Alesen Direct Solutions Limited v The Commissioners for HMRC

The statutory VAT hardship inquiry is assessed at the hearing, but earlier events may be considered to identify the real cause of an appellant’s inability to pay. Where the appellant’s own conduct created that inability, the payment requirement may not itself have caused the hardship. An appeal from the First-tier Tribunal must raise a point of law. Permission will ordinarily depend on a realistic prospect of success or, exceptionally, another good reason.

Alesen Direct Solutions Limited sought permission to appeal the First-tier Tribunal’s refusal of its hardship application under section 84(3B) of the Value Added Tax Act 1994. The FTT accepted that Alesen lacked funds at the hearing but found that its own payments to a customer and to a company controlled by the applicant’s director had created that position.

The FTT refused permission to appeal on 28 May 2026. The Upper Tribunal refused the renewed application on the papers and then heard an oral reconsideration. At the hearing, Alesen pursued one ground: that the FTT had assessed hardship by reference to earlier finances rather than the position at the hearing. The central issue was whether the FTT’s approach disclosed an arguable error of law.

1. Permission refused. The Upper Tribunal refused permission to appeal on all grounds. Only one ground was pursued at the oral hearing. An appeal from the FTT lies only on a point of law under section 11 of the Tribunals, Courts and Enforcement Act 2007. Permission requires a realistic prospect of success or, exceptionally, another good reason. The tribunal applied the approach in Smith v Cosworth Casting Processes Ltd [1997] 1 WLR 1538.
2. Hardship is assessed at the hearing. Section 84(3) of the Value Added Tax Act 1994 makes payment or deposit of the disputed VAT the ordinary condition for an appeal to proceed. Subsection (3B) permits relief where that requirement would cause hardship. The relevant position is the position at the hearing, not the application date or an earlier date.
3. Earlier conduct remains relevant to causation. Fixing the assessment date does not require the tribunal to ignore prior events. It may consider whether the appellant’s own actions, including paying away funds or causing delay, were the real cause of its inability to pay. The FTT correctly applied the principles in Revenue and Customs v Elbrook (Cash & Carry) Ltd [2017] UKUT 181 (TCC), as summarised in NT Ada Ltd v HMRC [2019] UKFTT 333 (TC).
4. No arguable error in the findings. The FTT was entitled on the evidence to find that the payments were made after the company knew VAT was payable and were intended to create an appearance of relative impecuniosity. A properly instructed tribunal could reasonably reach that conclusion. The FTT gave sufficient reasons and relied on sufficient evidence; the Upper Tribunal found no arguable error applying Edwards v Bairstow [1956] AC 14.

1. Upper Tribunal (oral reconsideration): refused permission to appeal following an oral hearing on 28 September 2026.
2. Upper Tribunal (paper application): refused permission on 18 August 2026.
3. First-tier Tribunal: refused permission to appeal on 28 May 2026.
4. First-tier Tribunal: refused Alesen’s hardship application on 13 March 2026.