Judgment summary
This decision concerns six related VAT appeals arising from an HMRC investigation into three connected companies, one of which was the First Appellant, 247 Jobline Limited. All six appeals were struck out by the Tribunal in April 2024 for non-compliance with directions and Unless orders (paras 3, 60).
About ten months later, in March 2025, the First Appellant and the Second Appellant, Mr Maaz Mohiuddin, applied to reinstate three of those appeals (paras 4, 70-71). Separately, Mr Mohiuddin applied to bring a late appeal against a third Personal Liability Notice, 1,030 days (just under two years and ten months) after the deadline (paras 5, 120).
The Tribunal applied the tests in Chappell v The Pension Regulator [2019] UKUT 209 (TCC) and Martland v HMRC [2018] UKUT 178 (TCC) to both types of application and refused all of them (paras 6, 129).
Background
HMRC investigated three related companies in 2021 and 2022. At the relevant time the Second Appellant, Mr Mohiuddin, was the sole director of two of the companies, including the First Appellant, 247 Jobline Limited, and his brother was director of the third (para 2).
During the investigation HMRC dealt with a person who held himself out to be the Second Appellant, and whom HMRC believed to be him. HMRC concluded there was a loss of tax, deregistered the companies for VAT, raised VAT assessments, and issued Section 69C VATA 1994 penalties to each company, together with Personal Liability Notices (PLNs) to the Second Appellant under Section 69D VATA 1994 (paras 2, 33-40).
Six appeals were filed with the Tribunal in 2022, including one by the First Appellant against its Section 69C penalty and two by the Second Appellant against two PLNs (para 3). The appellants failed to comply with Tribunal directions and subsequent Unless orders, and all six appeals were struck out automatically, three on 14 February 2024 and three on 23 April 2024, confirmed to the parties on 5 March 2024 and 10 May 2024 respectively (paras 59-61).
The Second Appellant later told HMRC and the Tribunal that he had had no interaction with HMRC and no knowledge of the Tribunal proceedings, and that he had been impersonated throughout by his brother, MU (para 4). Reinstatement applications were filed on 5 March 2025 and amended on 10 March 2025, and a late appeal against a third PLN was filed on 14 March 2025 (paras 4-5).
Core dispute
The central issue was whether the three struck-out appeals (one by the First Appellant and two by the Second Appellant) should be reinstated under the Chappell approach to Martland, and whether the Second Appellant should be given permission to make a late appeal against the third PLN under Martland (paras 76-82, 118-119).
The factual dispute underlying both applications was whether the Second Appellant had genuinely been unaware of the HMRC investigation and the 2022 Tribunal appeals until January 2025, because he had been impersonated by his brother MU, or whether he had known of the 2022 appeals and had simply allowed MU to manage them without adequate oversight (paras 4, 86-88).
HMRC opposed both types of application, disputing the Second Appellant's account and inviting the Tribunal to draw adverse inferences from incomplete disclosure of communications with a former agent (para 73).
Court findings
The Tribunal found HMRC's witness, Mr Hassam, to be candid and honest, though with limited additional recollection, and did not find the Second Appellant's oral evidence convincing or reliable where it conflicted with the contemporaneous documents (paras 10-11).
Applying Chappell, the Tribunal held that the underlying merits of the three struck-out appeals were not so weak that HMRC would succeed on a strike-out application, so the merits did not weigh for or against reinstatement (para 83). The breaches of the Unless orders were found to be serious and significant, as was the roughly nine-month delay in making the reinstatement applications against the 28-day time limit (paras 84-85).
On the reasons for default, the Tribunal found on the balance of probabilities that the Second Appellant was aware in 2022 that appeals had been made in his name, on his instructions and with his consent, rejecting his account of total ignorance (para 106). It drew an adverse inference from his disclosure of only one of at least five relevant emails with his former agent (paras 91-93, 99). Applying HMRC v Katib [2019] UKUT 0189, the Tribunal held that MU's failures in progressing the appeals were attributable to the appellants because the Second Appellant had not shown he took reasonable steps to oversee MU's conduct of the litigation after March 2022 (paras 108-110).
The Tribunal accepted that HMRC had sent correspondence to the correct last known addresses for the purposes of Section 98 VATA 1994, and that it was the Second Appellant's own responsibility, once aware of the 2022 appeals, to update his contact details (paras 111, 124). A submission that the penalties were criminal in nature under Article 6 was accepted as to characterisation but held not to alter the reinstatement test or the appellants' onus (para 112).
In the balancing exercise, the Tribunal weighed the prejudice to the Second Appellant, including a combined approximately £161,000 PLN liability and possible job and reputational loss, and prejudice to the First Appellant from a £62,000 penalty, against prejudice to HMRC (which had closed its files and stood down witnesses) and to other Tribunal users, concluding that the balance favoured refusal (paras 114-117).
For the late appeal, the Tribunal found the 1,030-day delay against a 30-day time limit to be exceptionally serious and significant, found no good reason for it, and again held that prejudice to HMRC and other Tribunal users outweighed the prejudice to the Second Appellant (paras 120-128).
Outcome
The Tribunal refused the First and Second Appellants' applications for reinstatement of the three struck-out appeals (paras 6, 117, 129).
The Tribunal also refused the Second Appellant's application for permission to make a late appeal against the third Personal Liability Notice (paras 6, 128-129).
The decision records the parties' right to apply for permission to appeal within 56 days under Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (para 130).
Major issues / areas of contention
- Whether three VAT appeals struck out for breach of Unless orders should be reinstated under the Chappell/Martland test
- Whether the Second Appellant's application to make a late appeal, filed 1,030 days after the deadline, should be permitted under Martland
- Whether the Second Appellant was genuinely unaware of HMRC's investigation and the 2022 Tribunal appeals because he had been impersonated by his brother
- Whether MU's conduct of the 2022 appeals and subsequent inaction should be attributed to the appellants under the principle in HMRC v Katib
- Whether adverse inferences should be drawn from the Second Appellant's incomplete disclosure of communications with his former agent
- The extent to which the underlying merits of the struck-out appeals should be taken into account on a reinstatement application
- The balance of prejudice between the appellants and HMRC and other Tribunal users in deciding whether to reinstate or extend time