Judgment summary
This decision concerns an application by HMRC dated 5 August 2026 for permission to rely on a Statement of Case served after the expiry of the time limit set by direction 12 of the Tribunal's directions dated 7 May 2026, and for relief from sanctions under rule 5(3)(a) and rule 25(4) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (1, 2, 3).
The application followed an earlier refusal by Judge Michael Blackwell, released on 22 July 2026, of HMRC's request for an extension of time to serve the Statement of Case (2, 6). HMRC then served the Statement of Case on 5 August 2026 together with the present application, which was opposed by the Appellant in representations dated 28 September 2026 (7, 9).
Applying the three-stage Martland approach, the Tribunal found the default serious and significant, found HMRC's explanation for the delay materially incomplete and unsatisfactory, but concluded that, weighing all the circumstances, permission should be granted for HMRC to rely on the Statement of Case (38, 51, 65, 68, 69).
Background
On 7 May 2026 the Tribunal issued directions for the conduct of the appeal, with direction 12 requiring HMRC to file and serve a Statement of Case by 6 July 2026 (4).
On 6 July 2026, before the deadline expired, HMRC applied for an extension of time until 5 August 2026, which the Appellant opposed (5). By a direction released on 22 July 2026, Judge Michael Blackwell refused that application, criticising HMRC for not making meaningful attempts to ascertain the Appellant's position and for providing an unsatisfactory explanation for needing further time (6).
On 5 August 2026, HMRC filed a Statement of Case together with an application for permission for late compliance and relief from sanctions, accepting that service occurred approximately 30 days after expiry of the relevant time limit and that contact with the Appellant's representative should have been made earlier (7). The renewed application advanced a different explanation from the earlier one, this time referring to concerns about the validity of discovery assessments and the relevance of deliberate behaviour to their validity (8).
The Appellant opposed the application in representations dated 28 September 2026, arguing that HMRC had not provided a satisfactory explanation, that the explanation had changed, and that aspects of the chronology remained unexplained (9).
Core dispute
The issue for determination was whether, having regard to all the circumstances, HMRC should be permitted to rely on the Statement of Case served out of time, pursuant to rule 25(4) of the FTT Rules, and whether relief from sanctions under rule 5(3)(a) should be granted (1, 3, 10, 12).
The Tribunal applied the three-stage approach from Martland v HMRC [2018] UKUT 178 (TCC), considering the seriousness and significance of the default, the reasons for it, and all the circumstances of the case, with particular weight given to the need for litigation to be conducted efficiently and for compliance with directions (15, 23).
Court findings
At the first stage, the Tribunal found HMRC's default in failing to comply with direction 12 to be both serious and significant. The Statement of Case was served approximately 30 days late, and only after HMRC's earlier extension application had been refused (28, 29, 31, 38).
At the second stage, the Tribunal found HMRC's explanation unsatisfactory. The application did not explain when concerns about the discovery assessments first arose, what prompted them, when technical advice was sought or received, or why compliance with direction 12 remained impossible despite the time HMRC had already had (43, 44, 46). The Tribunal also noted that HMRC's renewed explanation differed from that given in the earlier, refused application, and that no account was given of the relationship between the two explanations (49, 50).
At the third stage, the Tribunal weighed factors against HMRC, including the serious and significant default and the incomplete explanation, against factors favouring HMRC, including the relatively modest delay of about 30 days, the fact that the Statement of Case had now been served, the absence of evidence of material prejudice to the Appellant, and the significant practical consequences for HMRC's ability to defend the appeal if permission were refused (54-63).
The Tribunal concluded, with some hesitation, that the balance favoured granting the application, while expressing clear disapproval of HMRC's failure to properly explain its non-compliance (65, 66, 67).
Outcome
The Tribunal granted HMRC's application for permission for late compliance and relief from sanctions. HMRC was permitted to rely on the Statement of Case served on 5 August 2026 (69).
The decision recorded full findings of fact and reasons, with any party dissatisfied entitled to apply for permission to appeal within 56 days under Rule 39 of the FTT Rules (70).
Major issues / areas of contention
- Whether HMRC should be granted permission under rule 25(4) of the FTT Rules to rely on a Statement of Case served after the directed deadline.
- Whether relief from sanctions should be granted under rule 5(3)(a) of the FTT Rules following HMRC's earlier failed extension application.
- Application of the three-stage Martland test to assess the seriousness of the default, the reasons for it, and all the circumstances.
- Adequacy of HMRC's explanation for the delay, including inconsistency between the explanation given in the earlier refused application and the renewed application.
- Balancing the need for compliance with Tribunal directions against the practical consequences of refusing HMRC permission to rely on the Statement of Case.