Tajinder Pawar v The Commissioners for HMRC

This is an appeal against a decision of the First-tier Tribunal (Tax Chamber) (“FTT”) in Tajinder Singh Pawar v HMRC [2023] UKFTT 81 (TC) (“FTT Decision”). The FTT Decision concerned the Appellant’s application for permission to bring a late appeal against an HMRC review decision of 19 November 2018 that had upheld a Penalty Liability Notice made by HMRC on 5 October 2017 under paragraph 19(1) of Schedule 24 Finance Act 2007 (“PLN”).

The PLN made Mr Pawar personally liable for 100% of a penalty totalling £874,238, which HMRC had imposed on First Stop Wholesale Limited (“the Company”), a company of which Mr Pawar was a director and shareholder, in respect of errors in the Company’s VAT returns.

Mr Pawar sought to appeal the PLN on 22 February 2022, which it was common ground was 3 years and 2 months after the 30 day statutory deadline for appealing against HMRC’s review decision. The FTT, having considered whether to exercise its discretion to permit the appeal to proceed out of time using the three stage approach suggested by the Upper Tribunal in Martland v HMRC [2018] UKUT 178 (TCC),dismissed Mr Pawar’s late appeal application.

With the permission of the Upper Tribunal, Mr Pawar now appeals on the grounds that the FTT erred in law by failing to take into account relevant factors, or by misapplying the relevant legal principles in exercising its discretion to refuse permission for the late appeal to be brought.

In their submissions to us the parties referred to the then forthcoming decision of the Upper Tribunal in Medpro HealthcareLtd andKalvinder Ruprai v HMRC [2025] UKUT 00255 (TCC) (“Medpro UT”), which was released on 30 July 2025. We invited the parties to make submissions on the effect of that decision on the present appeal and in the light of the decision and those submissions we have decided that we should set aside and remake the FTT's decision in the case before us. Our decision is to refuse permission for a late appeal.

There is no challenge to the basic factual background which the FTT derived from the documentary evidence before it, which included correspondence between the parties, notices and assessments, and notes of meetings. In this section we set out those of the facts necessary to help understand the Appellant’s grounds before us. Unless otherwise stated the paragraph numbering refers to that in the FTT Decision.

The FTT found that on 24 September 2014, HMRC assessed the Company to VAT in the sum of £2,642,141 in respect of various VAT accounting periods between 1 June 2010 and 28 February 2014. On 9 January 2015, HMRC issued a penalty assessment to the Company in the sum of £1,256,490.91 which the Company appealed against to the FTT. On 3 February 2015, HMRC issued Mr Pawar with a PLN in the sum of £1,256,490.91, representing 100% of the penalty ([8] to [11]).

HMRC also issued an inaccuracy penalty in relation to the Company’s corporation tax return which the Company appealed to the FTT against. A PLN was also issued in respect of the corporation tax penalty, although the FTT noted the material before it in relation to corporation tax position being “sketchy in the extreme” ([11], [16] and [78]).

The FTT found that much of the VAT assessment, the penalty imposed on the Company, and therefore the PLN, arose from the disallowance of input tax claimed by the Company on invoices addressed not to it, but to Mr Pawar’s sole proprietorship (“the Wine Lodge”), which was VAT registered. The corporation tax liabilities were based on essentially the same VAT investigation by HMRC ([12]). The Appellant had arranged for the Company to make payments on invoices addressed to “The Wine Lodge” in order to benefit from supplier discounts available under his sole proprietor account. He claimed that the goods were actually sold by the Company (which accounted for output tax on the sale) and that he had only acted as agent or nominee in purchasing them ([12]).

As explained by the FTT (at [12]):

“…The Appellant claimed that the goods were actually sold by [the Company] (which accounted for output tax on the sale) and he had only acted as agent or nominee in purchasing them, which was why [the Company] (and not he) had claimed the input tax on their purchase.”

