Rytis Makvicius v The Commissioners for HMRC

Permission to appeal against a refusal to admit a late appeal should be granted only where, after considering the length and reasons for delay, all the circumstances justify doing so. The tribunal may consider obvious strengths or weaknesses in the underlying case, but should not conduct a detailed merits analysis.

Serious and unexplained delay, the importance of respecting statutory time limits, and the need for efficient and proportionate litigation may outweigh a merely arguable case or personal financial hardship. Statutory penalties cannot be treated as an unlawful windfall merely because they are severe in an individual case.

The applicant sought permission to appeal against a decision of the First-tier Tribunal (Tax Chamber), released on 4 August 2023. The FTT had refused to admit his appeal out of time against HMRC’s assessment of excise duty and a penalty following the seizure of concealed hand-rolling tobacco.

The FTT found that the delay was more than three years, or, on the applicant’s alternative case, still serious and substantial. It also considered the underlying case very weak. The FTT and the Upper Tribunal had refused permission on paper. The present hearing concerned the renewed oral application and whether the proposed grounds disclosed an arguable error of law.

1. Permission refused. The applicant failed to show that the FTT had exceeded the generous margin of case-management discretion available when deciding whether to admit a late appeal.
2. The governing approach, derived from Martland, requires the tribunal to consider: the length of the delay; the reasons for it; and all the circumstances, including the merits of those reasons and the prejudice caused by granting or refusing permission. The balancing exercise must recognise the importance of efficient litigation, proportionate costs and compliance with statutory time limits. It is an evaluative exercise, not a checklist.
3. The FTT was entitled to consider obvious strengths or weaknesses in the proposed appeal as part of its assessment of prejudice. That did not require a detailed analysis of the underlying merits. The FTT’s conclusion that the case was weak was open to it, particularly because the HMRC evidence had not been challenged.
4. In view of the serious and unexplained delay, the obvious merits of the proposed appeal would have needed to be substantially more than merely arguable. The FTT’s reference to a compelling case conveyed that meaning and did not impose an excessive legal threshold.
5. The proportionality ground disclosed no arguable error. The applicable principles require penalties not to exceed what is strictly necessary and not to be disproportionate to the gravity of the infringement: Paraskevas Louloudakis v Elliniko Dimosio [2001] ECR I-5547. Courts and tribunals must also show substantial deference to Parliament’s penalty scheme and must not substitute their own view of fairness: HMRC v Trinity Mirror Group PLC [2015] UKUT 0421 (TCC).
6. The penalties were prescribed by statute. Although they might have been reduced if the appeal had been admitted and special circumstances established, the FTT had found no basis for such a conclusion. Financial hardship and inability to pay did not provide a good reason for the delay or outweigh the other factors: Katib was treated as making that clear.

• Upper Tribunal (Tax and Chancery Chamber): permission to appeal refused. The FTT’s refusal to admit the late appeal was within its case-management discretion.
• First-tier Tribunal (Tax Chamber): refused the application to appeal out of time in a decision released on 4 August 2023. The FTT subsequently refused permission to appeal on 20 October 2023.