Judgment summary
This case concerned an application by RH Independent Healthcare Limited ("the Appellant") for permission to notify an appeal to the Tribunal outside the statutory time limit (1).
The appeal related to a determination issued by HMRC on 9 March 2012 under regulation 80 of the Income Tax (Pay As You Earn) Regulations 2003 and a notice issued on 20 September 2012 under section 8 of the Social Security Contributions (Transfer of Functions) Act 1999 (2).
The Tribunal had to determine whether three letters, the 13 October 2023 Letter, the Review Conclusion Letter (RCL) of 22 November 2023, and the March 2024 Letter (together "the Missing Letters"), were sent and received, and if so, whether the appeal was late and, if late, whether permission should be granted under the Martland approach (14, 16, 88).
The Tribunal found that the Missing Letters were sent by HMRC and, applying section 7 of the Interpretation Act 1978, were deemed delivered to the Appellant, since the Appellant had not displaced that deeming provision on the balance of probabilities (73, 84, 86).
The Tribunal therefore found that the appeal was late by approximately eight months, calculated from the date of the RCL (87, 89).
Applying Martland, the Tribunal found the delay serious and significant, found no good reason for the delay, found that HMRC would suffer prejudice from permission being granted, and refused permission to appeal out of time (90, 93, 99, 103, 104).
Background
The Appellant is part of a group of companies known as the "Abbey Group", which also included several other Abbey Healthcare and Trees Park companies (3). In the tax years 2007-08 and 2008-09 the Appellant and other Abbey Group companies entered into arrangements involving transfers of funds to employer financed retirement benefit schemes (EFRBS), the tax treatment of which HMRC is challenging, with litigation involving the other Abbey Group companies ("the Other Appeals") ongoing (4).
In March and September 2012, HMRC issued a Regulation 80 determination and a section 8 decision to the Appellant, both of which the Appellant appealed in time (5). On 3 February 2023, HMRC issued a "view of the matter" letter, revised on 14 June 2023, offering a statutory review, which the Appellant accepted on 21 June 2023 (6). HMRC wrote on 13 October 2023 proposing an extension to the review period, and on 22 November 2023 issued the Review Conclusion Letter (RCL) upholding the determinations and decision and setting out a 30-day appeal window (7, 8).
HMRC issued further correspondence about follower notices on 6 February 2024, and on 20 March 2024 wrote to the Appellant confirming the review had concluded and asking about the Appellant's appeal intentions, a letter HMRC says was also copied to the Appellant's adviser, Streets (9, 10). In July 2024, the Appellant's representative Mr Alan Craddock corresponded with HMRC and concluded no appeal had been filed (11). On 16 July 2024, HMRC wrote confirming that, absent an appeal, the determinations were treated as settled, enclosing the earlier RCL (12). The Appellant submitted its Notice of Appeal to the Tribunal on 30 July 2024 (13).
Core dispute
The Appellant maintained that its appeal was made in time because it did not receive the 13 October 2023 Letter, the RCL, or the March 2024 Letter (together "the Missing Letters"), and that it appealed within 30 days of receiving the 16 July 2024 Letter (14). The Tribunal had to determine whether the Missing Letters were sent, and if so, the effect of HMRC's unanswered request for an extension of the review period, in order to decide whether the appeal was late and, if so, by how long (14, 15).
If the appeal was found to be late, the Tribunal had to decide whether to grant permission to appeal out of time, applying the Martland framework (16, 88).
The Appellant put forward five alternative positions on lateness, ranging from the appeal not being late at all, to being four or eight months late depending on which letter constituted the effective notice of the review's conclusion (57). The Respondents submitted that the RCL constituted the deemed conclusion of the review for the purposes of sections 49E and 49G TMA, and that section 114 TMA cured any defect of form in the RCL (62).
Court findings
The Tribunal found that the RCL had the same effect as the deemed conclusion under section 49E(8) TMA, and that section 114 TMA applied to cure any defect of form, such that if sent, the RCL should be regarded as a deemed conclusion letter, making the appeal deadline run from the date of the RCL (70).
The Tribunal accepted Ms Ali's evidence regarding HMRC's postal processes and found that the OFMA Reports showed the Missing Letters were sent to Royal Mail and so were posted, meeting the requirements of section 7 Interpretation Act 1978 (73, 74).
The Tribunal found the Appellant's post-handling system had multiple potential points of failure and that there were significant gaps in the evidence, including the absence of evidence from the care home manager who covered for Ms Gillan during her leave, from the receptionist, from Mr Fry, and from Streets (81, 82). The Tribunal found that GreyEclipse's non-receipt was not particularly relevant since GreyEclipse were not acting as agents for the Appellant (83).
The Tribunal found, on the balance of probabilities, that the Appellant had not shown that it did not receive the Missing Letters and so had not displaced the deeming provisions of section 7 Interpretation Act (84). Accordingly, the Missing Letters were found to have been sent and delivered, including the March 2024 Letter to the Appellant's agent Streets (86).
The Tribunal therefore found the appeal deadline was established by the RCL and the appeal was made late, by approximately eight months (87, 89).
Applying Martland, the Tribunal found the delay serious and significant (90). It found the reason for lateness, that the individuals responsible were unaware of the RCL, did not amount to a good reason, because the Appellant took no steps to follow up on the review it had requested, despite comparator gaps in the Other Appeals of four to eight and a half months (93, 94, 96).
The Tribunal rejected the Appellant's reliance on Bridgerman as distinguishable and not binding (97). It accepted that HMRC would be prejudiced by the granting of permission, and rejected the submission that the Other Appeals were relevant to prejudice, following Romasave (98, 99). It found HMRC's views on whether an appeal existed were not binding on the Tribunal's own decision on permission (100).
Outcome
The Tribunal found that the Missing Letters were sent and deemed delivered under section 7 of the Interpretation Act 1978, and that the appeal was made late by approximately eight months, calculated from the date of the RCL (86, 87, 89).
Applying the Martland test, the Tribunal concluded that it was not satisfied that it should depart from the starting point that permission should not be given, giving particular weight to the need for statutory deadlines to be respected, as confirmed in Medpro (103).
The application for permission to appeal out of time was refused (104).
Major issues / areas of contention
- Whether the Missing Letters (the 13 October 2023 Letter, the RCL of 22 November 2023, and the March 2024 Letter) were sent by HMRC and received by the Appellant.
- Whether section 7 of the Interpretation Act 1978 deemed the Missing Letters delivered, and whether the Appellant displaced that deeming provision.
- Whether the RCL constituted a valid notice of the deemed conclusion of the review under section 49E(8) and (9) TMA, and whether section 114 TMA cured any defect of form in it.
- The effect of HMRC's unanswered request for an extension of the review period on the calculation of the post-review period under section 49G TMA.
- Whether the appeal was made late and, if so, by what length of delay.
- Whether permission should be granted to bring the appeal out of time, applying the Martland three-stage test.
- Whether the existence of the Other Appeals involving related Abbey Group companies was relevant to prejudice in the Martland analysis.