Judgment summary
The Tribunal refused an application by Omid Djalili, made under s 49G(3) of the Taxes Management Act 1970, for permission to bring a late appeal against a partial closure notice for the tax year ended 5 April 2010 and final closure notices for the tax years ended 5 April 2011 to 2015 (para 1).
The notice of appeal was filed 13 months and 28 days after the expiry of the 30-day statutory time limit (para 52). Applying the guidance in Martland v Revenue and Customs [2018] UKUT 178 (TCC), the Tribunal found that this delay was serious and significant, a point which was common ground between the parties (para 52).
The Tribunal did not accept the Appellant's account that he had been advised to wait for certain documents before appealing. Instead, it found on the balance of probability that the Appellant had initially decided, for a period of about 10 to 13 months, not to appeal at all (paras 56-57). Having evaluated all the circumstances, including the length of delay, the reasons given, and the prejudice to both parties, the Tribunal refused permission (para 58).
Background
From 2008/09, Mr Omid Djalili participated in the Scion Structured Products Ltd Scheme, a disclosed tax avoidance scheme described as enabling participants to exploit film rights, generating a fixed income element called Minimum Annual Payments (MAPs) (paras 3-4).
HMRC opened enquiries into the Appellant's tax returns for 2008/09 to 2014/15 between January 2012 and August 2016 (para 5). In separate litigation concerning other Scion Scheme participants, Good v Revenue and Customs, the FTT, Upper Tribunal and Court of Appeal successively held that MAPs were taxable income under ss 609 and 611 of the Income Tax (Trading and Other Income) Act 2005, without deduction of interest or expenses (paras 6, 8-9).
On 24 February 2023, HMRC issued closure notices to the Appellant applying this reasoning (para 10). The Appellant appealed to HMRC on 24 March 2023 and accepted a statutory review, during which his adviser referred to certain 'Transaction Documents' held by HMRC but not disclosed to individual Scion participants (paras 11-14). HMRC's review conclusion letter, dated 21 March 2024, upheld the closure notices (para 16).
Separately, another Scion participant, Mr Adams, commenced his own appeal, and in that case the FTT directed HMRC on 28 January 2025 to disclose the Transaction Documents, which HMRC did on 14 February 2025 (paras 15, 19-20). The Appellant states he later obtained copies of these documents himself (para 21). He filed his own notice of appeal, together with an application for permission to bring a late appeal, on 17 June 2025 (paras 22-23).
Core dispute
The dispute was whether the Appellant should be granted permission under s 49G(3) of the Taxes Management Act 1970 to bring a late appeal against the closure notices, given that his notice of appeal was filed 13 months and 28 days after the statutory 30-day time limit expired (para 52).
The Appellant argued that the delay was justified because he had been advised that the dispute was being resolved by correspondence with HMRC, and because he could not properly formulate grounds of appeal until he obtained the Transaction Documents, which HMRC had refused to disclose and which were only released in the related Adams case in February 2025 (para 41). He also argued that his case had strong merits, that HMRC would otherwise obtain a windfall, that HMRC would suffer little prejudice, and that he would suffer considerable prejudice if refused permission (paras 42-46).
HMRC argued that other Scion participants, including some advised by the same agents, had brought in-time appeals before the Transaction Documents were disclosed, that the Appellant had still delayed several months after disclosure before appealing, and that allowing the late appeal would prejudice HMRC and other taxpayers and undermine the need for litigation to be conducted efficiently and within statutory time limits (paras 48-51).
Court findings
The Tribunal applied the three-stage approach from Martland v Revenue and Customs [2018] UKUT 178 (TCC): establishing the length of delay, the reasons for it, and then balancing all circumstances, including the merits of the reasons and the prejudice to both parties (para 34).
It found the delay of 13 months and 28 days to be serious and significant (para 52). Examining the evidence for the period before the Appellant obtained the Transaction Documents, the Tribunal found the Appellant's account, including his claimed telephone advice from Evelyn Partners and his reliance on a group called the Sole Trader Action Group (STAG), to be vague, inconsistent, and insufficiently supported, and concluded that he had in fact decided for about 10 to 13 months not to appeal (paras 55-56).
For the period after he obtained the Transaction Documents, the Tribunal found his evidence as to timing vague and found that he had not acted timeously, noting there was no apparent reason why it should have taken him more than about a month to obtain advice and formulate grounds of appeal given his representatives' familiarity with the same issues in other Scion cases (para 57).
The Tribunal held that where an appellant has initially decided not to appeal and only later changes his mind, very particular circumstances are needed to justify a late appeal, and found none here (para 58(4)). It declined to give weight to the pendency of other similar appeals (paras 39, 58(6)-(7)), found it inappropriate to assess the merits in detail (para 58(9)), and found that financial hardship and costs incurred did not of themselves justify the late appeal (para 58(8)).
Outcome
The Tribunal was not satisfied on the balance of probabilities that permission should be granted and accordingly refused the Appellant's application dated 17 June 2025 for permission to bring a late appeal (paras 1, 58). The parties were informed of their right to apply for permission to appeal this decision within 56 days under Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (para 60).
Major issues / areas of contention
- Whether the Appellant should be granted permission under s 49G(3) of the Taxes Management Act 1970 to notify a late appeal against closure notices for tax years 2010 to 2015.
- The correct application of the three-stage Martland test for assessing late appeal applications.
- Whether the length of delay, 13 months and 28 days, was serious and significant.
- Whether the Appellant's explanation for the delay, including reliance on advice from his tax agent and on the Sole Trader Action Group, and the non-disclosure of the Transaction Documents by HMRC, justified the late appeal.
- Whether the Appellant acted timeously after eventually obtaining the Transaction Documents in around Spring 2025.
- Whether the pendency of related appeals by other Scion Scheme participants, including the Adams case, was relevant to the grant of permission.
- The weight to be given to the merits of the proposed appeal and to prejudice to each party in the balancing exercise.