HMRC accepted that Mr Pawar could reclaim the input VAT under his own registration, provided he issued sales invoices to the Company ([15]).

The FTT explained (at [13]) that the Appellant’s then accountants had referred in correspondence to a proposal that Mr Pawar would:

“claim the invoices as mentioned on [Mr Pawar’s] personal VAT reference and raise a notional sales invoice to [the Company] for each quarter to the value of £1 in order to meet the requirement that goods purchased for reclaiming VAT must also have a corresponding sale.”

HMRC responded on 12 March 2015 confirming (as set out at [15]) that:

“due to the large number of invoices involved, we will exceptionally agree to your proposal to raise a notional sales invoice for each period to [the Company] in order to achieve a tax neutral position. In order for us to deal with your client’s claim you may submit a voluntary disclosure i.e. notification to us in writing of the adjustments you have made in relation to the input tax and copies of the corresponding notional sales invoices. Please note that as there is no tax loss, the interest charged on the original assessment that was issued to [the Company] will be inhibited.” 

The FTT also recorded (at [17]) that it had been pointed out “at an early stage” that the proposal needed to be implemented within a statutory four year time limit. (This ran from the relevant VAT periods and there is no dispute that by the time the FTT heard the late appeal application the time for this “corrective action” had long expired).

As will be seen, the Appellant’s grounds before us highlight HMRC’s agreement to the corrective action (the proposal that input tax credit would be claimed in Mr Pawar’s VAT with a notional invoice from Mr Pawar to the Company for the supply of goods for consideration of £1) “in order to achieve a tax neutral position”. The Appellant also emphasises that HMRC had noted there to be “no tax loss” (though, as we explain below, the corrective action was never taken).

Mr Pawar instructed new accountants, Grant Thornton, to act for him personally. The Company went into liquidation shortly afterwards but discussions between Grant Thornton and HMRC continued as to the proposed “corrective action” ([19] and [20]). In June 2016 Grant Thornton prepared 33 pages of schedules, summaries and diagrams covering VAT periods from 08/10 to 08/12 only. A meeting took place between HMRC and Grant Thornton in that month (at [20]).

Grant Thornton concluded that £516,087.06 of input VAT was “proper” to the Appellant’s personal VAT registration (HMRC had assessed £667,966 in respect of those periods), though the FTT noted that Grant Thornton’s analysis did not cover periods after 08/12 (at [22]). It was not clearly explained to the FTT why Grant Thornton’s work did not cover subsequent periods. The tribunal noted that for the two subsequent periods 11/12 and 02/13 HMRC had raised assessments totalling £676,859 and penalties totalling £470,604.33 which amounted to more than half of the total penalties subsequently comprised in the PLN which the Appellant seeks permission to appeal ([22]).

The FTT recorded, in relation to the meeting in June 2016 that “it appeared that discussions were constructive but “credible evidence” was required to back up the information that had been presented” ([20]). It was not clear to the FTT what happened after that meeting; so far as the Appellant was concerned the next event was on 5 October 2017, when HMRC issued a revised PLN to him, reducing the penalty amount to £874,238 (at [24]–[30]).

The FTT noted that the revised PLN included a section outlining the options of review or appeal ([30]). Discussion of the PLN took place in correspondence between Mr Pawar and HMRC in October and November 2017 (at [31]-[34]).

Mr Pawar subsequently instructed a new adviser, Mr Christopher Mann of Tiberius Solutions Ltd, and discussions with HMRC continued through 2018, including a face-to-face meeting on 15 March 2018 at which it was agreed that the Appellant and Mr Mann would go away to discuss the quantum of the assessment and revert to HMRC ([36]). Between April and June 2018 Mr Mann raised issues concerning the lawfulness of the penalty, which he said was a more pressing issue, and added that the exercise of reviewing the assessment had not been started ([38-40]) The FTT found that by August 2018 the parties had “taken up entrenched positions” ([42]). However, HMRC agreed to carry out a statutory review of the decision to impose the PLN ([43]).

