach in Martland on the basis of the facts in Mr Milhill’s case and taking into account their submissions.

The first stage is to establish the length of the delay and whether it is serious and/or significant.

The 2014-15 closure notice and the 2015-16 discovery assessment were both issued on 2 March 2020. Appeals should have been made within 30 days, so by 1 April 2020. Haines Watts asked to make late appeals against those two decisions in their letter of 10 September 2020, which was over five months late. That application was refused by HMRC on 19 May 2021. Ms Rahman applied to the Tribunal on Mr Milhill’s behalf almost three years later, on 2 February 2024.

No appeal (or application for a late appeal) was made in relation to any of the other HMRC decisions until 2 February 2024. The length of delay therefore varies. The earliest in time is the late filing penalty for 2014-15 issued in February 2016 where the delay was almost eight years. The most recent were the late filing penalties issued on 15 August 2023 for £1,200, where the delay was 4.5 months.

In relation to the decisions on which Ms Rahman focused her submissions:

The time limit set by Parliament for a person to appeal against an HMRC decision is 30 days. Ms di Benedetto submitted that all the delays in Mr Milhill’s case were serious and significant. Ms Rahman agreed they were “serious” but submitted they were not “significant”.

In R (oao Hysaj) v SSHD [2015] 1 WLR 2472 at [51] the Court of Appeal said that “significant” was to be understood “in the sense of having an effect on the proceedings”, and continued at [54]:

“Of course, the applicant may in some cases be able to satisfy the court that the delay, although substantial, has not had any practical effect on the course of the proceedings, but the longer the delay, the less likely it is that he will be able to do so…One reason for limiting the time for filing a notice of appeal is to promote finality in litigation. Parties need to know where they stand. Delay of the kind that occurred in this case undermines that objective.”

We are in no doubt that all the delays in this case were both serious and significant. As the Court of Appeal said, the purpose of the time limit is to “promote finality in litigation”: in the context of tax decisions, the recipient is required to appeal within 30 days so HMRC knows whether the decision is under challenge.

The second stage requires the Tribunal to establish the reason(s) why the delays occurred.

One of the reasons relied on by Mr Milhill was his health, but we have already found as a fact that at all relevant times he was mentally and physically capable of appealing against the decisions.

Ms Rahman submitted that the delays were caused by Mr Milhill not having received the decisions. We have already found that:

The remaining decisions were the late payment penalty of £1,022 issued in October 2018 for the tax year 2014-15; the late filing penalties of £6,500 which totalled £6,500, and the Sch 36 penalties of £2,160. These were all sent to Ms Griffiths’ home address, and we have already found that they were deemed to be received by her as an undisclosed agent for Mr Milhill. We thus do not accept that any of the decisions were not received: they were either received by Mr Milhill directly, or by Ms Griffiths as his agent.

Mr Milhill said he had appointed Haines Watts, which he described as a “top 10 firm” to be responsible for ensuring that all deadlines were met. He criticised the approach taken by that firm and what he saw as their failures to provide him with the information required to deal with the appeals.

We did not have any evidence from Haines Watts, or copies of any communications between Mr Milhill and that firm, to support his case that Haines Watts were significantly to blame for the delays in appealing the decisions. We have already found as a fact (see §31) that on 13 May 2021, Mr Loughlin emailed Ms McGuire saying that he had made “numerous attempts” to obtain information from Mr Milhill, but without success. Although that communication was not about the appeals, we make the reasonable inference and find as a further fact that that Mr Milhill bears at least some of the responsibility for the delays in complying with the statutory time limits.

Mr Milhill also relied on Ms Griffiths, his accountant, who received some of the penalties at her home address. We have already found as a fact that Mr Milhill entered into this arrangement because he travelled frequently and because Ms Griffiths dealt with his financial and tax affairs. Mr Milhill could not remember whether Ms Griffiths had discussed the decisions with him. However, it was Mr Milhill who set up this arrangement, and he plainly had a responsibility to check with Ms Griffiths as to what she had received from HMRC.

