Judgment summary
This decision concerns an application by Ms Shahada Rahman Joli for permission to bring a late appeal against a Personal Liability Notice (PLN) issued by HMRC under paragraph 19 Schedule 24 Finance Act 2007, in the sum of £1,551,129.30 (para 6).
The PLN followed a VAT assessment against Extensive Enterprise Ltd (formerly Shan Consultancy Limited, Company Number 10997872) of £2,215,899 for periods 10/19 to 01/21 under s73 VATA 1994, and an inaccuracy penalty of £1,551,129.30 under Schedule 24 Finance Act 2007 on the basis that the under-declaration was deliberate (paras 5-6). The Appellant had been a director of the Company (para 3).
The deadline for requesting a review of or appealing the PLN was 1 June 2022, but the Appellant's Notice of Appeal, containing the Late Appeal Application, was not filed until 19 July 2024, some 777 days late (paras 7-8, 35).
Applying the three-stage test in Martland v HMRC [2018] UKUT 178 (TCC), the Tribunal found the delay serious and significant, accepted that the Appellant had a good reason for delay due to health issues until at least 14 February 2023, and found that HMRC's own conduct (including the obtuse wording of its 14 February 2023 letter and its delayed Jurisdiction Application in December 2024) contributed to a good reason for the remaining delay. The Tribunal concluded that permission to appeal out of time should be granted (paras 53-57).
Background
HMRC wrote to the Company on 27 August 2021 stating it would check the Company's VAT returns and records, citing concerns about supply chain fraud risk (para 4). HMRC subsequently issued a VAT assessment of £2,215,899 for periods 10/19 to 01/21 on 17 December 2021, and an inaccuracy penalty of £1,551,129.30 on 2 May 2022 on the basis the under-declaration was deliberate (para 5). The PLN for £1,551,129.30 was issued to the Appellant on 2 May 2022 (para 6), with a review/appeal deadline of 1 June 2022 (para 7).
Richardson Lissack confirmed instruction by the Appellant on 18 July 2022 and later indicated, on 16 September 2022, that an out of time statutory review request would follow once the Appellant was well enough (paras 13-14). On 10 February 2023, Richardson Lissack wrote to HMRC citing the Appellant's severe mental health issues, lack of business experience, and asserting that another individual, Jarrkkp Lahderante, had actually run the Company (para 16).
On 14 February 2023, HMRC replied clarifying it did not intend to publish the Appellant's name (para 18). The Notice of Appeal was eventually filed on 19 July 2024, referring to long covid, a bankruptcy warning letter in January 2024, and a statutory demand dated 2 July 2024 (para 19).
On 19 December 2024 HMRC applied to strike out the appeal for lack of jurisdiction, or alternatively objected to the Late Appeal Application (para 20). Following a case management hearing on 13 October 2025, the parties proceeded on the common position that the 14 February 2023 letter was a refusal to accept a late statutory review request, meaning the Jurisdiction Application fell away (paras 22-23).
A hearing on 10 February 2026 was adjourned because the Appellant, who attended remotely, was not in a position to give evidence or be cross-examined, and had not complied with directions requiring in-person attendance and a witness statement (para 27). The rescheduled hearing on 22 May 2026 proceeded in the Appellant's absence after her solicitors withdrew from acting on 21 May 2026 and a postponement application was refused by the Duty Judge on 18 May 2026 (paras 29-34).
Core dispute
The issue for determination was whether the Appellant should be given permission under s83G(4)(c) Value Added Tax Act 1994 to bring a late appeal against the PLN, having notified her appeal 777 days after the 30-day statutory time limit expired (para 35).
The Appellant argued she had only limited involvement in the Company, which was in fact controlled by another individual, that the underpayment was not attributable to any deliberate inaccuracy on her part, and that her serious mental health difficulties made it inappropriate to enforce the PLN against her (para 44). She also disputed the periods during which she was a director (para 45).
HMRC disputed several underlying facts, including when the Appellant ceased to be a director, the authenticity of sales and transfer documents, and the existence of the other individual said to control the Company, submitting that the Appellant did not have an overwhelmingly strong case (para 50). HMRC accepted a period of ill health but argued there remained an unexplained delay of over 500 days from 14 February 2023 to the filing of the Notice of Appeal on 19 July 2024 (para 51).
Court findings
The Tribunal applied the three-stage test from Martland v HMRC [2018] UKUT 178 (TCC), as confirmed by the Court of Appeal in HMRC v Medpro Healthcare Limited [2026] EWCA Civ 14 (paras 40-41).
First, the Tribunal found the 777-day delay serious and significant, a point Mr Sheridan's skeleton argument accepted (para 53).
Second, on the reasons for delay, the Tribunal accepted that the Appellant faced genuine health and personal issues affecting her mental health from January 2021 until at least 21 August 2022, persisting to some extent until February 2023, constituting a good reason for delay in that period (para 54(1)). For the period after 14 February 2023, the Tribunal found HMRC's letter of that date, now common ground as a rejection of the late review request, was not clear (para 54(2)).
Third, in the overall balancing exercise, the Tribunal noted that while the general rule in Katib might otherwise apply to treat solicitor inaction as the Appellant's own failing, HMRC's own conduct, including maintaining that no decision on the review had been made until the October 2025 hearing while nonetheless bringing the Jurisdiction Application in December 2024, added material weight to the conclusion that the status of the review request was genuinely unclear. The Tribunal therefore found a good reason for delay on the specific facts (para 55(2)).
The Tribunal found the merits of the substantive appeal were evenly balanced, given disputed evidence on both sides, and so did not weigh significantly for or against granting permission (para 55(3)). It found no particular prejudice to HMRC from delay in evidence preparation (para 55(4)), but significant prejudice to the Appellant if refused permission, given the substantial sum at stake (para 55(5)). The Tribunal also weighed the importance of respecting statutory time limits and the principle of finality in tax proceedings (para 55(6)).
Outcome
The Tribunal allowed the Late Appeal Application, granting the Appellant permission to bring her appeal against the Personal Liability Notice out of time (paras 56-57).
Major issues / areas of contention
- Whether the Appellant should be granted permission under s83G(4)(c) VATA 1994 to notify a late appeal against a Personal Liability Notice, filed 777 days after the 30-day time limit expired
- Application of the three-stage Martland test: length of delay, reasons for delay, and evaluation of all circumstances
- Whether the Appellant's mental health issues constituted a good reason for delay in the period before and after 14 February 2023
- Whether the ambiguity of HMRC's 14 February 2023 letter, and HMRC's delayed Jurisdiction Application, undermined the Katib general rule that solicitor failings are attributed to the litigant
- Whether to proceed with the 22 May 2026 hearing in the Appellant's absence after her solicitors ceased acting and a postponement application was refused
- The extent to which the merits of the substantive appeal, involving disputed facts about the Appellant's directorship and control of the Company, should factor into the balancing exercise