A review conclusion letter upholding the PLN was issued to the Appellant on 19 November 2018; it upheld HMRC’s earlier decision in full and concluded with a section referring to the possibility of an appeal to the tribunal and the 30-day deadline for doing so (at [44]–[45]). (This is the decision in respect of which the FTT refused permission for a late appeal; the subject of the appeal before us.) The letter also indicated in an earlier section that responsibility for the matter had reverted to the previous HMRC officer (a passage which Mr Mann later seized on when writing to HMRC on 1 May 2019).

The FTT then summarised the events from 19 November 2018 (when the PLN was notified to Mr Pawar) through to 22 February 2022 (when the appeal was eventually notified by him to the FTT ([46]–[51]).

The only evidence before the FTT of communication between Mr Mann and HMRC in this period consisted of an email dated 1 May 2019 in which Mr Mann wrote to officer Joanne Jones of HMRC stating:

“further to the 19 November 2019 letter which stated that the responsibility for this matter had reverted back to you. Our client is still waiting to hear from you regarding the next steps available for resolving this matter.”

On 30 May 2019, the Company’s liquidators confirmed the Company’s withdrawal of the Company’s appeals, following which it appears the PLN was released for collection. The FTT noted that Mr Pawar replied to HMRC letters of 12 December 2019 and 12 March 2020 warning of possible bankruptcy proceedings and referred to a phone call made by him to HMRC on 17 April 2020 which it accepted “at least show[ed] some further engagement by the Appellant” at that time. In May 2021 a different HMRC officer invited the Appellant to contact her to discuss the matter, but there was no evidence before the FTT of any response from the Appellant ([49]).

The next piece of evidence before the FTT was of the issue of a statutory demand dated 24 January 2022 addressed to the Appellant for the recovery of over £1.1 million in respect of various tax liabilities (which the FTT presumed included the £874,238 from the October 2017 PLN) ([50]). There followed “a flurry of activity” including the submission of the late appeal to the FTT on 22 February 2022 ([51]).

The oral hearing in relation to Mr Pawar’s late PLN appeal application took place before the FTT on 6 January 2023.

It was agreed before the FTT that s83G(6) Value Added Tax Act 1994 gave the FTT the discretion to give permission for the appeal to be made outside the 30 day time limit, and that in exercising that discretion the FTT should apply the three-stage test set out in Martland v HMRC [2018] UKUT 178 (TCC). That required the FTT, in summary, to 1) establish the length of the delay and whether it was serious and significant, 2) establish the reasons for the default, and 3) evaluate all the circumstances of the case, which involved balancing the merits of the reason given for the delay, and any prejudice in granting or refusing the application, taking 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.

In relation to Stage 1, the FTT found the delay was approximately 38 months ([65]).

In relation to Stage 2, the FTT recorded the Appellant’s argument that he had relied on his advisers, particularly Mr Mann, and had not been advised of the need to appeal the review conclusion. He believed an agreement in principle had been reached in March 2015 and only needed implementation ([54]).

The FTT recorded (at [61]) HMRC’s response, citing the Upper Tribunal’s comment in HMRC v Katib [2019] 0189 UKUT (TCC) at [54] of that decision that:

“…failures by a litigant’s adviser should generally be treated as failures by a litigant.”

The FTT accepted that the Appellant had not been specifically advised by Mr Mann of the need to notify the appeal to the FTT, stating (at [67]):

“No doubt, if he had been advised of the crucial need for this, an appeal would have been duly notified.”

The FTT also accepted that the Appellant believed a settlement had been agreed in principle. However, it rejected the argument that the need to appeal was unclear or that HMRC was at fault. The tribunal found that while HMRC may have contributed to a “muddle,” this ceased to be relevant once the review conclusion letter was issued in November 2018, which “brought clarity to HMRC’s position.” ([68]).

