Judgment summary
This decision concerns an application by David Morgan to reinstate his appeal against a Personal Liability Notice (PLN) issued by HMRC, after the appeal was automatically struck out under rule 8(1) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) 2009 Rules for failure to comply with an unless order dated 12 March 2026 (the March Unless Order) [1].
The Tribunal, applying the principles in Martland v HMRC, Chappell v The Pensions Regulator, BPP Holdings Limited v HMRC and Katib v HMRC, found that the breach of the March Unless Order was serious and significant, being the culmination of a sequence of earlier breaches [33]. The Tribunal found no good or acceptable reason for the breach, notwithstanding medical evidence about the Appellant's health [34-36]. Balancing the factors, the Tribunal refused the Reinstatement Application [38-39].
Background
On 8 May 2024, HMRC notified the Appellant of a decision to issue a Personal Liability Notice (PLN) in the sum of £44,223.08 plus interest, in respect of underpaid National Insurance Contributions (NICs) for the tax years 2019/20 to 2022/23 by Peter Morgan Contracts Ltd, of which the Appellant was sole director, said to arise from neglect on his part [8]. A statutory review upheld the PLN on 28 March 2025 [9].
An appeal was lodged on the Appellant's behalf by his solicitors, McNamee McDonnell Solicitors, on 25 April 2025, contending that his health during the Covid epidemic and chronic health problems meant neglect could not be found, and also challenging the proportion of NICs attributed to him [10].
The Tribunal issued directions on 11 June 2025 and further directions on 20 October 2025 requiring, among other things, a list of documents by 5 December 2025 and witness statements by 2 January 2026 [11, 14]. HMRC complied with successive directions, but the Appellant did not provide a list of documents or witness evidence by the required dates, and made no in-time applications for extension [13, 15, 17].
Following a warning letter of 8 January 2026 [18], the Tribunal issued an unless order on 21 January 2026 (the January Unless Order), requiring confirmation of intent to proceed and compliance with the October directions [19]. The Appellant's solicitors responded on 22 January 2026, providing a list of documents, confirming intent to proceed, and applying for an extension to 16 February 2026 for a witness statement, citing difficulty obtaining instructions due to the Appellant's ill health [21]. That extension was granted [22], but no witness statement was served by 16 February 2026, and no further extension was sought [23].
On 12 March 2026, the Tribunal issued a second unless order (the March Unless Order), requiring the Appellant to confirm in writing by 5pm on 26 March 2026 that he intended to proceed with the appeal, failing which the proceedings would be struck out [24]. The order contained a drafting error, repeating a phrase, but the Tribunal found its effect was sufficiently clear [25]. The Appellant did not provide the required confirmation [26], and the Tribunal notified the parties on 1 May 2026 that the appeal had been automatically struck out on 27 March 2026, with a right to apply for reinstatement within 28 days [27].
On 12 May 2026, the Appellant's solicitors made the Reinstatement Application, apologising for non-compliance and attaching a GP letter dated 12 May 2026 describing the Appellant's Class 3 obesity (BMI>85, weight 261kg) and associated conditions including chronic stress, anxiety and depression, pulmonary embolism, pre-diabetes, obstructive sleep apnoea, lipoedema and chronic joint pains, and stating he was currently unfit for work [28-29]. HMRC objected to the application on 15 June 2026, submitting that the Appellant had breached directions more than once and that the medical evidence was weak [31].
Core dispute
The dispute was whether the Tribunal should reinstate the Appellant's appeal under rule 8(5) of the FTTTC Rules, following automatic strike out for breach of the March Unless Order.
The Tribunal had to apply the three-stage Martland/Denton approach as adapted in Chappell and confirmed in HMRC v Medpro Healthcare Ltd, considering the seriousness of the breach, the reasons for it, and a balancing exercise weighing all the circumstances, including prejudice to both parties [5-7, 32].
The Appellant's case was that his significant and long-standing health problems had made it difficult for his solicitors to obtain instructions, and that this explained the failure to confirm his intention to proceed with the appeal by the deadline in the March Unless Order [28-29]. HMRC contended that the Appellant had a history of repeated non-compliance and that the medical evidence provided was weak [31].
Court findings
The Tribunal found, at the first stage, that the breach of the March Unless Order was serious and significant, being the culmination of a sequence of earlier breaches including failure to provide a list of documents by 5 December 2025, failure to serve witness evidence by 2 January 2026, failure to respond to the Tribunal's letter of 8 January 2026, and failure to serve a witness statement by 16 February 2026 despite an extension having been granted [33].
At the second stage, the Tribunal found no good or acceptable reason for the breach. The Tribunal noted that the importance of compliance should have been apparent from at least 8 January 2026 and certainly from the January Unless Order and the March Unless Order itself [35(1)]. The Tribunal found the evidence insufficient to establish that the Appellant's health prevented him from instructing his solicitors to confirm his intention to proceed, noting the absence of witness evidence from the Appellant or an explicit statement from the solicitors to that effect, and noting that the solicitors had in fact been able to obtain instructions at various points, including issuing the appeal, providing a list of documents, and indicating a statement would be served by 16 February 2026 [35(2)-(3)]. The Tribunal also found that any difficulty in taking instructions would not itself be a good reason, since the solicitors could have contacted the Tribunal within the compliance period [35(3)]. The underlying failure to serve a witness statement was also found not to be adequately explained, particularly given the absence of any in-time application for extension [35(4)].
At the third stage, the Tribunal did not take into account the merits of the underlying appeal, since there was no basis to treat the case as analogous to a summary judgment scenario [37]. Balancing the seriousness of the breach, the absence of good reason, and the importance of efficient and proportionate conduct of litigation and compliance with directions, the Tribunal found the balance weighed against reinstatement [38]. The Tribunal acknowledged that the Appellant would suffer significant prejudice in losing the opportunity to challenge the PLN, a significant sum of money, but found this factor, being common to reinstatement applications generally, insufficient to outweigh the countervailing factors [39].
Outcome
The Tribunal refused the Reinstatement Application [38-39]. The parties were notified of the right to apply for permission to appeal under Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, with any such application required to be received within 56 days of the decision being sent [40].
Major issues / areas of contention
- Whether the appeal, automatically struck out under rule 8(1) of the FTTTC Rules for non-compliance with the March Unless Order, should be reinstated under rule 8(5).
- Whether the breach of the March Unless Order, viewed in light of the preceding sequence of breaches, was serious and significant.
- Whether the Appellant's ill health, as evidenced by a GP letter, provided a good reason for the failure to confirm his intention to proceed with the appeal within the time allowed.
- Whether the solicitors' asserted difficulty in obtaining instructions from the Appellant was sufficiently evidenced.
- The extent to which the merits of the underlying appeal should be considered on a reinstatement application, applying the Global Torch principle.
- The balancing of prejudice to the Appellant, who would lose the opportunity to challenge the PLN, against the need for procedural discipline and efficient conduct of litigation.