Even if Mr Milhill had shown that Haines Watts and/or Ms Griffiths were largely responsible for the delays, the case law is not helpful. In Hytec Information Systems v Coventry City Council [1997] 1 WLR 666 (“Hytec”), the Court of Appeal considered a similar issue: whether a litigant’s case should be struck out for breach of an “unless” order that was said to be the fault of his barrister. Ward LJ, giving the leading judgment, said:

“Ordinarily this court should not distinguish between the litigant himself and his advisers. There are good reasons why the court should not: firstly, if anyone is to suffer for the failure of the solicitor it is better that it be the client than another party to the litigation; secondly, the disgruntled client may in appropriate cases have his remedies in damages or in respect of the wasted costs; thirdly, it seems to me that it would become a charter for the incompetent…were this court to allow almost impossible investigations in apportioning blame between solicitor and counsel on the one hand, or between themselves and their client on the other. The basis of the rule is that orders of the court must be observed and the court is entitled to expect that its officers and counsel who appear before it are more observant of that duty even than the litigant himself..”

In Katib v HMRC [2019] UKUT 189 (TCC) (“Katib”),the UT said at [49] (their emphasis):

“We accept HMRC’s general point that, in most cases, when the FTT is considering an application for permission to make a late appeal, failings by a litigant’s advisers should be regarded as failings of the litigant.”

The UT returned to the same issue at [54], saying:

“It is precisely because of the importance of complying with statutory time limits 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.”

The UT then cited the passage from Hytec set out above, and continued at [56] by concluding that the correct approach in Mr Katib’s case was:

“…to start with the general rule that the failure of Mr Bridger [Mr Katib’s adviser] to advise Mr Katib of the deadlines for making appeals, or to submit timely appeals on Mr Katib’s behalf, is unlikely to amount to a ‘good reason’ for missing those deadlines when considering the second stage of the evaluation required by Martland.”

This was followed by the following comment at [58]:

“…the core of Mr Katib’s complaint is that Mr Bridger was incompetent, did not give proper advice, failed to appeal on time and told Mr Katib that matters were in hand when they were not. In other words, he did not do his job. That core complaint is, unfortunately, not as uncommon as it should be. It may be that the nature of the incompetence is rather more striking, if not spectacular, than one normally sees, but that makes no difference in these circumstances. It cannot be the case that a greater degree of adviser incompetence improves one’s chances of an appeal, either by enabling the client to distance himself from the activity or otherwise.”

In deciding that little weight be given to Mr Katib’s reliance on his adviser, the UT also took into account that Mr Katib should have noticed “warning signs”, including direct contact from HMRC in the form of enforcement action, which “should have alerted him”, and they concluded Mr Katib was “not without responsibility in this story”.

It follows from this case law that the Tribunal should not normally find that a person’s reliance on his adviser provides a good reason for delay. We considered whether the facts of Mr Milhill’s case took him outside that normal range. We noted in particular that this was not a case where all communication was between the agent and HMRC, so that Mr Milhill was left in ignorance, or misled. Instead:

In addition, Mr Milhill did not provide any evidence as to instructions he had given to either Haines Watts or Ms Griffiths to make a timely appeal on his behalf.

We therefore decided that this case could not be distinguished from the normal position, where reliance on an adviser does not provide a good reason for delay.

The final reason given for the delays was that Mr Milhill worked hard, often overseas, and concentrated on those tasks; he was also involved with local organisations, including the cricket club. He repeatedly said in the course of his evidence that he regarded Haines Watts as being responsible for sorting out his tax affairs, because that was the nature of the engagement he had with them; the same was true of Ms Griffiths. In other words, he paid Haines Watts and Ms Griffiths to deal with HMRC so as to leave him free for his other activities.

We agree that this is the key reason for the delay in making the appeals. But it is plainly not a good reason. The decisions in question related to Mr Milhill’s tax returns; he repeatedly failed to ensure that those returns were filed on time, leading to penalties for late filing and late payment; he failed to provide the information required by the Sch 36 Notices, leading to penalties for non-compliance, and when he did belatedly submit his SA returns, they contained errors, leading to closure notice amendments and inaccuracy penalties.

The third stage in the Martland approach is to consider all the circumstances, and then to carry out a balancing exercise.

Significant weight must be placed as a matter of principle on the need for statutory time limits to be respected. This was described as “a matter of particular importance” in Katib;the same point is made in Martland at [46]. In Mr Milhill’s case, most of the delays were over two years, with the longest being eight years. This factor weighs heavily against him.