The FTT went on to conclude in that paragraph that the main reason for the delay was the Appellant’s:

“…wilful disregard (in the hope that the matter would simply “go away” if it were ignored), inattention, or an assumption that it would all be sorted out satisfactorily without further involvement on his part.”

In relation to Stage 3, the FTT set out its evaluation all the circumstances in the section of its decision at [69] through to [79].

It did so having earlier recorded the Appellant’s submissions that HMRC had recognised the PLN was excessive, that the amount would likely force him into bankruptcy, and that since the corporation tax PLN was still in time to be appealed and arose from the same facts, there was no prejudice to HMRC in addressing the VAT PLN appeal (at [55]).

Given the focus of the Appellant’s challenge to the FTT Decision on the FTT’s analysis at Stage 3, and it is a matter of dispute exactly what the FTT’s reasoning covered, it is helpful to see this part of the FTT Decision in full. Under the heading “Stage 3 – overall evaluation” the FTT explained:

“69.

I turn now to my overall evaluation of the circumstances of the case, balancing the merits of the reasons for the delay with the overall prejudice caused to the parties by granting or refusing permission. In doing so, I 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.

70.

I do not find any of the reasons for the delay set out above to have any significant merit, for the following reasons.

71.

Having been issued personally with a review conclusion letter which clearly stated HMRC’s position after the lengthy history and which specifically advised the Appellant of the need to appeal to the Tribunal within 30 days if he disagreed, there would need to be a good reason why it was appropriate for the Appellant effectively to ignore this deadline.

72.

There was no evidence before us as to any interaction between the Appellant and his then adviser in relation to HMRC’s review conclusion letter. It is not known whether he even spoke to his adviser about it. The review conclusion letter contained a clear statement of the Appellant’s appeal rights if he disagreed with the conclusion. I do not consider that the Appellant can fairly claim that his adviser’s failure to tell him he should appeal can be relied on as giving him a good reason for not doing so, even without regard to the Upper Tribunal’s statements in Katib set out at [61] above.

73.

I reject any suggestion that wilful disregard or inattention good [sic] be regarded as good reasons for delay on the Appellant’s part.

74.

That leaves the question of whether an assumption on the part of the Appellant that matters would all be sorted out satisfactorily without his further involvement can be regarded as constituting a good reason for the delay on his part in notifying his appeal.

75.

This reason must be considered against the background of what steps the Appellant actually took in response to the review conclusion letter of November 2018. On the evidence before me, there was precisely no action taken by him or on his behalf until 1 May 2019, at which point there was one very short email from his adviser which sought to put the ball back in HMRC’s court in terms of progressing matters, when in fact it was squarely in the Appellant’s court (having been there since at least December 2015, as confirmed by HMRC as recently as June 2018). Nor did the Appellant or his adviser follow up that email when no substantive reply was received (whether or not, as HMRC denied, the email ever reached officer Jones).

76.

Obviously an evaluation of the overall circumstances of the case requires consideration of the prejudice potentially suffered by both parties as a result of the granting or denying of permission.

77.

Mr McNall argued that the prejudice to the Appellant if permission were denied would be extreme. He would likely be made bankrupt, and he would lose the chance to dispute a penalty liability of nearly £875,000 when there were strong indications in the history of the matter that this would be significantly more than the amount that might be justified after proper investigation. He would also lose the opportunity to argue that the “reduced” PLN was technically invalid.

78.

So far as HMRC are concerned, the prejudice if permission were granted for a late appeal would be that they would have to devote resources to re-examining matters that they had long considered closed, in a situation where the Appellant had not availed himself for a period of several years of the opportunities that had been offered to him to make good his claims as to the massively exaggerated size of the penalties. It is said that HMRC will be required to examine effectively the same matters in any event in connection with a corporation tax penalty PLN which is also outstanding against the Appellant, in relation to which it is said he can still notify an “in time” appeal to the Tribunal. Whether or not that is the case, the material before me in relation to the corporation tax position was sketchy in the extreme, and in the circumstances I do not feel this factor can carry significant weight in my overall evaluation.

