The Commissioners for HMRC v MedPro Healthcare Limited & Ors

Where legislation requires an appeal within a specified period but permits the tribunal to grant permission out of time, the Upper Tribunal may give the First-tier Tribunal structured guidance on exercising that discretion. The guidance may identify factors deserving significant weight, including compliance with statutory time limits, efficient conduct and proportionate cost, provided it remains guidance and allows departure for sound reasons or special circumstances. The three-stage approach in Martland, as amplified in Katib, is appropriate for VAT appeals. The power is procedural and analogous to relief from sanctions and extensions of time to appeal. It differs from limitation-style powers permitting late commencement of private claims.

HMRC issued assessments, penalties and personal liability notices after investigating MedPro’s business. Three VAT appeals were notified to the First-tier Tribunal more than 30 days after review-conclusion letters, and the First-tier Tribunal refused an extension of time.

The Upper Tribunal allowed the respondents’ appeal on four grounds and remitted the matter, but divided on whether the Upper Tribunal could lawfully give guidance under section 83G(6) of the VAT Act 1994 which attached particular weight to specified factors. The Upper Tribunal’s decision was reported at [2025] UKUT 255 (TCC) and [2025] STC 1343. HMRC appealed on that issue only. The central questions were whether the discretion was procedural or substantive and whether the guidance impermissibly fettered it.

Disposition

The appeal was allowed unanimously. The point raised in the respondents’ notice was rejected. The application for permission to appeal out of time was to be remitted to the First-tier Tribunal, which was directed to proceed on the basis that the Martland guidance, as amplified by Katib, was appropriate.

1. Power to give guidance. The Upper Tribunal is a superior court of record and may develop structured guidance for the First-tier Tribunal to promote consistency in a specialist jurisdiction. That includes guidance on the weight to be given to relevant factors. The power exists even where the statutory discretion appears unfettered and the tribunal rules are silent. The approach was supported by R (Jones) v First Tier Tribunal [2013] UKSC 19, BPP Holdings Ltd v HMRC [2017] UKSC 55 and [2016] EWCA Civ 121, and the costs authorities R (Perinpanathan) v City of Westminster Magistrates’ Court [2010] EWCA Civ 40 and Competition and Market Authority v Flynn Pharma Ltd [2022] UKSC 14.
2. Nature of the power. Section 83G(6) of the VAT Act 1994, read with rule 20(4) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, forms part of the procedural process for bringing a VAT appeal before the tribunal. It is analogous to relief from sanctions and extensions of time to appeal. The fact that permission opens the gateway to an appeal does not make the power substantive.
3. Applicable approach. The three stages in Martland are appropriate: establish the length of delay; establish the reason or reasons for default; and evaluate all the circumstances, balancing the merits of the reasons against prejudice to both parties. The exercise must give significant weight to efficient litigation at proportionate cost and respect for statutory time limits. A statutory deadline is not merely a target date.
4. No impermissible fetter. Guidance remains guidance. The First-tier Tribunal may depart from it where it gives sound reasons, including where special circumstances justify doing so. The distinction between a discretion created by primary legislation and one created by secondary legislation makes no difference. The guidance in Martland, as amplified in Katib, was therefore permissible and appropriate.

• Court of Appeal (Civil Division) — In [2026] EWCA Civ 14, the appeal was allowed and the application was remitted to the First-tier Tribunal.
• Upper Tribunal (Tax and Chancery Chamber) — In [2025] UKUT 255 (TCC), also reported at [2025] STC 1343, the respondents’ appeal was allowed on four grounds and the matter was remitted. The judges divided on Ground 4; Mr Justice Marcus Smith’s view prevailed on his casting vote.
• First-tier Tribunal — The First-tier Tribunal refused the respondents’ applications for permission to appeal out of time.