DX Lingajothy t/a Flying Dragon v The Commissioners for HMRC

An application made in time to vary an unless order may, if granted, prevent an automatic strike-out from taking effect. An application made after the deadline cannot have that retrospective effect, and reinstatement is then the appropriate remedy.

When applying the first stage of the Martland approach, the tribunal must assess the underlying breach as well as the breach of the unless order. Material supplied shortly after the deadline may therefore be relevant. An error in omitting it does not justify setting aside the decision unless it could have affected the assessment.

Parties ordinarily identify the issues and file material on which they rely. The tribunal need not search its whole file for unraised material, but must invite submissions before relying on relevant material that a party has not had an opportunity to address.

The appellant challenged discovery assessments, a closure notice and associated penalties concerning the income of a take-away restaurant. Her appeal to the First-tier Tribunal had been automatically struck out after she did not provide a duly signed witness statement by the deadline in an unless order.

On the deadline day, her former representative applied to vary the order and supplied an unsigned witness statement. The First-tier Tribunal later refused reinstatement, applying the three-stage approach to relief from the sanction.

The appellant appealed, contending that the First-tier Tribunal should first have determined, or taken account of, the variation application and should have sought submissions about it.

1. Appeal dismissed. The First-tier Tribunal was entitled to find from its chronology that the variation application was made after the automatic strike-out had taken effect. The appellant had the burden of showing that it was made in time and had not done so.

2. The principle in Everwarm Ltd v BN Rendering Ltd [2019] 4 WLR 107 was accepted as applicable. An in-time application to extend or vary an unless order may be determined after the deadline and, if granted, may operate so that there was no breach. That principle did not assist where the application was out of time. The appeal had therefore been struck out and reinstatement was the only available route. In any event, the First-tier Tribunal was entitled to treat the unmentioned variation application as no longer pursued or abandoned.

3. The First-tier Tribunal erred at the first stage of the Martland approach by concentrating solely on breach of the unless order and not considering the underlying failure to serve witness evidence. The unsigned statement supplied on 8 October 2019 was potentially relevant to that broader inquiry. The error was immaterial. The statement was not served on HMRC until 19 November 2019, the underlying obligation had long remained unmet, and the fourth unless order followed repeated non-compliance with the same obligation. The requirement for a signed statement was also important in the circumstances.

4. The First-tier Tribunal was not obliged to examine its file for potentially relevant documents which the parties had not identified. Represented parties may normally be expected to identify the issues requiring decision and the material on which they rely. If the tribunal proposes to rely on relevant material which a party has not seen or had an opportunity to address, fairness requires it to invite submissions. Here the First-tier Tribunal did not rely on the variation application in its reasoning.

• Upper Tribunal (Tax and Chancery Chamber): dismissed the appeal from the First-tier Tribunal’s refusal to reinstate the underlying tax appeal.
• First-tier Tribunal (Tax Chamber): refused to reinstate the appellant’s appeal after its automatic strike-out for non-compliance with an unless order. No citation was stated.