79.

It is clear that the prejudice to the Appellant if permission is refused will potentially be very great. But this is common to all such cases. Given (a) that permission should not be granted unless the Appellant discharges the burden of satisfying the Tribunal that it should be, (b) the particular importance of the need for statutory time limits to be respected, and (c) what I consider to be the lack of any good reason for the delay, the balancing exercise I am required to carry out clearly militates against granting permission.”

Following the oral hearing of the late appeal in relation to the VAT PLN, Mr Pawar’s appeal against the corporation tax PLN was filed on 17 February 2023. On 4 June 2024, HMRC gave notice to the First-tier Tribunal that they were withdrawing from the corporation tax PLN appeal (in other words that they were no longer resisting the appeal).

The Appellant was granted permission by the Upper Tribunal (Judge Cannan) to advance three specified grounds. These are that the FTT failed to take account of various factors which individually or together would have weighed heavily in favour of granting the application, namely:

In relation to Ground 1 Judge Cannan mentioned that Mr Pawar also sought to rely on the fact that HMRC had withdrawn from resisting an appeal relating to the corporation tax PLN, which was based in effect on the same inaccuracy. He observed that this was “a new fact which was not available to the FTT” as it had post-dated the FTT’s decision. Judge Cannan considered it arguable that it was a relevant factor but made it clear that the issue of whether Mr Pawar should be granted permission to rely on new evidence was a matter for this tribunal.

We bear in mind that we can only interfere with the FTT’s decision if we find that it involved an error of law. Before moving on to address the suggested errors of law, we note that Mr Bedenham KC, who appeared alongside Mr McNall for the Appellant, helpfully clarified that the Appellant’s case was put in terms of the FTT failing to take account of relevant factors as opposed to a challenge to the particular weight put on them by the FTT when balancing the factors. (As explained by the Upper Tribunal in WM Morrison Supermarkets PLC v HMRC [2023] UKUT 20 (TCC) at [45], a challenge to the evaluation or balancing of the factors would only amount to an error of law if perverse and that is not a challenge the Appellant brings, or has permission to bring).

As we have indicated at [5] above we have decided to set aside and remake the FTT’s decision in consequence of the Upper Tribunal's subsequent decision in Medpro UT. We consider that we should deal with the original grounds of appeal before turning to the new ground based on Medpro UT.

Under this ground, it is argued that the FTT erred by failing to take into account two key matters: (1) that there had (as HMRC had accepted) been no loss of tax and, moreover, “corrective action” could have been taken to regularise the VAT position by re-routing the VAT supplies so as to accord with the VAT returns; and (2) the strength of Mr Pawar’s appeal, particularly in view of the availability and effect of such corrective action. Mr Bedenham accepted that there was some overlap between the two limbs of this ground; his submission was that in the light of the first limb any inaccuracy in the returns could not be characterised as “deliberate” so as to justify a PLN.

His written and oral submissions emphasised that the FTT had erred in failing even to consider the merits of Mr Pawar’s appeal as part of the stage three balancing exercise. The appeal had obvious strength in that the burden would be on HMRC to prove that the inaccuracy in the Company’s VAT return was “deliberate”. That was front and centre of the question of the merits of Mr Pawar’s claim. The relevant legislative provision (paragraph 19(1) of schedule 24 to the Finance Act 2007) applies “Where a penalty under paragraph 1 [the inaccuracy penalty] is payable by a company for a deliberate inaccuracy which was attributable to an officer of the company …”. The legislation makes it clear that the officer’s liability only arises where the relevant inaccuracy is a deliberate inaccuracy attributable to the officer.

