Medpro Healthcare Limited & Anor v The Commissioners for HMRC

The statutory discretion to extend time for an appeal under Value Added Tax Act 1994, section 83G(6), is broad and must be exercised judicially. The three-stage approach in Martland v HMRC requires the tribunal to identify the delay, establish the reasons for it and balance all the circumstances. The tribunal must identify the relevant factors and explain their weight. A general rule that adviser failures are ordinarily treated as failures by the taxpayer does not remove the need to consider whether the particular facts justify a departure. Adequate reasons must enable the parties and an appellate tribunal to understand how the decision was reached. The Upper Tribunal divided on whether the additional weighting given to compliance and procedural efficiency in the Martland approach was permissible under section 83G(6), but the appeal was allowed and remitted.

The First-tier Tribunal refused three applications for permission to appeal HMRC penalty and personal liability decisions out of time. One appeal was 70 days late; two were 5 months and 17 days late. The applications relied in part on the ill-health of the second appellant and failures by his professional adviser.

The FTT referred to Martland v HMRC and HMRC v Katib, but its dispositive reasoning was brief. The appellants challenged the decision on inadequate reasons, failure to undertake the required balancing exercise, misapplication of the adviser-failure rule and the correctness of the Martland approach itself.

1. The appeals were allowed on all four grounds. The FTT’s reasons did not show how it exercised the broad discretion under Value Added Tax Act 1994, section 83G(6). It identified the delay and the adviser’s failure, but did not identify all relevant factors, explain their weight or demonstrate a balancing exercise.

2. The FTT was required to apply the structured approach in Martland v HMRC. Stage 2 required it to establish the reasons for default, not merely recite the factual background. That was necessary to enable a meaningful Stage 3 assessment of all the circumstances.

3. The general rule in HMRC v Katib, that an adviser’s failure will generally be treated as the taxpayer’s failure, is guidance rather than an inflexible rule. The FTT had to consider whether the facts justified a departure from it and explain the weight given to the adviser’s conduct and the taxpayer’s ill-health.

4. A failure to give adequate reasons is a free-standing error of law. The appellate tribunal may examine the wider context to see whether the reasons are apparent, but it must not effectively remake a discretionary decision on evidence and submissions not addressed by the tribunal below.

5. The court unanimously considered the three-stage structure in Martland apt. On the further question whether the approach impermissibly gave ex ante additional weight to compliance and efficiency, Marcus Smith J would allow the challenge, while Judge Cannan would dismiss it on grounds of judicial comity. Marcus Smith J’s view prevailed by his casting vote.

6. The appeals were remitted to the FTT for rehearing by a differently constituted tribunal. The President of the FTT was to determine the constitution.

• Upper Tribunal (Tax and Chancery Chamber) — [2025] UKUT 255 (TCC): appeal allowed on all grounds and remitted to a differently constituted FTT.
• First-tier Tribunal (Tax Chamber) — decision dated 30 October 2023: permission to bring the three late appeals refused.