Judgment summary
This is a decision on an application for permission to appeal to the Upper Tribunal (Tax and Chancery Chamber). The applicant, Thomas Hanlon, sought permission to appeal against a First-tier Tribunal (Tax Chamber) decision released on 27 February 2024 (TC/2022/01108), which had dismissed his appeal against a penalty of £242,243.
The penalty had originally been issued to Cardiff Cash & Carry Ltd under s60 Value Added Taxes Act 1994 for failure to file VAT returns while knowing it was liable to pay VAT, and HMRC decided to make Mr Hanlon liable for that amount as a director of the Company (8).
Mr Hanlon's application to the FTT for permission to appeal, made on 30 January 2025, was refused as out of time by the FTT on 12 February 2026. His subsequent in-time application to the Upper Tribunal, made on 26 February 2026, was initially refused admission on 14 May 2026, before Mr Hanlon requested reconsideration at an oral hearing.
Following a hearing on 23 September 2026, Judge Jeanette Zaman decided to admit the application and to grant permission to appeal on two grounds, while refusing permission on any remaining grounds.
Background
The FTT Decision, released on 27 February 2024, dismissed Mr Hanlon's appeal against a penalty of £242,243 issued under s60 Value Added Taxes Act 1994 to Cardiff Cash & Carry Ltd for failure to file VAT returns while knowing it was liable to pay VAT (8).
The issues before the FTT were whether Mr Hanlon had behaved dishonestly and whether the penalty levied on the Company was attributable to that dishonest behaviour, and whether it was appropriate for all of the penalty to be levied on Mr Hanlon (9).
The FTT concluded that Mr Hanlon's behaviour was dishonest, that the penalty imposed on the Company was attributable to his dishonest conduct while he was a director, and that the full amount of the Company's penalty should be payable by him (11).
Mr Hanlon applied to the FTT for permission to appeal on 30 January 2025, which was out of time. The FTT refused to admit that application in a decision released on 12 February 2026 (1). Mr Hanlon then made an in-time application to the Upper Tribunal on 26 February 2026, which was refused admission in a decision released on 14 May 2026 (2). Mr Hanlon applied for reconsideration at a hearing, which took place on 23 September 2026 (3).
Core dispute
The issues for the Upper Tribunal were whether to admit the application for permission to appeal, given that the FTT had refused to admit the underlying out-of-time application, and, if admitted, whether to grant permission to appeal on any or all of the grounds raised by Mr Hanlon (12).
Mr Hanlon raised multiple challenges to the FTT Decision, including that the FTT lacked sufficient evidence, that he had been unknowingly duped by an individual later identified as a fraud ringleader, disagreement with HMRC officer evidence, a claimed genuine error on his VAT application, disputed findings about a PN160 meeting including non-disclosure of a recording or transcript, and advice not to call a particular witness (14).
Court findings
The judge concluded it was in the interests of justice to admit the application, weighing the delay, reliance on an adviser, and potential prejudice to HMRC against the time taken for release of the FTT Decision, the seriousness and significance of its conclusions, and identified arguable errors of law (19, 20).
Permission to appeal was granted on Ground 1, that the FTT made an error of law in failing to determine or making insufficient findings as to the VAT which was evaded or sought to be evaded by the Company, and on Ground 2, that the FTT made an error of law in failing to determine or making insufficient findings as to the conduct and subjective knowledge of the Company and/or Mr Hanlon supporting the conclusions on dishonesty and attribution (4, 21).
Permission was refused on the remaining grounds. The judge found it was not arguable that the FTT erred in law regarding the disputed evidence of an HMRC officer, as the FTT had not made findings of fact to that effect (23(2)). It was also not arguable that the FTT erred regarding the PN160 meeting findings, since Mr Hanlon had not shown any application for disclosure of a recording or transcript had been made to the FTT, and the FTT's findings based on HMRC's signed meeting notes were not irrational (23(3)).
The judge did not decide whether to admit new witness statements from Daniel Booth and John Naylor as evidence (24).
Outcome
The application for permission to appeal was admitted. Permission to appeal was granted on Ground 1 and Ground 2 as set out above, and refused on any remaining grounds (4, 21, 22). This means Mr Hanlon's appeal will proceed to be heard by the Upper Tribunal on the grounds for which permission was granted (5).
The judge noted the cost-shifting nature of Upper Tribunal appeals, meaning the losing party may be ordered to pay the winning party's legal costs, subject to any cap or limit if Mr Hanlon remains unrepresented, and encouraged Mr Hanlon to seek pro bono legal representation (25, 26).
Major issues / areas of contention
- Whether to admit an application for permission to appeal to the Upper Tribunal after the FTT had refused to admit the underlying out-of-time application
- Whether the FTT made an error of law in failing to determine or make sufficient findings as to the VAT evaded or sought to be evaded by Cardiff Cash & Carry Ltd
- Whether the FTT made an error of law in failing to determine or make sufficient findings on the conduct and subjective knowledge of the Company and/or Mr Hanlon supporting the dishonesty and attribution conclusions
- Whether disputed HMRC officer evidence and findings regarding a PN160 meeting, including non-disclosure of a recording or transcript, disclosed arguable errors of law
- The costs and pro bono representation position for Mr Hanlon going forward