Mr Bedenham complains that the FTT did not even refer to these provisions, as might have been expected given their central importance to any assessment of the merits of the dispute. That the Appellant’s case was strong was revealed by the inconsistency in HMRC’s position between their acceptance that there had been no loss of tax and that corrective action could be taken, while on the other, maintaining that the inaccuracies were deliberate on Mr Pawar’s part. He also argued that the logical inference from HMRC having withdrawn from the corporation tax penalty was that HMRC could not meet the burden of proof on the balance of probabilities, and that the same reasoning should apply to the VAT penalty. HMRC submit the FTT did consider the merits appropriately and without error. It also did consider specifically the Appellant’s arguments regarding the corrective action. It rejected those arguments as a good reason for the delay (at [70] and [74] to [75] of the FTT Decision). The corrective action was dependent on the provision of further information and that information was not provided. HMRC submit that by rejecting the “corrective action” argument as a good reason for the delay the FTT was plainly also rejecting the point that the possibility of corrective action meant the Appellant’s case had strength. No deal on corrective active could have been reached when the information the deal was dependent on had not been provided.

As regards the relevant legal principles, there is no dispute that the obvious strength of the underlying appeal in respect of which the application to bring a late appeal is something which can properly be taken into account at Stage 3 of Martland (as is clear from [44] et seq of that decision which in turn cited R (oao) Hysaj v SSHD [2014] EWCA Civ 1633, which the FTT referred to at [52])).

It is worth recalling the further guidance the Upper Tribunal in Martland gave at [46] of that decision (also referred to by the FTT at [52]) that in taking account of all relevant factors: “the FTT can have regard to any obvious strength or weakness of the applicant’s case…” noting that “..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”.

The Upper Tribunal cautioned that “It is important however that this should not descend into a detailed analysis of the underlying merits of the appeal”. The UT quoted from Moore-Bick LJ’s judgment in Hysaj which explained that it was:

“…only in those cases where the court can see without much investigation that the grounds of appeal are either very strong or very weak will the merits have a significant part to play when it comes to balancing the various factors that have to be considered at stage three of the process. In most cases the court should decline to embark on an investigation of the merits and firmly discourage argument directed to them”.

The FTT was thus not required to conduct a detailed merits assessment but to consider whether the merits were obviously strong or obviously weak.

It is true the FTT did not explicitly say it had evaluated the merits of the case. Nevertheless, from the wider context of the decision, the FTT’s self-direction by reference to the extracts from Martland quoting Hysaj, and its summary of the parties’ arguments, we are satisfied the FTT had the issue of merits in mind. It had recorded Mr McNall’s submission at [77] regarding the prejudice of losing the chance to dispute a significant penalty liability and similarly recorded HMRC’s submission at [78] (consistent with the Tribunal’s earlier view at [42]) to the effect the merits were weak insofar as the Appellant had not taken advantage of the various opportunities that HMRC had given to make good his claims about the amounts HMRC sought to charge in penalties.

Therefore, to the extent that there was any error, it was the error of failing to state that the FTT was considering the merits rather than a failure to actually consider those.

In seeking to persuade us that the merits were obviously strong, Mr Bedenham focussed on the need for HMRC to show that the inaccuracy was “deliberate” and the supposed inconsistency between that and HMRC’s stance on tax loss and corrective action. The first point we note is that there was nothing to suggest to us that this point was raised before the FTT. It is not referred to in the application for permission (which refers to HMRC’s agreement as to corrective action and the absence of a tax loss, but does not advance an argument that the inaccuracy was not deliberate) nor in Mr McNall’s skeleton argument or in the FTT’s summary of the arguments; and Ms Goldring, who appeared for HMRC before the FTT, told us that the point was not raised there. Given that the Appellant accepted responsibility for the relevant VAT returns, and accepted that they were inaccurate, if he disputed that the inaccuracy was deliberate he might have been expected to say so. Without the point having been expressly raised, it could only be an error of law for the FTT to fail to deal with it if it leapt from the evidence as an obviously significant point.

