Judgment summary
This decision concerns applications by Mr Adrian Vlad and Mr Ion Grab for permission to bring late appeals against a number of HMRC decisions, including personal liability notices, discovery assessments and penalties (paragraphs 1, 19 to 22). The Tribunal applied the three-stage Martland test to decide whether to admit the appeals out of time (paragraphs 2, 48).
The Tribunal found that both appellants had been badly let down by their former accountant, who had told them their appeals had been lodged when they had not been, and who the Tribunal found had given misleading advice, though it made no finding as to whether he acted dishonestly or criminally (paragraphs 4, 27, 29).
Despite accepting the appellants' evidence as honest and credible, the Tribunal concluded that the delays, in some cases exceeding 1400 days, were serious and significant, and that from March 2022 (Mr Grab) and July 2022 (Mr Vlad) each appellant had reason to doubt the accountant but did not take sufficient steps thereafter to protect their appeal rights (paragraphs 4, 34, 37, 57 to 59). Permission to appeal out of time was refused and the appeals were dismissed (paragraphs 66 to 68).
Background
Mr Grab and Mr Vlad ran separate businesses in the building trade through companies, and are related, Mr Vlad having married Mr Grab's daughter (paragraphs 17 to 18). Both used the same accountant to manage their personal and corporate tax affairs (paragraph 24).
HMRC made various decisions charging both men to tax and penalties, including a VAT-based personal liability notice of £120,863.43 and a corporation tax-based personal liability notice of £33,863.80 for Mr Grab, and discovery assessments relating to self-assessment tax totalling £98,957.17 and a VAT-based personal liability notice of £179,529.97 for Mr Vlad, among other sums (paragraph 22).
The appellants said their accountant defrauded them, taking around £60,000 from Mr Grab and £110,000 from Mr Vlad which had been intended for HMRC, and told them that appeals had been lodged against the assessments when in fact none had been (paragraphs 24, 29). Yorkshire Police were dealing with criminal issues concerning the accountant, and the matter had been referred to the Crown Prosecution Service (paragraph 25).
The appeals were lodged with the Tribunal very late: two notices of appeal for Mr Vlad were submitted on 4 August 2024, and a notice of appeal for Mr Grab was submitted on 15 January 2025 (paragraphs 20 to 21). The delays ranged from 474 days to 1443 days depending on the decision (paragraph 22).
Core dispute
The issue was whether the Tribunal should exercise its discretion under the three-stage Martland approach to admit the late appeals of Mr Grab and Mr Vlad (paragraphs 1 to 2, 11).
The appellants argued that the delay was caused by their former accountant, who acted fraudulently, failed to deal with HMRC correspondence, misled them as to the status of their appeals, and failed to advise them properly (paragraph 50). HMRC disputed the sufficiency of the evidence of the accountant's fraudulent behaviour and argued that the underlying appeals were weak, though it did not explain the basis for that submission (paragraphs 26, 65).
A central question was the extent to which the accountant's failings should be attributed to the appellants, applying the general rule in Katib v HMRC [2019] UKUT 0189 (TCC) that an adviser's failings are generally treated as the client's failings, subject to the taxpayer having done what a reasonable taxpayer would have done to keep tabs on the adviser, as discussed in Uddin v HMRC [2023] UKUT 99 (TC) (paragraphs 13 to 15, 56 to 59).
Court findings
The Tribunal found both appellants to be honest and credible witnesses and accepted their evidence that the accountant had told them appeals had been made and that everything was in hand, which the Tribunal found to be misleading since no appeals had in fact been lodged (paragraphs 9, 29).
Applying Martland, the Tribunal found the delays in bringing the appeals, set out in the tables at paragraph 22, were serious and significant and not marginal or de minimis breaches of the 30-day statutory time limit (paragraph 49).
On the reasons for delay, the Tribunal accepted that the accountant's conduct explained at least part of the delay for both appellants, but not the delay relating to the 14 March 2023 penalty issued to Mr Grab, since by then he had appointed a new accountant, GC Forest (paragraphs 31, 50 to 51). The Tribunal found that Mr Grab had reason to doubt the accountant by March 2022 and Mr Vlad by July 2022, these being the dates by which each became aware of matters fundamentally inconsistent with what the accountant had told them (paragraphs 34, 37, 57).
In weighing all the circumstances, the Tribunal gave weight to the public interest in observance of statutory time limits, the financial and family consequences for the appellants of refusal, the accountant's misleading conduct, Mr Vlad's serious health condition from September 2023 and his difficulties finding a new adviser, but found that neither appellant had taken sufficient steps after the relevant dates in 2022 to verify the position with HMRC or obtain independent advice, which was a factor against permission (paragraphs 53 to 63). The Tribunal treated the underlying merits of the appeals as neutral, having insufficient information to assess them, and found that any prejudice to HMRC from investigating stale facts also weighed against permission (paragraphs 64 to 65).
Outcome
The Tribunal declined to exercise its discretion to admit any of the appeals out of time (paragraph 67). The appeals were accordingly dismissed (paragraph 68). The Tribunal noted a right to apply for permission to appeal under Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, to be received within 56 days of the decision being sent (paragraph 69).
Major issues / areas of contention
- Whether the delays in lodging appeals, ranging from 474 to 1443 days depending on the decision, were serious and significant under the first stage of Martland.
- Whether reliance on a former accountant who misled the appellants as to the status of their appeals constituted a good reason for the delay.
- Whether, once the appellants had reason to doubt the accountant (March 2022 for Mr Grab, July 2022 for Mr Vlad), they took sufficient steps as reasonable taxpayers to verify the position or protect their appeal rights.
- Whether the accountant's conduct should be attributed to the appellants under the general rule in Katib v HMRC.
- Whether the prejudice to the appellants from refusal of permission, including serious financial consequences and Mr Vlad's health condition, outweighed the public interest in finality and respect for statutory time limits.
- Whether the Tribunal should have regard to the underlying merits of the appeals in assessing prejudice.