Judgment summary
This is a decision of the First-tier Tribunal (Tax Chamber) determined without a hearing under Rule 29(3) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (1). HMRC applied under Rule 8(3)(c) to strike out the Appellant's appeal on the basis that it had no reasonable prospect of success, because the claim fell outside the four-year time limits in Regulations 29(1A) and 34(1A) of the Value Added Tax Regulations 1995 (1).
The Tribunal considered the Notice of Appeal, HMRC's strike-out application and a direction inviting the Appellant to respond, to which the Appellant did not reply (11).
Applying the principles from Fairford, First De Sales and Easyair, the Tribunal assumed the Appellant's factual case at its highest, including that the delay arose from serious ill-health, good faith conduct, and an earlier attempt to notify HMRC of the errors (24-25). The Tribunal nonetheless held that neither HMRC nor the Tribunal had any statutory power to disapply or extend the mandatory four-year time limits, and struck out the appeal (41-44).
Background
The Appellant is a VAT registered company operating caravan, holiday and leisure parks (2).
On 28 January 2026, HMRC rejected the Appellant's claim to recover VAT of £3,481.38 relating to prescribed accounting periods 02/21 and 05/21, on the basis that the claim was made outside the applicable four-year statutory time limit. HMRC accepted separate corrections relating to periods 08/21 and 11/21 (3).
On 18 March 2026, the Appellant appealed HMRC's decision to the Tribunal (4).
In its Notice of Appeal, the Appellant argued that denial of recovery solely on timing grounds was inequitable, that it had made a good-faith attempt to notify HMRC of the errors by post at an earlier stage, and that the delay in HMRC's response contributed to part of the claim falling outside the four-year limit (5-6). The Appellant attributed the delay in identifying and correcting the errors to severe and prolonged ill-health affecting the business owner, including multiple hospital admissions for life-threatening conditions, compounded by the business being a small organisation with no alternative personnel to handle financial administration (7). The Appellant stated it had since strengthened financial controls, engaged external bookkeeping support, and improved invoice capture procedures, and maintained there was no deliberate or careless behaviour (8).
On 10 July 2026, HMRC applied to strike out the appeal under Rule 8(3)(c) of the Tribunal Rules (10). On 28 July 2026, the Tribunal directed the Appellant to respond to that application, but the Appellant did not do so (11).
Core dispute
The central question was whether the matters relied upon by the Appellant, even if accepted in their entirety, were capable in law of overcoming the statutory time limitations imposed by Regulations 29(1A) and 34(1A) of the Value Added Tax Regulations 1995 (23).
The Appellant asked the Tribunal to determine that the VAT was recoverable, to direct HMRC to make repayment, and to find that application of the four-year time limit would lead to an unjust outcome and should not be applied (9).
HMRC's position was that the claim fell outside the four-year limits in Regulations 29(1A) and 34(1A) of VATR, and that neither HMRC nor the Tribunal had power to disapply or extend those statutory limits (1).
Court findings
The Tribunal proceeded on the basis most favourable to the Appellant, assuming the truth of all factual assertions in the Notice of Appeal, including the ill-health, good faith, genuine business expenditure, earlier notification attempt, and absence of deliberate or careless conduct (24-25).
The Tribunal found that the language of Regulations 29(1A) and 34(1A) of VATR is mandatory, and that neither provision contains any mechanism to extend the relevant period because a taxpayer acted reasonably, had a reasonable excuse, suffered illness, or would otherwise experience hardship (34). Neither provision confers any discretion on the Tribunal to dispense with the statutory requirements where their application produces an unfair result (35).
The Tribunal held that it is a statutory tribunal possessing only those powers conferred by Parliament, and does not possess a general equitable jurisdiction allowing it to disapply or override legislation because its operation produces a harsh result (21-22, 36).
The Tribunal found that the Appellant's earlier correspondence with HMRC did not constitute a valid claim for the purposes of Regulations 29 or 34 of VATR, and no legal basis was identified for treating the statutory requirements as satisfied by that correspondence (38-39).
The Tribunal concluded that the appeal turned on a short point of law, that it had all material necessary to determine that issue, and that the Appellant had a fair opportunity to advance its position (40). Even accepting the Appellant's case in its entirety, the Tribunal found it had no power to grant the relief sought, and the appeal had no realistic prospect of success (41).
Outcome
The Tribunal was satisfied that the appeal had no reasonable prospect of success within the meaning of Rule 8(3)(c) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (42).
The appeal was struck out pursuant to Rule 8(3)(c) of the Tribunal Rules (43-44).
The decision notes a right to apply for permission to appeal under Rule 39 of the Tribunal Rules, with any such application required within 56 days of the decision being sent (45).
Major issues / areas of contention
- Whether HMRC's application to strike out the appeal under Rule 8(3)(c) should succeed on the basis that the appeal had no reasonable prospect of success
- Whether the four-year time limits in Regulations 29(1A) and 34(1A) of the Value Added Tax Regulations 1995 could be disapplied or extended due to the Appellant's ill-health or exceptional circumstances
- Whether an earlier good-faith attempt to notify HMRC of the VAT errors by post constituted a valid claim for the purposes of Regulations 29 or 34 of VATR
- Whether the Tribunal possesses any equitable or discretionary jurisdiction to override mandatory statutory time limits where their application produces an unfair outcome