The only evidence before the FTT as to the Appellant's state of mind in relation to the Company’s VAT returns was contained in a witness statement made by the Appellant in February 2022 in connection with an application to set aside a statutory demand that had been served on him in relation to the PLN.

In that witness statement the Appellant explains that he had a retail business in his own name which had accounts with suppliers on favourable terms and that he placed orders with them on behalf of the Company but in his own name and using his own VAT number. The Company then paid the suppliers directly, benefiting from the favourable terms. He goes on to say that he believed the Company's tax affairs were in good order and that the VAT assessments and penalty came as a complete surprise to him, and refers to it “subsequently transpiring” that the procedure he had followed was incorrect.

As regards the meaning of the term “deliberate inaccuracy”, Mr Bedenham referred us to the decision of the Supreme Court in HMRC v Tooth [2021] UKSC 17, in which the Court concluded (at [47]) that “for there to be a deliberate inaccuracy in a document … there will have to be demonstrated an intention to mislead the Revenue on the part of the taxpayer as to the truth of the relevant statement”. The relevant question is therefore whether Mr Pawar intended to mislead HMRC by claiming input tax on invoices that were in his own name but which he was treating as the Company’s input tax. His witness statement is at best unspecific on this.

The fact that an inaccuracy could be corrected does not preclude it being deliberate. The fact that the inaccuracy could be cured by re-routing the invoicing would not alter the fact that the returns were inaccurate at the time they were made nor exclude the possibility that the Appellant knew this and that the inaccuracy was deliberate.

Moreover, as Ms Goldring pointed out, HMRC made clear they did not accept the evidence in the Appellant’s witness statement. Following receipt of the Appellant’s skeleton argument on 3 January 2023, HMRC had, on 4 January 2023, e-mailed the FTT (copying the Appellant) stating that they did not accept the evidence.

None of the above accordingly points to Mr Pawar having a case that was obviously strong. Much would depend on what the FTT hearing any substantive appeal would make of his evidence. It is difficult however to see how the FTT could have got any further in its analysis than it did, even with detailed investigation, and if it were to do so it would be going against the established case-law guidance not to do precisely that.

There was also, in our view, no error arising in relation to a failure to consider the relevance of HMRC having previously agreed to corrective action.

As discussed above (see [14]) there was no question of the corrective action being directly relevant as it was out of time. While the FTT did not consider corrective action in relation to the merits, it cannot be criticised for failing to do so, as the point was not advanced in that context. The corrective action was put forward to support the Appellant having a good reason for the delay and the FTT clearly addressed that (at [54] and [68]).

As for HMRC’s withdrawal of their defence of the corporation tax penalty appeal, Mr Bedenham fairly and correctly accepted that this could not be relevant to whether the FTT had erred in its decision, as the withdrawal occurred after the FTT’s decision. Mr Bedenham clarified the point was raised in advancing the Appellant’s case in the event the FTT’s decision fell to be remade and we accordingly deal with it in that context.

Moreover to the extent any argument was made that the merits were strong because there was “no tax loss” because input tax could have been claimed then that is undermined not only by the fact the four-year time limit that applied for such corrective action to be taken (which the FTT noted at [17]) had expired but also by the findings that Grant Thornton had identified that there were other reasons underlying the disputed amount in respect of which despite Grant Thornton’s disclosure of further detail had not been backed up by “credible evidence” from HMRC’s point of view. Other sums not within scope of the corrective action were therefore clearly in dispute too and there was nothing to suggest the FTT would have been able to determine, without descending into to the detail, which way that dispute should be resolved.

In summary it cannot be said the merits were obviously strong. There was accordingly nothing to suggest that the FTT erred by failing to consider that the merits were obviously strong and we reject the ground of appeal (Any error in the FTT omitting to state that it had considered the merits, would be plainly immaterial to the outcome and would not be a reason by itself to justify setting aside the FTT Decision).