Cook, R (on the application of) v General Commissioners of Income Tax & Anor

An application to admit a tax appeal out of time engages a discretionary balancing exercise. The applicant must address both the existence of a reasonable excuse for missing the statutory time limit and whether the application was made without unreasonable delay after the excuse ended. Relevant considerations include prejudice, finality, the public interest, the quality of available evidence and the merits of the proposed appeal. Even an apparently unanswerable appeal cannot by itself overcome substantial delay and the absence of both statutory conditions. Brief reasons may suffice where, read in context, they identify the principal considerations and explain why the decision was reached.

The claimant challenged the General Commissioners’ refusal to admit late appeals against PAYE and national insurance assessments. The assessments had been issued in 2003, but the claimant did not appeal until February 2005, after bankruptcy proceedings had begun. On remission following an earlier successful judicial review, the Commissioners assumed that the proposed appeals would have merit but found no reasonable excuse for the delay and unreasonable delay in applying out of time. They refused permission. The issues were whether that decision was irrational and whether the Commissioners had given adequate reasons.

1. Judicial review challenge dismissed. The Commissioners’ decision was within the range of reasonable decisions open to them.
2. Section 49(1) of the Taxes Management Act 1970 contains two distinct conditions: there must have been a reasonable excuse for failing to appeal within time, and the application to appeal out of time must have been made without unreasonable delay after the time limit or excuse had ended. The decision remains discretionary and requires the competing considerations to be weighed.
3. The relevant considerations include the reason for the delay, the speed of the subsequent application, prejudice to either party, the public interest in finality and compliance with statutory time limits, the effect on other concluded proceedings, relevant statutory policy, and deterioration in the evidence. The list is not exhaustive.
4. The merits of the proposed appeal are relevant, and may need to be weighed against factors favouring refusal. They are not decisive. The claimant’s assumed success on the merits could not outweigh an 18-month delay, the absence of both statutory conditions, prejudice to HMRC, the public interest in finality, and the claimant’s relevant history of non-compliance.
5. The approach in The Commissioners of Inland Revenue for Judicial Review of a Decision of the General Commissioners of Income Tax (Hugh Love) [2005] CSOH 135 provided valuable guidance and was applied. The approach in Sayers v Clarke Walker [2002] 1 WLR 3095 was consistent with the requirement to weigh prospects of success with other relevant factors.
6. Reasons need identify the principal issues and conclusions sufficiently to permit the parties and a reviewing court to understand the decision and test its legality. Brevity is not objectionable where the reasons are intelligible in context and the claimant cannot show prejudice. The Commissioners’ reference to the assumed merits, the absence of reasonable excuse, and the balance of prejudice was sufficient.
7. The claim against HMRC was not pursued. The claimant was ordered to pay costs assessed at £8,986.

The judgment itself records that an earlier judicial review before Burton J had succeeded because the Commissioners had failed to exercise the statutory discretion and had not considered merits or prejudice. The matter was remitted for rehearing. This judgment dismissed the subsequent challenge to the Commissioners’ rehearing decision.