Parts of the UT’s judgment in Katib were set out earlier in this decision, including their finding at [56] that in the context of the second stage, reliance on advisers “is unlikely to amount to a “good reason” for missing the statutory deadlines. The UT continued in the same paragraph:

“…when considering the third stage of the evaluation required by Martland, we should recognise that exceptions to the general rule are possible and that, if Mr Katib was misled by his advisers, that is a relevant consideration.”

However, the UT then went on to find that, for the same reasons as those relating to the second stage, the behaviour of Mr Katib’s adviser had no “real weight” at the third stage.

The position is the same in Mr Milhill’s case. He has not proved that responsibility for the delays rested solely with Haines Watts and/or Ms Griffiths: instead, he repeatedly emphasised that he expected them to get on with his tax affairs without bothering him or requiring his involvement, and thought it was “unjust” that he was now having to “pay for other people’s mistakes”.

However, Mr Milhill was informed directly of the time limits for almost all of the decisions, and Ms Griffiths was informed of the others. Mr Milhill had a responsibility to read those letters and ensure that they were actioned, rather than simply leaving matters to his advisers.

The UT said in Martland thatthere is “much greater prejudice for an applicant to lose the opportunity of putting forward a really strong case than a very weak one”, and added that the Tribunal should not “descend into a detailed analysis of the underlying merits of the appeal” but instead “form a general impression of its strength or weakness to weigh in the balance”.

Mr Milhill’s position on the merits was as follows:

We find that Mr Milhill has not shown that the merits of his case were “overwhelmingly in his favour”, as the UT put it in Martland, because:

Taking into account all the above, we place no weight on the merits when conducting the balancing exercise.

If Mr Milhill fails to obtain permission to appeal, the HMRC decisions he is now seeking to challenge will become final, so he will owe HMRC £875,623 plus interest. That is however an inevitable consequence of losing the opportunity to challenge an HMRC decision at the Tribunal, and we accord it little weight.

In addition, the bankruptcy proceedings will recommence. While that is plainly a serious matter, it is also a consequence of the exceedingly long delays in this case. It would be unfair to give this factor significant weight, because it would advantage those who, like Mr Milhill, leave it to the very last minute to seek permission to challenge a HMRC decision, compared to other applicants who apply to the Tribunal well before they are facing enforcement proceedings in the High Court.

If this application were to be allowed, the hearing of the appeals would take significant time: there are multiple issues extending over many years. Organising those appeals will take the time of tribunal staff, and the historic nature of the issues means that this is likely to take longer than if the appeals had been made by the statutory time limits. That time would otherwise be spent on the appeals of other Tribunal users, who have complied with the statutory requirements.

If permission were to be given, HMRC would have to divert resource to prepare for the appeals and attend a lengthy hearing. Those resources could be used to ensure that other taxpayers are paying the correct amount of tax.

One of the factors on which the Tribunal must place particular weight is that litigation is to be conducted efficiently and at proportionate cost, see Martland at [44] cited above. Given that these HMRC decisions relate to periods between 2014 and 2019, and the decisions were made in 2020 and 2021, requiring HMRC to litigate those decisions so many years later will increase the prejudice they will suffer were permission to be given. In particular, it will be more time consuming to gather all the relevant evidence.

Once the circumstances have been identified, they must be balanced.

In doing so, we are required by Denton and Martland to place particular weight on (a) enforcing compliance with statutory time limits and (b) the need for litigation to be conducted efficiently and at proportionate cost. In relation to the former, Mr Milhill failed to comply with the statutory provisions setting a 30-day time limit: most of the delays were over two years, and so were plainly serious and significant; there was no good reason for any of those delays. In relation to the latter, the long delays in this case mean that it will be more difficult to gather the evidence. In addition, there is prejudice to HMRC and to appellants in other cases for the reasons set out above.

On the other side of the scales is the prejudice to Mr Milhill if he loses this opportunity of appealing to the Tribunal because he will have to pay the tax and penalties, and his bankruptcy proceedings will recommence.

There is no doubt that those factors are significantly outweighed by those on the other side of the scales, and permission to appeal late is therefore refused.

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.